As heads of state from South Africa and across the continent prepare to participate in the upcoming US-Africa Leaders’ Summit next week in Washington, the importance of partnerships between the two countries is apparent. The US is increasing its efforts to engage and is exploring ways to deepen US-Africa relations. In South Africa, we should consider how our partnership with the US can be strengthened by the support of multinational companies.
Key discussion points will include promoting trade, encouraging investment and accelerating job growth. In this context, it is instructive to examine the role multinational companies have played in accelerating economic integration over the last quarter century, and the role they can play in the future. That is, if the right conditions are set on both sides of the Atlantic.
Through trade, foreign direct investment and the international transfer of knowledge and technology, multinationals such as General Electric (GE), Ford and Microsoft have forged strong businesses in partnership across Africa and, in particular, in South Africa. There is much to commend – and learn from – in these mutually beneficial partnerships.
Microsoft consistently concentrates its global resources in the communities where it operates to create positive impacts via partnerships, innovative technologies, giving programmes and community outreach. Ford recently celebrated 3 million engine milestone at its Struandale Engine Plant in the Eastern Cape. It reiterated that as one of the province’s largest manufacturers, its biggest objectives include job creation and skills development.
Consider the mutual benefit for both countries stemming from GE South Africa’s recent R700 million investment. Of that, R500m went into a customer innovation centre in Gauteng and another R200m into a supplier-development vehicle to promote job creation and skills development among small and medium enterprises (SME).
This initiative illuminates the importance of developing SMEs that embrace the objectives detailed in the National Development Plan.
The customer innovation centre will house up to 100 technical employees. GE will recruit experienced engineers, university graduates and technicians to develop solutions for its customers, suppliers and industries in South Africa. They will cross key sectors, including energy, health care, lighting and rail transportation.
The result is a programme that brings local innovation to GE’s global product pipeline and leverages South African talent to provide solutions regionally and internationally. Broadly, it addresses critical skills development and job creation and develops black industrialists. Through the supplier-development vehicle, black SMEs will receive up-skilling to supply multinational corporations and stimulate downstream job creation.
These partnerships – between multinationals and industry stakeholders from the government to the private sector – are highly effective for everyone.
Godisa, unveiled in February, is a R165m fund to empower Transnet’s black-owned suppliers. A collaboration between Anglo American’s enterprise development arm Zimele, Transnet and the Small Enterprise Finance Agency, each partner committed R55m to promote entrepreneurship and foster transformation via SMEs. Zimele chairman Khanyisile Kweyama acknowledges that enterprise development serves as a vital source for job creation and poverty alleviation.
Already, US firms are contributing to a key South African industry – renewable energy generation and energy-efficiency technologies. As this “green revolution” gains pace, so does the ability to create jobs and aid technology transfers in both countries, while contributing to South Africa’s economic growth. Both countries can reap the benefits of expanded trade in other industries as well – with markets opening in both directions following the announcement of South Africa’s infrastructure build programme.
As African leaders gather in Washington, they will focus on key priorities that include promoting trade, encouraging investment and accelerating job growth, and the role of multinational companies. By working in tandem, the South African government and corporations can develop skills, support SMEs and create the opportunities so critical for economic growth.
Tim Schweikert is the president and chief executive of GE South Africa.