Western Cape Business News

Send  Share  RSS  Twitter  07 Dec 2010

EXPORTS: W Cape Should Be Part Of African Growth


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The Western Cape can be a forerunner in the new African growth narrative and a natural springboard into the African West Coast if it harnesses opportunities for trade and investment in Africa, according to the Western Cape Investment and Trade Promotion Agency (Wesgro).

Wesgro CEO Nils Flaatten and Jacyntha Maclennan, senior manager of Wesgro IQ, the agency’s intelligence unit, spoke about seizing African growth opportunities during a presentation on exploring the African continent held at the Cape Town International Convention Centre (CTICC) in collaboration with Ernst & Young yesterday. 

Wesgro, Ernst & Young and Economic Development MEC Alan Winde addressed business and economic leaders on opportunities and challenges for the Western Cape in reaching out to other African economies.  Ernst & Young unveiled Africa Interactive, an interactive map-based software of statistical and business information on the African continent. 

Flaatten said the Western Cape was one of South Africa’s most important export centres and its location should be used to its advantagein strengthening trade with booming economies in West Africa and other growing economies on the continent. About 20% of the Western Cape’s exports went to the rest of Africa, but this number could improve, because there still were many untapped markets on the continent, he said.

The Western Cape was already successfully exporting large quantities of fish to Cameroon, which meant there were channels in place for the export of other products, for example computer paper or ink cartridges.

Flaatten said: “If we in the Western Cape are sending fish to Cameroon with all of its complicated supply chain challenges then surely the opportunity to export other value added goods must also exist. We should take note of the fact that exports to Cameroon increased by 68% in 2008 and 09 right in the middle of the global financial crisis. This proves how robust the certain African economies are becoming.”

The Western Cape was already trading successfully with the West Coast of Africa in certain sectors, and Wesgro has for the past six years been marketing the Western Cape as the springboard into the African West Coast through its Western African Trade Corridor programme. The Western Cape has also long been involved in more diverse, freeflowing trade within the SADC region, but governments in Africa needed to look at ways to ease trade flows across the continent. 

We have a relatively balanced footprint on the continent, but we must develop our entry into the central African states and those along the west coast. This corridor starts in Angola, moves up to Nigeria and bends across through Ghana, Ivory Coast,” Flaatten said.

He went onto to say that the favourable new Head Quartered tax regime, linked with Cape Town’s solid infrastructure, schools and health systems would make Cape Town the choice location for operating African regional head offices.

Maclennan said GDP growth of 0-3% was predicted for Europe and the US by 2014, while many Central and West African economies  looked at growth of 6-10% and SA looked at 3-6% growth. After the year 2000 Africa became the world’s third fastest growing region after emerging Asia and the Middle East.

South-South trade makes up more than half of African trade. This shows us that emerging economies are starting to trade with each other,” Maclennan said.

Maclennan added that Africa’s resource wealth was well-known, but businesses had to recognise opportunities in subsidiary sectors. African countries presented many opportunities and could feature on the top 20 global investment destinations within the next decade.

Coal, oil and natural gas were still the biggest investment sectors, but its subsidiary sectors also presented many investment opportunities.

South Africa, Egypt, Tunisia, Morocco, Nigeria and Angola were receiving the most investment projects on the continent, but other economies also presented opportunities to investors. In software and IT, investment was clustered in North and Southern Africa, but “huge opportunities” existed onthe rest of the continent.

Similarly, the mobile market boomed in Southern and West Africa, but many opportunities remained in the rest of Africa. Central Africa also presented opportunities in the food and tobacco markets.

Flaatten said that although Morocco has emerged as one of the  top destination for foreign direct investment on the continent it would appear that these investment flows were not connected to operations in sub-Saharan Africa.

Egypt still received the lion’s share of foreign direct investment in the financial services sector, but demand for these services would increase as other economies grow rapidly across the continent, said Mclennan.

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