Address by H.E. Phumzile Mlambo-Ngcuka, Deputy President of the Republic of South Africa at a South Africa-Italy Business Forum, Johannesburg, South Africa, 09 July 2007

Deputy Prime Minister and Minister of Foreign Affairs, Mr Massimo D'ALEMA,

Ambassador of Italy to the Republic of South Africa,

South Africa's Ambassador to Italy

Members of the delegation from Italy,

Distinguished members of the South African business community,

Ladies and Gentlemen,

Introduction

It is a great honour and pleasure for me, on behalf of the people of my country, to welcome Deputy Prime Minister D'ALEMA and his delegation to the beautiful Republic of South Africa.

I understand that from here the Deputy Prime Minister and his delegation will visit, among others, the provinces of KwaZulu-Natal and the Western Cape. I can assure you, that you will go back home with rich and unforgettable memories and experience that attest to the beauty of African eco-tourism and the hospitality of South Africans.

I would like to underscore the importance of this forum as not only serving the purpose of improving trade relations but also promoting people to people interactions amongst our peoples.

Diplomatic relations

South Africa and Italy are best friends. Ours are tried and tested relations that hold great opportunities for the future of both our countries. Indeed, bilateral engagements between us have and will continue to intensify.

It is on this basis that, in the year 2003, we mutually acknowledged the need to deepen our relations even further by signing a Memorandum of Understanding (MOU).

The signing of the MOU served to cement a diplomatic relationship that had already been blossoming. President Mbeki had in 2001 visited Italy, on the occasion of the World Food Summit. The following year, President Carlo Azeglio Ciampi also paid a state visit to our country. These visits form the solid foundation through which BUSA (Business Unity South Africa) and Confindustria can consolidate their relationship.

However, the MOU has served a strategic purpose in structuring and taking our bilateral relations to higher levels. Since 2003, the number of diplomatic and business engagements have increased by leaps and bounds. In May the same year, South Africans were honoured and pleased to receive a business delegation from Italy led by the Governor of the Lombadry Region, Mr Roberto Formigoni.

It is, among others, on the basis of the foundation laid by this visit that our business association, Business Unity South Africa (BUSA), signed an MOU with Confindustria, an important business player in Italy I was made to understand.
In the context of the MOU President Mbeki paid a visit to Italy in May 2005 and met with a number of Italian political and business leaders, including President Ciampi as well as former Prime Minister Berlusconi.

Indeed, the MOU has made it possible for both our governments to meet and consult with each other on regular basis regarding issues of mutual interest. It is within this context that our Foreign Minister, Dr Nkosazana Dlamini-Zuma, met with her Italian counterpart, Minister Gianfranco Fini last year in November.

These are only highlights of a diplomatic relationship that could aptly be described as one that defies the constraints imposed by distance and geographic space. Our meeting here today further attests to that reality.

Trade relations

In the area of trade, Deputy Prime Minister D'ALEMA will be pleased to know that Italy ranks amongst our country's top ten trading partners. We will, therefore, understand why we value Italy so much.

For the past few years, trade between our two countries has been growing steadily, reaching R23 billion last year. Italian companies are among those that have taken advantage of the sound economic management of the democratically elected government and the thriving business environment we have created over the past 13 years.

South Africa also wishes to strengthen its role in the region, primarily through Nepad and the AU (African Union), and in this regard deepened trade relations with influential players like Italy are paramount.

Italy also has a firm understanding of the needs of the developing world, and therefore has been able to advocate for these through its position in the G8.

South African business stands to learn many lessons from Italy, especially in the context of Italy's very robust SMMEs sector.
I'm told that companies such as Fiat and Parmalat are household names in the Italian business world. These are among the many Italian companies that have also become household names in our country, serving as living examples of the success business story South Africa can and must tell. The number of joint ventures between companies from both our two countries, particularly in our mining sector, is encouragingly rising.

Indeed, South African companies also have a good story to tell about the enormous business opportunities that Italy has on offer. Companies such as SAB Miller, Sasol and Dimension Data are some of our companies that have done very well in Italy. We are beginning to observe encouraging signs that more and more South African companies are following the path charted by companies such as Sasol.

The challenge is, of course, to narrow the balance of trade, which is currently in favour of Italy, so as to ensure that our countries benefit mutually from our trade relations. However, this should be done without holding back the currently levels of investment from both our countries.

In that context, our country stands to benefit from more and more investment from Italy. As I have indicated above, ours provides one of the friendliest business environments in the world. South African is ranked 28 in the World Bank Investment Climate Survey.

This is a ranking earned on the basis of a solid and good track record. The sound macro-economic management frameworks put in place since 1994 have lead to a steady economic growth. For the past 13 years, our economy has been experiencing a positive growth, as opposed to the 20 years before 1994.

For the past 3 years, we have been registering an annual growth rate of 5% and creating 500 000 jobs per annum. Government is confident that we will be able to achieve our targetted annual growth rate of at least 6% as of 2008.

Growth and AsgiSA

Infrastructure is the leading sector that is contributing to the unprecedented economic growth that South Africa is currently enjoying. In this sector there is a huge demand for capital goods. South Africa would welcome collaboration with Italy the provision of these goods.

However, one of the binding constraints that limit the growth trajectory is the deficit of skills. This is particularly prominent in the engineering sector as well as artisans.

South Africa is also keen to work with Italy around initiatives that increase government capacity. This would be for the greater goal of increasing service delivery and of course reducing the bureaucratic red tape that often hinders international business players.

In South Africa we have what is called a second economy. This economy refers to those people of the population that have been unable to participate in the formal economy, in other words, they are marginalised from the mainstream economy. These are the people that SMME interventions are targeted at. As previously mentioned, Italian business has a lot to teach South African in the terms of SMMEs, and we look forward to that collaboration.

There are a number of sectors where collaboration is feasible, such as the textile industry and especially in clothing design. Furthermore, in the jewellery sector; Italy is also renowned for its design there and South Africa is a pole player in the raw materials of this industry.

Indeed, South Africa's future has never looked brighter than it is today. It is for this reason that South Africans generally describe this as the age of hope.

Our hosting of the FIFA Soccer World Cup in 2010 is another show of confidence by the rest of the world in the organizational capacity of South Africa. More importantly, the event holds and will certainly open up limitless business opportunities for South Africans and investment partners from all over the world.

I hope that the Italian Government will be as ready as we are to offer assistance to Italian companies intending to do business in South Africa.

It is true that things are not all rosy about South Africa's socio-economic situation. A sizable proportion of our population still lives in poverty - an unenviable legacy inherited from the paralysis and ills of the apartheid economy. The encouraging fact, thought, is that the South African government has acknowledged the challenges, studied the situation and devised practical programmes that hold great prospects for the poor and the marginalized.

Key among the challenges we have identified is the need to fast-track economic growth by addressing identified binding constraints. In this regard, the government has, among others, adopted a targeted intervention known as the Accelerated and Shared Growth Initiative of South Africa (AsgiSA).

Asgi-SA, is specifically meant to deal with the need to revamp our infrastructure and national logistics system, train South Africans to impart skills needed in critical areas of our economy and create jobs in order to ensure that our people have a better life.

We are under no illusions that we can achieve all these objectives on our own. We have accepted the reality that much as we must mobilize domestic investment, foreign direct investment remains a critical factor in our ability to win the war against poverty, unemployment and underdevelopment. It is for this reason that we are encouraged by the growing levels of investment by Italian companies in our economy and look forward to even more investment.

International cooperation and conclusion

As you know, South Africa has and continues to play an important role in peace-building and conflict resolution and peacekeeping on the African continent. We do this driven by our consciousness of the imperative to contribute to the advancement of the African Agenda.

We are convinced that our actions will lead to an African continent where underdevelopment will be history, political stability and democratic governance the order of the day and economic prosperity a reachable dream.

In this regard, we are encouraged by the good cooperation we have had with Italy, bilaterally and in multilateral context such as the EU, the G8 and the UN. The emphasis placed by Italy on the importance of enhancing the institutional capacity of the African Union (AU) is an objective that has seized the efforts of the South African government since the AU came into being.

The fact that our two countries are currently non-permanent members of the UN Security Council is not a mere ignorable historical coincidence. It is a strategic opportunity for our countries to advance a shared vision not only in African affairs, but also in critical political and economic challenges facing humanity today.

Given the deepening relations between Italy and South Africa I have referred to through out my speech, I have no doubt that ours is a relationship that will not only defy the constraints imposed by distance and geographic space, but one that will serve as the best example of true friends who act together in good and bad times. I wish you success in your deliberations.

Thank you very much.

The Presidency: Republic of South Africa