Statement by the International Cooperation, Trade and Security (ICTS) cluster on work done in the first quarter of 2017
Create a better South Africa; contribute to a better and safer Africa in a better world
The International, Cooperation Trade and Security (ICTS) Cluster is pleased to report on progress made in implementing its commitments to the 2014-2019 Medium Term Strategic Framework.
Since our reporting through our last briefing in February 2017, the cluster has made significant progress in the implementation of Outcome 11 of the Medium Term Strategic Framework to Create a better South Africa; contribute to a better and safer Africa in a better world.
Our work in the cluster focuses on the following core areas:
Trade and Tourism
Peace and Security, and
International Cooperation and Global Governance
While the current challenging local and global economic climate has been difficult to navigate, global economic and political challenges present an opportunity for South Africa to drive the inclusive growth and radical economic transformation agenda.
This requires the country to respond by building and strengthening international partnerships towards increasing trade, tourism and investment. This is critical if we are to resolve the triple challenge of poverty, unemployment and inequality as we implement the Vision 2030 of the National Development Plan.
Our tenacity has also paid off on a number of fronts and as a country we have registered notable progress in trade, investment and tourism. We have also contributed to a better and more peaceful region, continent and world.
South Africa has consistently underscored the need for a holistic economic diplomacy strategy, coordinated by the Department of International Relations and Cooperation through a specialised Economic Diplomacy Unit. The establishment of this unit has enabled South Africa to take advantage of the economic opportunities on the continent and globally, and also improve trade relations with both traditional and newly-identified markets. In the period under review.
The Cluster, through the Department of Trade and Industry, has established Trade and Invest Africa that is responsible for promoting an investment led approach into the Continent aimed at enhancing mutually-beneficial relations and to promote intra-Africa trade.
In the period under review, the Department of Trade and Industry launched Guidelines on Good Business Practice for South African companies operating in the rest of the African continent. It was endorsed during the 1st Africa Trade week held in Addis Ababa, Ethiopia for doing business in Africa and which will assist South African businesses in business ventures across the continent. Guidelines for Good Business Practice can be accessed on the webpage: http://files.constantcontact.com/8360ff0d101/19a99fde-32e7-41dc-a4ae-f0c1dfba2c75.pdf?ver=1472465496000
As part of improving trade relations with newly identified markets, South African total trade with East African region amounted to R25.5 billion in 2016, up from R23.6 billion in 2015 representing a 7.92% increase. The composition of trade between South Africa and the East African has remained the same since 1994, with South African exports being mainly semi- to manufactured products while imports from the region remained primary products.
Through a number of bilateral engagements, we continue to see growth in regional, continental and global trade and investment. This has resulted in increased sales of manufactured value-added exports from our Industrial Policy Action Plan priority sectors by R62.2 million. This has brought total sales for the year to R4.2 billion.
The ICTS Cluster’s work of targeting emerging and traditional markets, and our product and market diversification strategy, has led to an increase in Foreign Direct Investment inflows of R15.3 billion during the 4th quarter (January to March 2017), particularly in the energy and chemicals sectors.
This brings the total investment pipeline to R50.2 billion. The investment pipeline is the investment projects that have been committed to by the project owners.
Every year a target amount is determined. The target amount for this year is R45 billion. InvestSA will therefore engage in a range of activities identifying potential investment opportunities, targeting potential investors and assisting and supporting them until the potential projects are turned into investment commitments. The amounts will then be added to the investment pipeline.
These figures follow the recent announcement by the United Nations that global Foreign Direct Investment has fallen by less than previously thought in 2016, and is expected to grow again this year and for 2018. This implies that, contrary to challenges often referred to around the world, as investment risk in the developing world, we continue to attract foreign investment.
This was affirmed by the recent A.T. Kearney 2017 Foreign Direct Investment Confidence report which places South Africa as the 25th most attractive destination for Foreign Direct Investment globally – and the first on the continent. Furthermore, the 2016 African Economic Outlook placed South Africa fourth amongst the leading African investment destinations in 2015.
Trade and Tourism
Tourism is a significant driver of economic growth for our country. Through entities like South African Tourism and Brand South Africa we have prioritised marketing our country as a tourism destination of choice.
This campaign aims to remind every South African of the importance of the tourism industry and the role citizens can play as advocates for South Africa and tourism. This campaign will greatly support the tourism 5 in 5 Strategy, which aims to attract four million additional international tourists to South Africa and result in one million additional domestic holiday trips.
A total of 10 044 163 international tourist arrivals, excluding transits were recorded during the period January to December 2016, exceeding the annual target by 10.6%. More than R75 billion in direct spend was recorded by foreigntourists during this period, exceeding the annual target by 6%. South Africa recorded 2 622 215 international tourist arrivals during the quarter (January to March 2017) confirming that South Africa continues to be a tourist destination of choice.
Regional and Trade Integration
In line with the principles of Agenda 2063 of the African Union, South Africa prioritises issues of regional trade and economic integration through a number of entities and policy instruments, such as the Southern African Customs Union and the Southern African Development Community (SADC) Industrialisation Action Plan.
Work is continuing to advance our country along a development trajectory that is sustainable and prioritises integration. Continental integration is the foundation for Africa’s socio-economic development and a prerequisite for building stability, prosperity, peace and unity.
A key element of the Implementation Plan of the SADC Industrialisation Action Plan is the development of regional value chains, which will contribute to SADC-wide industrialisation and investment. The SADC Industrialisation Action Plan furthermore calls for an improved policy environment for industrial development and enhanced competitiveness through the use of targeted industrial policy instruments. It also promotes the increased participation in value chains for regional value addition within and beyond the SADC region.
In March 2017 the SADC Council of Ministers Meeting approved the SADC Organisational Structure for the SADC Secretariat. The new structure will enable the Secretariat to support SADC in its full range of initiatives to implement the revised Regional Indicative Strategic Development Plan, which includes the industrialisation agenda.
The region continues to collaborate on a number of issues, such as food security and agriculture. We cite for example how regional cross-border cooperation to speedily tackle the outbreak of the Fall Army Worm was a great success.
Regional and continental integration is accomplished through a number of bilateral and multilateral agreements that promote and facilitate intra-African trade.
South Africa is actively involved in the Tripartite Free Trade Area negotiations and the Continental Free Trade Areas. These negotiations are aimed at promoting a developmental integration agenda that combines market integration with industrial and infrastructure development.
These arrangements will ensure an integrated regional market and address the challenges of small and fragmented markets, improving Africa’s proposition as a viable destination for investment.
Work is underway to promote active participation of the private sector in the regional integration agenda in order to promote intra-Africa investment and the development of regional value-chains.
SACU held its 5th SACU Summit on 23 June 2017 in Swaziland and among the key issues discussed was the need for SACU to pursue regional economic development for the benefit of its member states through the implementation of a six point work programme. In addition, the Summit agreed to review elements of the SACU Agreement to facilitate implementation of this work programme with a view to review and develop a suitable architecture for tariff-setting, rebates, duty drawbacks and trade remedies; review of the Revenue Sharing Formula and the long-term management of the Common Revenue Pool; establish a Stabilisation Fund and explore the feasibility of a financing mechanism for regional industrialisation; identify financing options for regional projects; and develop public policy interventions to promote industrial development and value chains.
To further our contributions to the socio-economic development of the region, the 37th SADC Summit will take place from 9 to 20 August 2017 under the theme: Partnering with the Private sector in Developing Industrial and Regional Value Chains. South Africa takes over from Swaziland as the chair of SADC from August 2017 to August 2018.
During our tenure as Chair, we will ensure that we harness the participation and involvement of the regional private sector in the implementation of the SADC Regional Industrialisation Strategy and Roadmap.
Peace and Security
Peace and stability on the Continent is a prerequisite for development and prosperity. As South Africa, we will continue to contribute to peace and security on the continent as well as maintaining its current commitments to the African Union Peace and Security Council and the United Nations Security Council.
Earlier this year, South Africa extended the deployment of members of the South African National Defence Force for service in fulfillment of our international obligations to the United Nations through peacekeeping efforts in the Democratic Republic of Congo. We have extended the deployment from of 1 April 2017 to 31 March 2018. South Africa has concluded all other peacekeeping missions in line with its international obligations.
The country, under SADC leadership, remains committed to the stabilisation of the political and security situation in Lesotho and seconded experts to the country to assist with constitutional and security sector reforms. This included the contribution towards the Parliamentary elections which were held recently.
As a country we recently commemorated the centenary of Delville Wood, which was a watershed engagement during the First World War. We are working towards the integration of the Battle of Delville Wood into our national Military Veterans heritage archives.
This year also marks the centenary of the sinking of the SS Mendi and on Armed Forces Day in February, President Jacob Zuma laid a wreath to salute the lives of the more than 600 members of the South African Native Labour Corps who lost their lives during the disaster.
International Cooperation and Global Governance
On the international cooperation front, the ICTS Cluster continues to enhance cooperation with developed and developing countries through our active participation in multilateral structures.
We will draw on the spirit of internationalism, pan-Africanism, and South-South solidarity during our participation in these fora to advance the African Agenda, promote South-South Cooperation and secure greater equity within the international system.
Our relations with fellow African States are prioritised in line with our country’s commitment to advance Agenda 2063 of the African Union.
The African Union Global Review of Strategic Partnerships has been finalised and a recommendation has been made for its implementation with 10 strategic partners by 2018/19.
African Union Summit
South Africa participated in the African Union Summit held in January 2017 under the theme Harnessing the Demographic Dividend through Investment in the Youth. Later in July 2017, South Africa looks forward to participating in the mid-year Summit.
Indian-Ocean Rim Association (IORA)
South Africa participated in the Indian-Ocean Rim Association (IORA) Leaders’ Summit in March 2017 in Indonesia where member states committed to focusing on maritime safety and security as well as Heads of State agreeing on a broader Blue Economy sustainable development that includes responsible fisheries management.
South Africa will be taking over the rotating chairpersonship of the Indian Ocean Rim Association at the Council of Ministers’ meeting scheduled for October 2017 in Durban. As part of our priorities as chair, South Africa will promote aligning Operation Phakisa: Oceans Economy with the Indian Ocean Rim Association’s Core Objectives of the Blue Economy.
In support of the work of the Blue Economy within the Indian Ocean Rim Association, South Africa has led the Blue Economy Core Group looking at three thematic areas that were the focus of three successive workshops over the past two years: Promoting Fisheries and Aquaculture, Maritime Safety and Security Cooperation in the Indian Ocean Region; Maritime Connectivity and Financing for Development in the Indian Ocean Rim; and Environmental Sustainability and the Blue Economy in the Indian Ocean Region.
South Africa attended the 12th Conference of Parties (COP) of the Abidjan Convention in Abidjan, Cote d’Ivoire. The Convention addressed pollution from land-based and sea-based sources, impacts from minerals exploration, resource over-extraction, environmental impact management systems, the conservation through the establishment of marine protected areas and other coastal management issues. The Abidjan Convention is a comprehensive agreement established to achieve sound management of the coastal and marine environment.
The coastline covered by the Convention on the west coast of Africa exceeds 14 000 kms from Mauritania in the North to South Africa in the south, spanning more than 22 countries.
With regards to our participation in UN structures, in particular around the global human rights agenda, South Africa, at the 34th Session of the UN Human Rights Council in February 2017, voted on 41 draft resolutions related to racism.
In addition, we advanced our national priorities and foreign policy positions in a number of for a, such as the 55th Session of the Commission for Social Development (CSocD55) held in February 2017; the Social Dimensions of the New Partnership for Africa’s Development (NEPAD); and the World Programme of Action concerning people with disabilities.
We also participated in the 2017 session of the Commission on the Status of Women in March this year as a non-voting observer and helped in framing the agreed conclusions which will go to the Economic and Social Council (ECOSOC) as recommendations.
There has been a consistent focus on strengthening South-South relations, which is largely informed by our history as well as our identity as a developing country. In this regard, South Africa’s role in the Brazil, Russia, India, China and South Africa (BRICS) forum continues to grow.
At the same time we are alive to the changes in governments of some of our BRICS partners, such as Brazil, and continue to assess how this could affect the cohesion of the forum.
The BRICS New Development Bank is an alternative and effective funding mechanism with the objective of financing infrastructure development and sustainable development projects in BRICS and other emerging economies and developing countries. We wholly support its formation. As it is well-known by now, South Africa is the proud host of the BRICS Regional Bank.
To date, the New Development Bank has extended loans worth US$1.5 billion towards funding suitable projects in BRICS countries, mostly in the renewable energy space. Included in this amount is a US$ 180 million loan to ESKOM to assist with investments in renewable energy projects.
The operationalisation of the African Regional Centre is one of the key priorities of the New Development Bank. South Africa is working with the New Development Bank to complete the process of setting up the Bank’s regional office, which is expected to be in operation by year end.
South Africa will participate in the upcoming BRICS Summit in Xiamen, China, taking place from 3 to 5 September 2017 and we look forward to assuming the chair next year (2018).
During our tenure we will focus on deepening BRICS cooperation for common development, enhancement of global governance to jointly meet our shared challenges, carrying out people-to-people exchanges to support BRICS cooperation and institutional improvements, among others.
South Africa hosted the inaugural Joint Administration Committee (JAC) for the Common Market of the South (MERCOSUR) and the Southern Africa Customs Union (SACU). This follows the entry into force of the SACU-Mercosur Agreement which provides preferential access on over 1 000 tariff lines on both sides.
The agreement covers amongst others, agriculture and agro-processed; plastics, chemicals, minerals, metals, rubbers, textile and clothing, electrical, machinery and miscellaneous products. Exporters are encouraged to take advantage of the market access opportunities and tap into a market of more than 280 million people
The ICTS Cluster is on track to put in place the foundation to realise the goals of the National Development Plan. We are committed in our work towards growing the economy and creating a better South Africa thus contributing to a better and safer Africa, and a better world.
Source: Government of South Africa