Uncle Jacob wants your money

November 17, 2015 in Business, Letters, Trade & Industry, U by Editor

South Africa changes pitch as it seeks deeper integration with rest of Africa

KAMPALA, November 17
For a man whose job is to open and expand markets for South African output, Dr Julius Nyalunga’s sales pitch in Kampala was a sharp departure from the usual. Leading a fourteen strong troupe of South African companies spanning the agro-processing, construction and infrastructure as well as the mining and capital equipment among others, the Director for Trade Promotion is South Africa’s department of trade and industry was more sophisticated speaking not about the merits of cape wine but shared prosperity and investment opportunities Ugandan entrepreneurs could tap into.

While the default praise of Uganda’s strategic location in the Great Lakes region was inevitable, the clues about the other purpose of this mission were in the details. Patiently taking his audience through a power-point presentation, that demonstrated how South Africa topped its BRICS peers in ease of doing business and the promise offered by a market as large as 700million consumers when the tripartite trade area finally gains traction, Nyalunga gave some insights into the strategic direction of South Africa’s economy. Under its new growth plan, Pretoria needs to create 5 million jobs and reduce unemployment from 26 percent to 15 percent over the next ten years. But this comes against a backdrop of sluggish growth.

While the end of apartheid rocketed South Africa’s GDP from $60 billion to $ 384 billion and merchandise exports from $8.7 billion to $84.9 billion between 1994 and 2012, the momentum that delivered this growth slumped from a peak of 4.6 percent in 2004 to just 1.9 percent in 2013.

“Conventional wisdom dictates that to overcome unemployment, the economy must grow at a higher rate than the unemployment rate,” Nyalunga said before delving into figures that showed the weak connections between the South African economy and the rest of Africa. Only two African countries – Nigeria and Angola featured among its top ten import partners, accounting for 6.5 percent of South Africa’s imports during 2014. Only Zambia, Mozambique and Zimbabwe appear among the top ten export destinations, weighing in at a combined 9 percent of outbound trade in 2014.

Pointing at the numbers, Nyalunga said African countries were not trading enough with each other and one solution to this imbalance could be to remove barriers to investment. Heavily skewed in South Africa’s favour, trade with Uganda reached $126 million in 2014. Some 50 South African companies are registered and doing business in Uganda.

“South Africa is a strategic export and industrial partners for Uganda and we hope we will be able to complement the efforts of this country to develop. But we don’t come as ‘big brother’; we seek joint ventures both here and in South Africa,” he said.

But big brother or not, South African High Commissioner to Uganda retired Maj. LS Mollo offered some food for thought: “There is a new scramble for Africa and if we don’t occupy that space, someone else will.”