Political leaders attending the 13th African Renaissance Conference in Durban on Thursday argued that increased infrastructural connectivity between African countries should be prioritised, as it would create an important platform for social, political and economic development on the continent.
At present, only about 10% of African trade was intracontinental, while the balance was with countries in Europe, Asia and the Americas.
South Africa’s Public Enterprises Minister Malusi Gigaba argued that yearly infrastructure investment of $38-billion would be required over the next ten years to deal with the current deficits and to create the basis for greater trade and investment within the continent and with trade partners.
The bulk of the flows would be required to bolster energy capacity, but large logistics-related investment was also key to unblocking the current constraints to intraregional trade and to stimulating new agricultural, mining and manufacturing activities.
“As a result of the lack of transport infrastructure, Africa has become a target in the global scramble for resources, but social and political integration must be lead by Africans themselves as those who are still keen on plundering the continent don’t have the will to help us solve our problems,” he said.
“However, without infrastructure, economic activity will be stifled.”
He pointed out that China had identified Africa as a target for increased investment, which had risen dramatically over the past decade. “But we must not be romantic because Chinese involvement in Africa is for its own benefit,” he said, arguing that South Africa needed to develop a strategy for engaging China in Africa.
KwaZulu-Natal Premier Dr Zweli Mkhize said it was time to transform the continent into a strong base of industrial growth, but that to do this countries would have to integrate their economies by shared economic planning.
“Strategic resources such as the ports must be used not only to serve South Africa but the whole SADC region and hubs must be created to channel the movement of goods across Africa,” he said.
He also pointed out that continental planning must create a balance between the resources Africa possesses and the need to overcome the shackles of poverty.
Founder and chair of the African Renaissance Trust and South Africa’s Transport Minister Sibusiso Ndebele argued that it was imperative that Africa began exploiting its own resources and used these for the development of the African continent.
But to achieve that objective transport infrastructure needed to be developed across the continent. While this would require private equity, it would bring huge economic and social benefits, he said.
The American Infrastructure Investors Forum launched in February 2011 and the International Investors Transport Conference held in June were trends in this direction.
Trade and Industry Minister Dr Rob Davies stressed that, while the economic geography of the world economy was shifting in ways potentially beneficial for Africa, the continent must actively foster greater integration.
He noted that six of the world’s ten fastest growing economies were from Africa, largely because of the mineral products boom. But he warned that there were weakness of a growth based on someone else’s growth.
“In all successful cases where countries have set themselves a growth path, it has been driven by value added activity,” he said. “It is therefore imperative to promote industrial activity in South Africa but the challenges require a robust new set of policies.”
He said the government’s immediate objective was to reduce unemployment, which was hovering around 25%. South Africa lost one-million jobs during the recession and these have not yet been replaced. While the country had “passed through the great recession”, progress was still very faltering.
One of the problems facing the country was that financial institutions were not focusing on financing production. Also, too few of the investments in public procurements were stimulating industrial development.
“While trade with other Brics partners quadrupled between 2006 and 2010, this mainly involved primary products, an issue that the Industrial Policy Action Plan is seeking to address,” he said.
The country was currently making a number of amendments to its national procurement mechanisms and the New Preferential Procurement Act is due to be implemented on December 7, 2011. Davies said this would designate particular sectors for a range of procurement activities that would focus on local participation.
Government, he said, was working to introduce localisation into its new policies and to build in embedded suppliers.
Further, the Industrial Development Corporation had revised its business model and would disburse R102-billion over the next five years for investment into sectors that could support growth and new jobs.