The government is fine-tuning a new economic diplomacy strategy aimed at strengthening investment flows, expanding regional value chains and insulating the domestic economy from rising geopolitical volatility.
The strategy aims to attract investment, stimulate economic growth and build stronger regional value chains, particularly in sectors such as critical minerals and manufacturing, said minister of international relations & co-operation Ronald Lamola.
The development of the policy comes as the department of trade, industry & competition plans to prioritise export-led growth as a pathway to spur growth, particularly within the continent and through intra-Africa trade under the African Continental Free Trade Area (AfCFTA).
The AfCFTA aims to remove barriers to intra-Africa trade. It seeks to turn the continent into the largest regional free-trade area, with most tariffs on goods traded eventually at zero, complete with a consumer base of 1.3-billion people and about $31.1bn (R565bn) in export potential.
“We are also developing a proactive investment facilitation framework that will offer support through our foreign economic offices, improve market intelligence and regulatory advice, and strengthen risk-mitigation tools,” Lamola told SA business leaders at a pre-B20 summit presidential dinner on Tuesday.
Guests at the dinner included MTN CEO Ralph Mupita, Nedbank CEO Jason Quinn, Industrial Development Corporation (IDC) chairperson Gloria Serobe, Daniel Mminele, chair of the Nedbank Group and the B20 SA Energy Mix and Just Transition Task Force and President Cyril Ramaphosa’s trade envoy, Allistar Ruiters.
“This will be anchored in the Protection of Investment Act of 2015 and will prioritise transparency, predictability, simpler administrative processes, and effective dispute prevention,” Lamola said.
“It will also balance investor protection with the sovereign right to regulate in the public interest and complement the AfCFTA Investment Protocol as well as the WTO’s (World Trade Organisation) Investment Facilitation for Development.”
Africa’s demographic and mineral endowment, he said, positioned the continent at the centre of future global growth. By 2050, the population would reach 2.5-billion, while the continent hosts “the minerals that will power the global energy transition”.
Only “16% of Africa’s trade is with itself”, Lamola noted, adding that SADC trade is at 21% and that SA “must strive for a 50% regional integration on trade in the SADC region”.
SA’s new plan acknowledges the obstacles companies face when operating across the continent. Firms often contend with sudden policy shifts as well as uneven and unpredictable regulation and strict exchange controls … export restrictions, and even unfair treatment, Lamola said.
To improve co-ordination, the government has created the committee for the co-ordination of economic diplomacy (Comed), which brings government and the private sector together to advance SA’s economic footprint.
The department of international relations & co-operation and the department of trade, industry & competition, working closely with business, have established a new co-ordination platform to unlock opportunities across the continent, Lamola said.
Ramaphosa reinforced that message, telling business leaders that government would assist businesses “as we undertake the long-term investments and strategic shifts needed to embed SA more deeply into African and global value chains”.
“The strategy that is being developed will finally be approved by cabinet. It’s a strategy that we believe will give much more support to your businesses, to your operations. We want to build a team SA concept as we support you in your businesses.
“Let it be the work that we can undertake from our government perspective … we will be ready, willing and prepared through giving government support, diplomatic support to the businesses. We will be deploying even more knowledgeable people throughout our various embassies and consulates on the continent who will give you great support,” Ramaphosa said.
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