Johannesburg - Trade and Industry Minister Rob Davies has called for the diversification of African economies in order to attract foreign direct investment.
Davies also warned that Africa’s economic integration was facing a threat if infrastructure development did not take place.
He told 100 political and business leaders at the South Africa-Italy summit in Cape Town, to which Independent Media is a partner, on Friday that there were a number of constraints facing African growth.
Independent Media owns Business Report.
He said on top of this list was a lack of diversification of the African economy followed by the lack of infrastructure development.
Davies said Africa was lagging behind the world because its economies were inward looking and more focused on the exports of raw materials to shore up its gross domestic product.
He said the recent global slump in oil and commodity prices due to slowing demand, particularly from China, required a new approach for doing business on the continent and ways to accelerate the process of integration into a new market that would be consumption-based.
Closer links
“Our approach to regional integration should be different,” Davies said. “We need to build pillars together for sound economic reasons.”
The South Africa-Italy summit, which is in its second year, is aimed at forging closer links between South Africa and Italy.
Davies said South Africa and the rest of the continent were focusing on regional integration as a key driver to overcome economic developmental challenges and to achieve sustainable economic growth.
“There is a consensus that by merging its economies and pooling its capacities, endowments and energies, the continent can overcome its development challenges,” said Davies.
“Regional integration would allow it to achieve sustained and robust economic growth, enhanced movement of goods, services, capital and labour, socio-economic policy co-ordination and harmonisation, infrastructure development as well as the promotion of peace and security within and between the regions.”
Luigi Michi, the director of strategy and development at Tena Group, said the rest of the world was watching the emergence of Africa as a new investment destination and was keen to invest in it.
“We have the experience and the expertise to start working with local companies to solve the energy problems,” said Michi.
Sub-Saharan Africa has experienced a surge in economic growth over the past decade.
During the period, consumption in the region has quadrupled, investment levels have reached nearly e60 billion (R923.27bn) in the 2013/14 financial year.
He said the lessening of reliance in commodity export and diversification into a common market would beef up value-adding production and foster the quick integration of the continent.
BUSINESS REPORT