President Jacob Zuma will lead a South African delegation to the first United States-Africa Leaders’ Summit that will take place in Washington on 4-6 August 2014. The Summit is one of the outcomes of President Barack Obama’s visit to Africa last year. During the visit to 3 African countries, which included Senegal, South Africa and Tanzania, President Obama had promised that the US would host a US-Africa Summit to discuss issues of mutual interest.
The Summit will include a Congressional Reception, the African Growth and Opportunity Act (AGOA) Ministerial meeting, CEO Dinners, a Business Forum, a White House Dinner, culminating in the Heads of State meeting. (on the 6th of August.)
The Summit theme is “Investing in the Next Generation” and is intended to explore how the USA and Africa can together sustain and advance Africa’s transformation. The Summit will focus on Trade and Investment, the promotion of Sustainable Development, Peace and Security Issues and creation of Good Governance and the advancement of Human Development
As Ministers of Trade we will also participate in the African Growth and Opportunity Act (Agoa) Ministerial Forum that will take place on the margins of the United States – Africa Leaders’ Summit. The AGOA Ministerial Forum takes place on a rotation basis between the US and the continent. Last year’s AGOA Forum took place in Ethiopia.
Expected Outcomes of the Summit
Although President Barack Obama has offered his endorsement in favour of extending the AGOA, we expect him to announce his support of AGOA for another 15 years without any new conditionality or graduation of any country. During his visit to South Africa last year, President Obama said that AGOA represented good business for both Africa and America. African governments are also strongly in favour of extending AGOA.
AGOA is the cornerstone of bilateral relations between the United States and Sub-Saharan Africa (SSA), as it provides the sole platform between the US and SSA to discuss ways and means to deepen trade and investment relations.
Our central message is that AGOA is significant to the regional integration efforts in Africa.
Africa is pursuing a developmental integration with industrialisation and infrastructure development as its pillars, and as such AGOA would support the creation of regional value chain and value addition.
For us, AGOA is the only legal framework between the Sub-Saharan Africa and the Unites States and it has generated enormous goodwill between African countries and the Unites States of America. For South Africa, it has underpinned exports of diversified and value added products to the US markets. Further, the US investment through Power Africa could help to support infrastructure development in Africa.
We therefore, expect the first United States-Africa Leaders’ Summit to endorse the extension of AGOA, and by endorsing the extension of AGOA the US will be promoting our continental developmental integration, industrialisation, and infrastructure development.
Trade statistics indicate that AGOA has truly transformed the way the US and Africa interact on trade and economic issues. The US total trade with sub-Saharan Africa (exports plus imports) have grown more than 250 percent from $28.2 billion in 2001.
AGOA exports from Sub-Saharan Africa increased from US$8.15 billion in 2001 to US$34.9 in 2012, representing an increase of 328 percent in exports.
South Africa within the African FDI context
Foreign direct investment flows to Africa increased nearly 7 per cent to an estimated $56 billion in 2014, nearly a fifth of which went to top recipient South Africa, according to the recent United Nations report.
Sub-Saharan Africa’s robust economic growth, which the International Monetary Fund (IMF) expects to increase to 6.1 percent in 2014, from 5.1 percent last year, has made it an attractive destination for investors.
According United Nations Conference on Trade and Development (UNCTAD), FDI inflows to South Africa more than doubled to $10.3 billion in 2013, while other African countries like Nigeria and Ghana saw a decline in investment.
South Africa’s Investment Environment
The National Development Plan (NDP) provides a framework that will shift South Africa towards a new trajectory of economic growth and job creation.
Macroeconomic stability provides the foundation for strong and sustainable growth and job creation envisioned in the NDP by supporting investment and confidence.
In August 2013, Global Financial Times Magazine of UK voted South Africa overall winner for best investment destination in Africa for 2013 and 2014. The 2014 AT Kearney Foreign Direct Confidence Index ranks South Africa in position 13 amongst 25 leading economies moving up two places from 2013. South Africa ranks better than countries such as Switzerland, Sweden and Netherlands.
Foreign direct investment (FDI) into South Africa recovered to $8.2-billion in 2013, from $4.6-billion in 2012, UNCTAD World Investment Report 2014.
Over 130 foreign firms either entered South Africa or expanded their investments during 2013 – that is about 2.5 foreign firms per week announced an investment in South Africa.
US – SA Trade and investment Relationship
The U.S. and South Africa signed a Trade and Investment Framework Agreement (TIFA) in 2012, which amends the United States-South Africa TIFA originally signed in 1999. The most recent meeting of the United States-South Africa Council on Trade and Investment was held in June 2012 in Washington D.C. See the press release for more information.
In addition, the U.S. and the Southern Africa Customs Union (SACU), which includes South Africa, signed a Trade, Investment, and Development Cooperative Agreement (TIDCA) in 2008. The TIDCA establishes a forum for consultative discussions, cooperative work, and possible agreements on a wide range of trade issues, with a special focus on customs and trade facilitation, technical barriers to trade, sanitary and phytosanitary (SPS) measures, and trade and investment promotion.
U.S.-South Africa Trade Facts
U.S. goods and services trade with South Africa totaled $21 billion in 2012 (latest data available). Exports totaled $10 billion; Imports totaled $11 billion. The U.S. goods and services trade deficit with South Africa was $0.3 billion in 2012.
South Africa is currently our 38th largest goods trading partner with $15.8 billion in total (two ways) goods trade during 2013. Goods exports totaled $7.3 billion; Goods imports totaled $8.5 billion. The U.S. goods trade deficit with South Africa was $1.2 billion in 2013.
Trade in services with South Africa (exports and imports) totaled $4.6 billion in 2012 (latest data available). Services exports were $2.7 billion; Services imports were $1.9 billion. The U.S. services trade surplus with South Africa was $770 million in 2012.
South Africa was the United States’ 36th largest goods export market in 2013. U.S. goods exports to South Africa in 2013 were $7.3 billion, down 3.4% ($259 million) from 2012, but up 159% from 2003.
The top export categories (2-digit HS) for 2013 were: Machinery ($1.6 billion), Precious Stones (gold) ($1.1 billion), Vehicles ($1.0 billion), Electrical Machinery ($418 million), and Optic and Medical Instruments ($362 million).
U.S. exports of agricultural products to South Africa totalled $295 million in 2013. Leading categories includes: dairy products ($28 million), wheat ($25 million), planting seeds ($24 million), and poultry meat ($24 million).
U.S. exports of private commercial services* (i.e., excluding military and government) to South Africa were $2.7 billion in 2012 (latest data available), 1.8% ($50 million) less than 2011 but 115% greater than 2002 levels. Other private services (business, professional, and technical services), and royalties and license fees (computer software and industrial processes) categories accounted for most of U.S. services exports to South Africa.
South Africa was the United States’ 39th largest supplier of goods imports in 2013. U.S. goods imports from South Africa totalled $8.5 billion in 2013, a 2.2% decrease ($193 million) from 2012, but up 83% from 2003.
The five largest import categories in 2013 were: Precious Stones (platinum and diamonds) ($2.6 billion), Vehicles (cars) ($2.3 billion), Iron and Steel ($696 million), Ores, Slag, Ash ($577 million), and Machinery ($404 million).
U.S. imports of agricultural products from South Africa totaled $253 million in 2013. Leading categories include: wine and beer ($69 million), fresh fruit ($59 million), and tree nuts ($42 million).
U.S. imports of private commercial services* (i.e., excluding military and government) were $1.9 billion in 2012 (latest data available), up 5.8 ($107 million) from 2011, and up 157% from 2002 level. Travel and the other private services (business, professional, and technical services) categories accounted for most of U.S. services imports from South Africa.
The U.S. goods trade deficit with South Africa was $1.2 billion in 2013, a 5.9% increase ($66 million) over 2012. The United States had a services trade surplus of $770 million with South Africa in 2012 (latest data available), down 16.9% from 2011.
U.S. foreign direct investment (FDI) in South Africa (stock) was $5.5 billion in 2012 (latest data available), a 5.6% decrease from 2011. Reported U.S. direct investment in South Africa was led by the manufacturing and wholesale trade sectors. South Africa FDI in the United States (stock) was $1.5 billion in 2012 (latest data available), up 55.4% from 2011.
Sales of services in South Africa by majority U.S.-owned affiliates were $5.1 billion in 2011 (latest data available), while sales of services in the United States by majority South African-owned firms were $315 million.
US FDI Projects in South Africa
Headline figures: 2008-2014
No of FDI projects -164
Total jobs created -16,661
Average project size (jobs) -101
Total capital investment – ZAR 42,9 billion
Average project size – ZAR 261million
In terms of project type, 83.5% of projects are new investments. New projects have an average capital investment of ZAR 253.50 million and job creation of 79 per project.
The average capital investment for expansion and co-location is ZAR 292.45 million and ZAR 368.29 million respectively. The average number of jobs created in these project types is 231 and 48 respectively.
The key reasons for investment were domestic market growth potential, proximity to markets or customers, regulations or business climate, in that order.
Top 10 Companies
General Motors (GM)
Procter & Gamble (P&G)
SunEdison Inc (MEMC Electronic Materials)
Crane Worldwide Logistics
Hilton Hotels (Hilton Worldwide)
General Electric (GE)
SOURCE: SOUTH AFRICAN OFFICIAL NEWS