Southern Africa is today off the radar of the majority of European companies and the many opportunities offered by the region are still largely ignored by European Union (EU) business leaders, professional consulting group European House Ambrosetti senior partner Paolo Borzatta said at a media briefing in preparation for the South Africa–Italy Summit 2018, which will be held on October 23 and 24 in Johannesburg.
The summit is a platform for dialogue and debate between Southern African and European business leaders. The purpose is to foster cross-national business engagement and investment relations, increasing mutual knowledge and profiting from concrete business opportunities.
“Ignoring these opportunities is a typical example of strategic myopia, short term orientation, and biased judgment of Western corporations, when in fact, the EU and Southern Africa are not only key economic companions for each other, but also increasingly strategic partners on several issues that remain crucial for both areas’ future growth and development,” he said.
The relevance of such relations is confirmed by the latest data on trade and investment. EU exports to Southern Africa have returned to growth in the last year (+7.7%), reaching a value of €72-billion and strengthening the EU position as the major exporter in the region. This value is almost twice that from the US, the United Arab Emirates (UAE) and India combined, and 15% more than exports from China.
Southern African exports to the EU have increased as well (+6.5% in the past year), reaching €69-billion at end-2017. This is higher than the value of Southern Africa exports of goods to the US, India and the UAE combined and larger than its exports to China. The EU has also affirmed Africa as a major partner for growth, with total foreign direct investment (FDI) stock in the continent totalling €302-billion in 2017 (more than five times the US amount and eight times the Chinese amount, owing to the historical EU presence in the region).
“Such achievements, however, should not mean we can sleep easy. Chinese, Association of Southeast Asian Nations (ASEAN), Russian and Indian trade in the region is on the rise. China alone has more than doubled total trade value with the region over the past ten years. In addition, Chinese President Xi Jinping announced less than a month ago that China will provide at least €53-billion package of aid, investment and loans to Africa over the next three years,” states Borzatta.
Within this context, engagement between European and African companies remains below potential.
In fact, the opportunities for partnership between European and African enterprises are huge. Europe can put important technologies and know-how to use in Africa, especially in partnership with South African enterprises. African, and South African companies in particular, have an unmatchable knowledge of the territory and a historical momentum and mission for growth. The economies of the two continents can grow faster and better together, and the South African platform could be very effective for European enterprises, he says.
So why, then, is South Africa not on the radar of European business leaders? The think-tank believes it is owing to a combination of factors, in part related to the strong growth experienced by other areas in the world, such as ASEAN, where remunerative investment opportunities are made available, distracting the attention of European players and diverting their capital. It is also owing in part to the prevalence of some major impediments in the Southern Africa region, including the difficulties experienced by South Africa, which has been the historical entrance to the area for Western companies. While Cyril Ramaphosa’s Presidency has rekindled hopes, time is needed to consolidate the results, notes Borzatta.
“However, in our opinion, what weighs the most is the limited personal knowledge of the continent and of its business environment by European entrepreneurs and CEOs. For this reason, The European House – Ambrosetti decided to invest in the Southern Africa region more than six years ago, in order to build up one of its summits with think-tanks that are exclusive platforms for sharing and opening discussions between leaders of different countries and areas. This format is already delivering successful results in Europe, ASEAN, Iran, China and among the other countries interested by the One Belt, One Road initiative.”
The first edition of the South Africa–Italy Indaba was launched in Cape Town in 2014. The gathering was intended to be an annual bilateral, exclusive forum of dialogue reserved for the two countries’ CEOs and leaders. The indaba’s purpose is to build up mutual knowledge, personal feeling and trust among the participants. Since 2016, the event has been hosted in Johannesburg, thanks to the support of the Gauteng government and Premier David Makhura, evolving into a pan-European and pan-African platform, capable of creating strategic business partnerships at the highest level.
This year, the fifth edition of the South Africa–Italy Indaba, titled ‘Africa Europe CEO Dialogue’, will be held on October 23 and 24 in Johannesburg. It will address several topics of interest, including financial tools capable of improving Africa’s investment ability, the potential synergies between different tourism models, the role of an intermodal paradigm in transport and logistics across the region, skills for smart manufacturing, and smart technologies for the city of the future.