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Davies lobbies for African common market

Minister Rob Davies attending a Business BRICS Colloquium held at in Durban seated next to him is Mr Iqbal Surve.

Minister Rob Davies attending a Business BRICS Colloquium held at in Durban seated next to him is Mr Iqbal Surve.

Published Mar 27, 2013

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Ethel Hazelhurst

Closer economic integration in Africa is high on the agenda of the fifth Brics summit, which opened in Durban yesterday.

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As representatives from Brazil, Russia, India, China and South Africa gathered ahead of the plenary session, Trade and Industry Minister Rob Davies highlighted the need to create a common market with the critical mass to drive growth on the continent. And he appealed for a Brics partnership to “move us along that journey” – towards integration.

Among the audience were government officials from Brics countries, as well as members of the newly created Brics Business Council.

Davies noted that the other Brics countries, with their huge populations, already had the advantage of large domestic markets. And he said the success of the Brics partnership would be measured not only in terms of trade and investment between members, but also in terms of the contribution towards creating productive sectors across Africa.

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Davies said negotiations on the proposed free trade area (FTA) between the countries of the Southern African Develompent Community (SADC), the Common Market for Eastern and Southern Africa and the East African Community were “well on track” and should meet the deadline of next year, identified by the heads of state of the countries involved.

The FTA, he said, “would embrace 26 countries with 600 to 700 million people and a combined gross domestic product of $1 trillion (R9.2 trillion)”.

Davies said the biggest barriers to “creating a sizeable market on the African continent that would support industrialisation” were not just tariff barriers but also “inadequate infrastructure and underdeveloped production structures in our economies”.

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And, he said, along with the negotiation on a FTA “we are also involved in a massive infrastructure programme, which in the case of the SADC is called the north-south corridor programme”. Davies noted that Africa had achieved a “remarkable turnaround over the past few years”.

He spoke of four main drivers of growth.

One was a boom in mineral products, which fuelled a rise in prices. “That has been responsible, according to commentators, for one quarter of the growth in Africa. In addition, we have seen the development of service industries, based on imports of technologies, leap-frogging over backlogs that existed in previous technologies. For example, the embrace of information and communications technology and the development of industries around that has also been a significant growth driver.”

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A third factor was the benefit “of not having a sovereign debt or a systemic financial crisis”. And a fourth factor was a degree of infrastructure development on the continent.

Davies said African leaders were increasingly talking about the next wave of growth on the African continent which would be driven by industrial development. “We need to add more value to the mineral products we have in our soil and move from a position where we are just producers of agricultural crops into agro-processing.”

Davies said South Africa had “already seen a significant increase in our trade and economic relations” with Brics countries. “Last year there was an increase of 11.6 percent in total trade with other members. But last year was a bad year; the previous year the increase was about 27 percent.”

Davies also spoke of 31 investment projects by 25 companies in the Brics member countries and said there was a “potential investment value” in the South African economy of R12.6 billion.

Jabu Mabuza, the president of Business Unity SA, urged the other Brics members to allow more access for South African foreign direct investment. He praised India for recent reforms but said more was needed from the Brics partners.

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