The European Union pushes for an African free trade agreement
CAPE TOWN - The European Union (EU) pushed for an African free trade agreement at the opening of the Southern Africa Europe CEO Dialogue in Sandton, Johannesburg on Tuesday.
Newly-appointed European Union (EU) Ambassador to South Africa, Riina Kionka stated that with R1.4 trillion in investment stocks, South Africa’s major trade partner is the EU.
“The R1.4 trillion in foreign direct investment stocks by the European Union is almost as much as South Africa’s state budget for 2019 (R1.8 trillion) and accounts for a whopping 75 percent of overall foreign direct investment in this country,” said Kionka at the sixth edition of the summit.
“The European Union has been a stable and resilient partner of South Africa through the toughest times. While South African exports in 2018 have decreased by 3.1 percent overall, due mainly to strong declines in the United States (-13.5 percent) and China (-9 percent), South Africa’s exports to the EU have increased by 2.8 percent. This comprises almost one quarter of this country’s total exports. This is a testament to our preferential agreement, the Economic Partnership Agreement (EPA), which provides stability and predictability to our trading and business environment and is an anchor for our investment decisions,” Kionka added.
The Southern Africa Europe CEO Dialogue (formerly the South Africa Italy Summit) is hosted by one of the world’s leading think tanks, The European House Ambrosetti, in partnership with the Gauteng Provincial Government (GPG).
Gauteng Premier, David Makhura, said it was the Gauteng Province’s aim to contribute 50 percent to President Cyril Ramaphosa’s investment target of $100 billion (R750 billion) over the next five years.
“I am leading this investment drive, together with the Mayors, CEOs of Gauteng- based companies and state-owned enterprises. We have infrastructure and investment projects – both public and private sector – worth R500 billion over the next 5-7 years. We want to attract an additional R200 billion of foreign direct investment over five years. The Southern Africa Europe CEO Dialogue is an important platform to mobilise the investor community towards a common understanding of the opportunities and common action to unlock investment to grow South Africa and the SADC region,” Makhura said at the summit.
Makhura said Gauteng was the 7th largest economy in Africa, with 42 percent of the country’s industrial output, 53 percent of its exports and 41 percent of its tourism arrivals. He added, though, that the province remained beset with high inequality, spatial injustice and urban sprawl.
Chief and Managing Partner of The European House Ambrosetti, Valerio De Molli, said the goal of the exclusive and influential gathering of business leaders and companies is to further stimulate bilateral investment and expand trade volumes.
“In the last decade, foreign direct investment in SADC have been growing by a compound annual growth rate of 4.2 percent and Italy was at the forefront of that growth, with 12 investment projects in Gauteng alone,” said De Molli.
Outgoing Johannesburg Mayor Herman Mashaba said at the summit that the continued confidence and positive business sentiment from European companies meant that however bleak things may appear, potential investors recognise that the challenges South Africa faces are not insurmountable.
“These investors recognise that we are a few good decisions away from turning the corner. But we must begin to follow through on our policy decisions with action. And we need to recognise that the world, and Africa specifically, is becoming an increasingly competitive economic environment. Investors have choices of where to go with their funds and they will go where the greatest prospects of stable economic returns exist,” said Mashaba.
“By making city-owned properties available to the private sector for mixed-use development, we have unlocked a R32 billion investment boom that will turn the city into a construction site, create thousands of jobs and accelerate the provision of affordable housing. This project also illustrates how government can achieve broad-based empowerment. I maintain the view that the only way in which we can achieve true redress is by growing the economy, increasing investor confidence and repealing legislation that undermines these objectives,” said Mashaba.
The European Chamber’s President, Diego de Radigues, said the EU remained South Africa's first trading and investment partner, accounting for 25% of South Africa’s trade and 75 percent of its foreign direct investment, with EU business with South Africa having created 500,000 direct jobs.