Speech for Deputy Minister Pahad: French - South Africa Chamber of Commerce and Industry, 12 June 2000 Sandton, Johannesburg

Mr President, Madame General Secretary, Ambassador d'Albis, distinguished guests, I am honoured to address this esteemed Chamber today.

In the last few weeks sceptics and Afro-pessimists have had a field day. We are acutely aware of the tragedy unfolding from Sierra Leone to Angola, from the DRC to Sudan, from the killing fields of Ethiopia and Eritrea to the killing fields of Burundi and Somalia, from the tensions in Zimbabwe to the tensions in Rwanda. Thousands of innocent people are being killed, the infrastructure is being destroyed, land mines are indiscriminately planted. The agricultural land is laid to waste and millions of people have become refugees.

However, while we cannot ignore this reality we don’t have the luxury to indulge in sceptism and despondency. We must, rather, constructively and critically examine the challenges facing Africa, and identify the tremendous opportunities that need to be exploited.

Today, I would like to concentrate on the African Renaissance, South Africa’s role in Southern Africa and the importance of South Africa’s relations with Europe, especially France.

The notion of the African Renaissance is described by academician John Stremlau as Renaissance proponents seek to convey a positive vision of Africa as a peaceful, democratic and market-oriented region that will attract foreign trade and investment, as well as the return of thousands of talented Africans and billions of capital flight now in safe havens abroad. No one denies the harsh realities of human deprivation and deadly conflict.

Calls for a renaissance are intended to encourage all Africans to confront these realities and take greater responsibility for reversing them. Strategically, the African Renaissance offers an alternative to the prevailing European concepts of, and structures for, African and global order".

I believe he captures the essence of our vision of an African Renaissance.

The very nature of regional and global interdependence today, characterised by globalisation and the information revolution, indicates that no country can be an island of prosperity in a sea of poverty.

Historically, and especially in the post colonial period, African leaders spoke of Africa's contributions to the very evolution of human life and also of ancient times when Africa was the leading centre of learning, technology and culture. They were referring to the increasing discovery of evidence which points to Africa's primacy in the historical evolution of humankind; to the magnificent royal courts of Mali and Timbukto in the 15th and 16th centuries; to the works of rock art in South Africa that are thousands of years old; to the artistic works of the Nubians and the Egyptians; to the sculptured stones of Aksum in Ethiopia; the pyramids of Egypt; the City of Carthage in Tunisia and the ancient universities of Egypt, Morocco and Mali. Those leaders called for an African reawakening to restore this legacy. Although the vision was there, the time was not yet right for a renaissance. Africa, which was already struggling to come to grips with the legacies of the slave trade and colonialism was again sacrificed on the altar of the Cold War.

Recently President Thabo Mbeki said that "there exists within our continent a generation which has been victim to all things which created the negative past; this generation remains African and carries with it a historic pride which compels it to seek a place for Africans equal to all other peoples of our common universe ... I believe that the new African generations have learned and are learning from the experiences of the past. I further believe that they are unwilling to continue to repeat the wrongs that have occurred".

This reflects the renewed spirit of confidence and self-assertiveness on our continent. Once again our leaders have taken up the mantle of revolutionaries for the African rebirth.

Today, Africans are again asking questions, inter alia why, despite our enormous riches and potential, are the greatest number of the least developed countries found in Africa (33 out of 48), why has sub-Saharan Africa's slice of the world trade fallen from three percent in the mid 1950's one percent in 1995; why have African exports fallen by 50% from 1985 to 1995. How do we cope with the reality that the prices of the vast majority of our exports has systematically declined?

Why do the majority of Africans live in countries where economic development has declined? According to latest UN statistics, of the 5 sub-regions in Africa, only 2 accounting for only 25% of the continent's population enjoyed a positive growth performance. Growth decelerated in the remaining 3 sub-regions, negatively impacting on 75% of Africa's population.

Why has the world not effectively dealt with Africa’s debt problem? In 1980 the total debt stock of the highly indebted countries, the overwhelming majority of whom are African, stood at about $59 billion. By 1997 it had increased to $201 billion. Outstanding external debts in many African countries exceed their GNP and debt service requirements exceed 25 per cent of their total export earnings. In the same period, the debt service paid had increased from $5.9 billion to about $8.7 billion.

Why has official development assistance declined by almost a 1/5th in real terms since 1992? A report issued last month found that the USA Administration’s $10.7 bn foreign aid request for the financial year 2001- which Congress is expected to cut – is a post-Second World War low in the percentage of federal funds going to foreign aid.

This compelled the UN Secretary General, Kofi Annan, to recently state: "It is particularly shameful that the US, the most prosperous and most successful country in the world, should be one of the least generous in terms of the share of its Gross Domestic Product it devotes to helping the world’s poor."

Why has Africa failed to attract substantive foreign direct investment? Many African countries have taken measures to create a climate conducive to Foreign Direct Investment. These measures included trade liberalisation, the strengthening of the rule of law, improvements in legal and other instruments, as well as greater investment in infrastructure development, privatisation, greater accountability and transparency, greater degree of financial and budgetary discipline and the creation and consolidation of multi-party democracies.

Since 1990 the profit levels of foreign companies in Africa have averaged 29%, higher than any other region in the world. Sadly this has not led to sufficient Foreign Direct Investment. Africa, which has the highest number of least developed countries, continues to grapple with the fact that its share of FDI flowing to developing countries, declined from more than 11% in the period 1976-1980 to 4% in 1996-1997.

The dire consequences of our failure to answer these questions is that the largest percentage of people in the world living on less than one dollar a day are to be found in sub-Saharan Africa. Growth per capita income, which averaged 1,3 percent in the sixties, was reduced to 0,8 percent in the seventies and further reduced to minus 1.2 percent in the eighties. Today per capita income is as low as $500 per annum; electrical power consumption per person is the lowest in the world; Africa has 14 telephone lines per 1000 and less than half of 1 percent of all Africans have used the internet.

African Renaissance is our attempt to answer these burning questions.

We seek to answer these questions in a New World order that has changed dramatically over the last few years. Not only do we have to deal with the legacies of the past, but also now we are confronted with the phenomenon of globalisation, liberalisation, deregulation and the information revolution.

We believe that the biggest challenge facing humanity today is to ensure that Globalisation benefits all - big and small, the rich and the poor. In our global village, there cannot be islands of development and prosperity in a sea of abject poverty and conflicts.

The real condition for growth, development and the equitable spread of wealth across the world economy, lies in raising the per capita incomes of the majority of the world’s people. The rise of GDP in these areas offers the true prospect for global growth and wealth. This would only be achievable if these economies are capable of reaching new levels of industrialisation. This involves achieving the capacity to develop sophisticated industrial processes, widen the variety of products that are produced, greater market access, and ensure that Africa benefits from the scientific and technological revolutions. This must include the transfer of affordable technology and access to research.

What we need, therefore, is to establishing a direct line from the rural village to the global village in the interest of our shared human condition. Regardless of the individual belief system of any human being, this shared genetic and moral code that constitutes humanity, must surely bind us all together.

It is now your time to seize the opportunity and contribute to the African Renaissance, because at the end of the day, businesses stand to profit as much as humankind.

Chairperson, wealth creation and therefore promoting economic growth is Southern Africa’s greatest challenge. This economic growth encompasses not only socio-economic developments, but also peace and stability.

SADC is the foundation on which we seek to make the 21st Century an African Century.

The aim of SADC is to create a Community providing for regional peace and security, sector co-operation and an integrated regional economy. As a regional institution it has laid the basis for regional planning and development in southern Africa. SADC forms one of the building blocks of the African Economic Community (AEC).

Our vision for the Southern African region is one of the highest possible degree of economic co-operation, mutual assistance where necessary and joint planning of regional development initiatives leading to the establishment of a free trade area in the region, the development of basic infrastructure, the development of our human resources and the creation of the necessary capacity to drive this complicated process forward, as well as the urgent need for peace, democracy and good governance to be established throughout the region.

The countries of the Southern Africa region can achieve their full potential only through close co-operation in the exploitation of natural resources in a co-ordinated fashion, the pooling of technical expertise, the harmonisation of trade practices and the promotion of economies of scale. This is one of the principle tasks of the SADC.

We are confident that the SADC Trade Protocol, which is the main instrument for creating a Free Trade Area, will be implemented on the 1st September 2000. ECOWAS and COMESA have also taken decisions to accelerate their integration process. This undoubtedly will open up exciting new possibilities for trade in the region and the continent.

Also increased development of our common Transport, Electricity and Telecommunications infrastructure will accelerate the economic development of the Continent. The opportunities for joint SA / French initiatives in this regard should be evident.

Chairperson, the SADC Region does not function in isolation. In this regard it needs to form partnerships with the rest of the international community which will significantly increase its chances of success. Europe as a strategic partner has a major role to play.

In this respect, South Africa is a member of the 3-country steering committee driving the Berlin Initiative, which strives to foster closer co-operation between the European Union and SADC, Priority issues that are included under this Initiative are the consolidation of democracy in the Southern African region, combating illicit drug trafficking, clearance of landmines, regional integration, promotion of Trade and Investment and combating HIV/AIDS.

Europe remains South Africa’s main economic partner in terms of trade, investments, finance and the transfer of technology. It is vital for South Africa to expand its economic relations with the outside world in order to meet the growing demands of our people for a better life. Economic restructuring, greater market access, more foreign direct investment, increased co-operation in science and transfer of technology, as well as the development of our tourism industry are priorities. In this regard Europe is a vital partner for South Africa. It should be noted that South Africa’s total trade with Europe has doubled over the past ten years. 45% of South Africa’s total trade is conducted with Europe and Europe remains the largest source of foreign direct investment to South Africa.

In view of the fact that Europe’s share of world GNP amounts to 25% and that it accounts for 20% of world trade, the EU/SA Free Trade and Development Agreement is of strategic importance to South Africa. Once fully in operation, it will contribute significantly to economic growth in South and Southern Africa. The Trade, Development and Co-operation Agreement (TDCA) has become the centerpiece of South Africa’s bilateral interactions with Europe. After approximately four years and 23 rounds of negotiations, the TDCA was signed in Pretoria in October 1999. Objections raised by Italy and Greece over grappa and ouzu raises some serious concerns. I am happy that, a few days ago, it was announced that all outstanding differences have been resolved.

The most prominent feature of the TDCA is its provision for the establishment of a Free Trade Area (FTA) between South Africa and the EU. The EU has undertaken to eliminate tariffs on 95% of its imports from South Africa within 10 years. This process will be most extensive and rapid in the case of individual goods. Indeed, most industrial products from South Africa will be able to enter the EU market duty free within three years of the implementation of the TDCA, i.e. by the end of 2002. South Africa, for its part, has committed itself to the full liberalisation of 86% of its imports from the EU by the end of a transitional period of 12 years. It is estimated that the coverage of the FTA will be around 90% of current trade between South Africa and the EU. The EU is at present South Africa’s largest trading partner, accounting for around 35% of its overall merchandise trade. It is, moreover, the source of over half the total stock of foreign direct investment in South Africa.

While agriculture proved to be a sensitive issue for the EU, after difficult negotiations it agreed to liberalise approximately 61% of agricultural imports from South Africa. In addition, it granted South Africa quotas for certain agricultural products at preferential tariff rates, ranging from 0% to 50% those for Most Favoured Nation (MFN). These quotas, which comprise 13% of agricultural trade with the EU, have been established for cheese, cut flowers, proteas, wine, fruit juices and canned fruit. In return, South Africa pledged to liberalise 81% of its agricultural imports from the EU.

South Africa, like Europe, placed certain sensitive products on a review list. These are excluded from FTA but their liberalisation will be considered at a later stage. This list includes such items as sugar, beef, wheat and maize as well as some textiles and automotive goods.

The TDLA opens up tremendous opportunities for the private sectors of South Africa and France. Your partnership will enable full exploitation of these opportunities.

South Africa has also managed to consolidate political and economic relations with Central and Eastern Europe, which offer attractive opportunities to South African companies for trade and joint ventures. Despite the current economic problems in Russia, the country has huge potential and it is important to position South Africa and its private sector to avail itself of these opportunities in the medium to long term. It is expected that Deputy President Zuma will pay an official visit to a number of countries in Central and Eastern Europe in the latter part of the year in order to give renewed momentum to South Africa’s relations with that region. I will soon be visiting Portugal, Stockholm, Slovakia, Turkey, Bulgaria, Slovenia and Romania.

If you have any proposals on consolidating or initialing economic interests in these countries, please let us know.

Lastly, let me deal with South Africa’s excellent bilateral relations with France.

The Third Session of the South African/French Joint Commission on Trade and Industry is scheduled to take place from 28 to 29 June 2000 in Pretoria. It will be chaired by Minister Erwin and the French Secretary of State for Foreign Trade, Mr Francois Huwart. This meeting will review the progress made in our respective trade relations, as well as direct the way for renewed focus and identifying strategic areas for co-operation. Areas where strong potential exists to promote investments, notably in the automotive, chemical, pharmaceutical and hotel infrastructure sectors will be high on the agenda.

Our bilateral trade growth in 1998 was 58 %, the highest from a real base for all of Europe, which was surely due to the impetus of the state visit to South Africa of President Chirac and the important trade delegation that accompanied him to South Africa in June 1998. In 1999, however, this figure declined by -3,2 % and France dropped from being our 6th overall trade partner to the 7th position. South African exports to France increased in 1999 by 8,1 % to R3, 1 bn compared to R2, 9 bn in 1998, although France dropped from being our 10th to being our 12th largest export market. French exports to South Africa declined by -7,9 % in 1999 but France remained our 5th import market for both 1998 and 1999. This trade balance is firmly in France’s favour, amounting to R3, 3 billion, and qualifying France only as our (164th) partner in respect of a favourable trade balance. On the other hand, France has increased its position to 7th Foreign Direct Investor in South Africa, from 10th position in 1999.

The way forward should focus, on building a partnership to doing business in South Africa as well as in our respective "traditional" business spheres, namely that of "Franco" and "Anglophone" Africa.

It makes sense that South African business, rather than competing with French business, should join forces with French companies.

As South Africa is an integral part of Africa and Southern Africa, so is France in Europe and the European Union. Together, South Africa and France could only create a win-win situation if we pool our resource and use the opportunities created by the Africa Renaissance.

Consortiums consisting of compatible French and South African companies will certainly be a winning team in Africa. This partnership could also attend to Europe, Latin America, Asia and the Middle East.

I would like to suggest that the respective business communities determine a new way forward to pro-actively enhance our bilateral trade and investment relations. In this respect I would like to propose a special status for our private sector relations, namely that of a special partnership ("partenariat special").

Let us seize these opportunities to further strengthen the all-round relations between the South African and French people and our two governments.