STANDARD BANK GLOBAL TRADE AND PRODUCT WORKSHOP

1. STANDARD BANK GLOBAL TRADE AND PRODUCT WORKSHOP the dti’sAFRICA STRATEGY 24 June 2014 Presented by: Lerato D. Mataboge Chief Director: Africa Bilateral Economic Relations

2. CONTENTS Section 1: the dtiVision and Strategic Objectives Section 2: Minister’s Priority for Africa Section 3:Overview of the thedti’sAfrica Work Section 4: South Africa’s Export Growth Section 4: SACU, SADC, T-FTA Section 5: Trade and Investment Support Measures

3. the dtiVision The Department of Trade and Industry's (the dti) vision is of a South Africa that has a vibrant economy, characterised by inclusivegrowth and development, decent employment and equity, built on the full potential of all citizens.

4. The dtiStructure Ministry Office of the DG Group COO Group CFO Policy Co-Ordination Unit Broadening Participation Division Industrial Development Division Group Shared Services Communications and Marketing International Trade and Economic Development Trade and Investment South Africa Incentive Administration Division (TEO) Consumer and Corporate Regulation Division Agencies

5. the dti’s Strategic Objectives • Promoting broad economic participation, equity and redress • Enterprise & Industry support and development • International Trade Promotion • Consumer & Corporate Regulation • Contributing towards the development and integration of the African Continent within the Nepad framework

6. MINISTER’S PRIORITY FOR AFRICA Priority as articulated in May 2014: “South Africa must consolidate its economic relations with the African continent through: • Institutional development • Infrastructure development • Industrial development and the creation of value-chains • Trade facilitation / market access (addressing NTBs, harmonization of standards etc) • Outward investment facilitation (aggressive private sector engagement in the bilateral strategy etc.)” The fundamental objective is to promote regional integration, trade, investments as well as industrial and infrastructure development in Africa. The result must be greater levels of intra-Africa trade and intra-Africa investments.

7. OVERVIEW OF the dtiAFRICA WORK the dti’sAfrica objective is to drive a developmental agenda, aimed at achieving mutual economic growth and development for South Africa and the rest of the continent. We pursue a bilateral and a multilateral strategy. The bilateral strategy is aimed at complementing the regional integration agenda under the SADC, SACU and the continental agenda of the African Union, which places primacy on the building of effective Regional Economic Communities (RECs) on the continent as necessary for sustainable economic growth and development.

8. OVERVIEW OF the dti’s AFRICA WORK IMPLEMENTATION INSTRUMENTS: 1) Economic research and analysis: Country and regional briefs and strategy documents. In depth assessment of market access conditions and investment opportunities. 2) Trade and investment enabling agreements: MoUs on Economic Co-operation, Preferential Trade Arrangements (outside of southern Africa and outside of Tri-Partite FTA), SACU, SADC, T-FTA and upcoming C-FTA negotiations. 3) Outward investment facilitation: Fact-finding missions, sector-specific technical missions, project-specific outward investment missions, investor conferences, facilitating new regional infrastructure and industrial growth poles through the SDI methodology in southern Africa, establishing integrated manufacturing platforms on the continent.

9. OVERVIEW OF the dti’sAFRICA WORK IMPLEMENTATION INSTRUMENTS: 4) Government to Government engagement platforms: ITED-led Heads of State Economic Bilateral Forums, DIRCO-led Joint Permanent Commissions for Cooperation (JBCC) at Ministerial level, Presidency-led Bi-National Commissions (BNC) at Presidential level. • These structures serve to govern and deepen bilateral relations as well as set bilateral work programmes with benchmarks, thus locking-in political commitments for projects’ implementation. 5) Overseeing the work of the RegionalSpatial Development Initiatives Programme and the North-South Corridor. 6) Addressingnon-tariff barriers and other barriers to entry/operation: Through continuous engagement with South Africa’s Missions on the continent as well as through direct engagement with the private sector and host governments. • ITED collates reports of challenges faced by South African entities (exporters and investors) on the continent and aims to resolve the challenges though bilateral engagement with the respective governments, and through regional platforms (SADC and SACU).

10. STATEGIC IMPORTANCE OF ENGAGEMENT IN AFRICA • Foreign policy priority; AU/NEPAD Objectives • South Africa’s sustainable growth linked to the growth of the Continent • Africa is the second fastest growing region in the world, after Asia. • Enormous reserves of raw materials. • 60% of unused arable agricultural land globally. • Young and growing population. • Growing middle class with considerable purchasing power. • Rapid urbanisation. • Improvements in economic governance. Over the next 5 years: • Africa’s output will expand 50%. • Growth will average 5.5% per annum. • Africa’s GDP per capita income will expand by 30%. • Private consumption in Africa’s 10 largest economies will more than double. • Africa’s total trade will grow dramatically: from US$654 billion to US$1.6 trillion by 2015. • Capital inflows expected to reach US$150 billion.

11. ENGAGEMENT STRATEGY IN AFRICA • Seeks to foster closer collaboration with partners on the Continent to address the following: • Challenges of underdeveloped infrastructure. • Lack of adequate human capital. • Lack of industrialisation and product diversification in economies. • Underdeveloped institutions. • Inadequate access to finance. • Fragmented markets

12. ENGAGEMENT STRATEGY IN AFRICA • South African government encourages and facilitates outward investment to the Continent by SA companies. • Companies should adopt good corporate governance and ethical business practises. • Companies are encouraged to source inputs locally, empowerment of SMME’s, the employment of local labour and services. • Companies are encouraged to explore opportunities for becoming involved in projects that contribute significantly to the development of productive capacity in Africa.

13. SOUTH AFRICA’S EXPORTS BY REGION Source: Quantec, 2013

14. SOUTH AFRICA’S TRADE WITH THE CONTINENT • Compared to other regions (e.g. EU, NAFTA, Asia), Africa has low levels of intra-regional trade, at 10%. • Some challenges to be addressed: • Undiversified production structures; • Inadequate infrastructure to support trade in goods; • Prevalence of NTBs; • Trade governance (i.e. RoO, NTBs, harmonising customs procedures and documentation, etc).

15. SACU • Future of SACU lies in “development integration” to address real economy constraints. • Market integration combined with cross-border infrastructure development (e.g. SDIs) and sectoral coordination (e.g. industrial policy). • SACU has adopted a work programme focusing on five areas: • Promote regional industrial development. • Trade facilitation. • Review revenue-sharing arrangement. • Establish common institutions. • Unified engagement in trade negotiations with third parties (SACU-Mercosur/India PTAs, etc).

16. SADC • SADC FTA (2008) to have been fully implemented in 2012. • Over 90% of products duty-free. • Need to address the real economy constraints to achieve higher levels of intra-regional trade and investment (i.e. undiversified production structures and supply-side capacities). • Emphasis currently on consolidating the SADC FTA and accession of non-Members (DRC and Angola) and full compliance by all Parties.

17. Tripartite FTA • Consolidating the SADC-EAC and COMESA trade arrangements. • Encompasses 26 countries; combined GDP approaching US$1 trillion; population of almost 600 million. • Larger market enables economies of scale to develop and stimulate manufacturing, attracts FDI and can boost intra-Africa trade. • Allow Africa to compete more effectively on global stage. • Allow Africa to join emerging economies in the ‘South’ as new centres of global economic growth, and sources of trade and investment. • The T-FTA will form the basis for a Continental FTA (C-FTA).

18. TRADE AND INVESTMENT SUPPORT MEASURES

19. TRADE AND INVESTMENT FACILITATION SUPPORT MEASURES • Export Credit Insurance Corporation (ECIC): • Underwrites bank loans and investments by RSA companies outside the country (minimum R200 000). • 90% Political Risk Cover (expropriation, wars, breaches of contracts inter alia). • Export Marketing and Investment Assistance (EMIA) Scheme • Provides partial funding to potential investors & exporters (i.e. travel, accommodation, exhibition, S&T costs) • IDC– state owned development finance institution. • DBSA– funds development projects in the southern Africa region (infrastructure). • Spatial Development Initiatives (SDIs) – Investment & infrastructure development (PPP). Project origination. • Capital Project Feasibility Programme • Facilitates feasibility studies that are likely to lead to projects that will increase South Africa’s exports, stimulate growth for the local capital goods and services sector and allied industries

20. EMIA Group Partially compensates SA exporters for costs incurred to: • Develop export markets for SA products & services such as marketing assistance and research, match-making, patent registration • Recruit new foreign direct investment (FDI) into SA.

21. EMIA GROUP OFFERINGS

22. CPFP Description Capital Projects Feasibility Programme (CPFP) is a cost-sharing scheme, providing a contribution to the cost of feasibility studies that are likely to lead to projects outside South Africa that will increase local exports and stimulate the markets for South African capital goods and services The Programme’scontribution is in the form of a grant of up to: • 50%of the study costs for projects outside Africa and • 55% of the study costs for projects in Africa • Minimum R100 000 to the maximum of R8 million 22

23. Eligibility – Project Criteria The project must fulfill the following non-financial criteria: • New projects, expansion of existing projects and the rehabilitation of existing projects in the capital goods sector; • The programme that is anticipated to emerge from the feasibility study must fulfill the objectives of the CPFP programme; • The minimum local content, depending of the nature of the project, must be 50% for goods and 70% for professional services; which remains at the discretion of the Adjudication Committee • Projects can be situated anywhere in the world ( excluding South Africa) while projects in Africa will be encouraged.

24. CPFP Projects- Locations Oman Residential & Resort Development Student Residential Villas Mali Biodiesel Sierra Leone Iron Ore Mine Burundi Jiji Hydropower Scheme Mule Hydropower Scheme Ghana Greenfields Sugar Dark Fibre Sugar Cane • l • l Mauritius Balaclava Hotel • l • l Angola Hotel Chain Development Mozambique Alluvial Gold Mine Kenmore Moma Expansion Tete Industrial Park Rolling Stock Supply Mineral Sand Deposits • l Zambia Chingola Railway Commercial properties • l • l • l • l Swaziland Ethanol Plant Distillery Project • l • l • l Namibia Caparo Caprivi Farm Logistics Activity Precinct Zimbabwe Integrated Development Plan Water & Wastewater Master plan

25. Website: www.thedti.gov.za Government incentives website: www.investmentincentives.co.za

26. THANK YOU