||South Africa: United State Visit Important for South African Economy
||Thursday, June 27, 2013
||Jun 27, 2013
Speaking to the media ahead of Obama’s visit, Davies said SA would use the opportunity to showcase to external trade partners that South Africa, as well as the rest of Africa, had growth prospects that could rope in investments, especially in infrastructure, trade and development.
“The reality is that Africa is turning around… We are looking at partnerships that will strengthen our economy,” said Davies, adding that for this to happen, South Africa should focus on integrating African countries into the global economy through infrastructure development on the continent.
Obama arrives in South Africa for an official working visit on Friday evening.
The visit forms part of a three-country African tour, consisting of South Africa, Senegal and Tanzania.
President Jacob Zuma will hold bilateral talks with Obama in Pretoria to discuss trade, health, education, development assistance, peace and security, among others.
US, sub-Saharan Africa to strengthen relations
The White House said Obama would use his visits to reinforce the importance that the US places on growing ties with countries in sub-Saharan Africa and would “underscore the President’s commitment to broadening and deepening cooperation between the United States and the people of sub-Saharan Africa to advance regional and global peace and prosperity”.
The two countries enjoy good trade relations, which Davies acknowledged could be improved upon.
The United States is a major economic partner for South Africa and continues to feature high on the list of trade and investment partners. It is a major export market for South African products and an important source of foreign direct investment.
There are currently about 600 US companies trading in SA, which provide more than 120 000 local jobs and contribute about 30 percent to Cooperate Social Investment (CSI) for corporate social projects.
South Africa’s total trade with the US was in excess of R130 billion in 2011, with SA enjoying a trade surplus of approximately R18 billion, a 14.4% increase over 2010.
While the US is a significant partner for South Africa, SA is also the US’ biggest market in Africa, accounting for $7.3 billion of American exports.
African Growth and Opportunity Act
Davies said the SA delegation would also use the visit to highlight the importance of the extension of the African Growth and Opportunity Act (Agoa) for a reasonable amount of time.
“Our message is that we would like to see a rollover, an extension of the Agoa for a reasonable period of time, along more or less the architecture of Agoa at the moment,” Davies said.
Agoa – which expires in 2015 - offers incentives for African countries to continue their efforts to open their economies and build free markets.
But some in the US congress are questioning if SA should be allowed to continue in the involvement because they think the country is developed.
Davies said it would be detrimental for the American market if SA were excluded, as the Agoa boosts SA–US trade.
Around 43% of SA exports, totalling to about $4.6 billion, have entered under the Agoa programme and this, according to Davies, has helped enhance the SA exports and in so doing, has helped support the development of the economy - notably in manufacturing.
Also speaking at the briefing was Sasol Group Executive, Maurice Radebe, who also agreed that Agoa has played a major role in stimulating exports to the US, consolidating the high-tech industry in SA and creating local supply chains.
Sasol announced in December 2012 that it would begin front-end engineering and design (FEED) work for a world-scale ethane cracker and an integrated GTL facility, to be located near the town of Westlake, Louisiana. This is regarded as the single biggest investment in the history of the US.
Radebe emphasised the positive impact that the project would have on both countries.
“The benefits of these projects also extend back at home. It is a game-changing partnership and it is a compelling example of how bilateral trade can yield substantial foreign direct investment – which represents a win-win for both the USA and SA economies.”
CEO of the Ford Motor Company and President of the Board of the American Chamber of Commerce, Jeff Nemeth, said the visit will be good for South Africa, highlighting that the US has been a major investor in SA over the years.
“The visit shows that the USA sees SA as a major trading partner… The fact that he is travelling here during his tour shows the strategic importance of SA,” Nemeth said.
Nemeth also highlighted the importance of Agoa and the benefits it has on SA companies gaining access to American markets.
Given the current economic times, Nemeth said the African continent was the best place to invest in because of its high return of foreign direct investment over the last three years. Taking that into consideration, and the fact that the US is looking for a place to invest money in, Obama’s visit was suitable to highlight this dynamic, Nemeth said.
President's Emergency Plan for AIDS Relief Programme
Another issue that the SA government will bring to the table is the positive impact the President's Emergency Plan for Ai Relief Programme (PEPFAR) has had on the health care sector in the country.
Observers say the creation of the $15 billion PEPFAR programme in 2003 marked a significant increase in funding and attention to the AIDS epidemic in Africa. But the decision the US took to reduce this funding in South Africa has sparked concerns it may affect interventions to address the disease.
Despite some planned protests against Obama’s visit by some organisations, Davies said government welcomed Obama’s visit and the message he brings.
Obama is scheduled to preside over a Youth African Leaders Initiative (YALI) meeting at the University of Johannesburg, Soweto campus. He will also visit sites in Cape Town, including Robben Island and a health facility funded by the US at the Desmond Tutu Centre.