President Ramaphosa reinforces economic ties with US

Wednesday, November 11, 2020

President Cyril Ramaphosa has reiterated his commitment to strengthening South Africa’s ties with the United State.

Speaking during a virtual business and investment roundtable on Tuesday, President Ramaphosa began by congratulating the Americans for their successful elections held last week, which saw Joe Biden win.

Among the attendees of the engagement were three major organisations, Business Council for International Understanding, the Corporate Council on Africa, and the US Chamber of Commerce.

President Ramaphosa described the United States as a longstanding and valued partner of South Africa.

“We look forward to further strengthening our ties of friendship and cooperation with the incoming administration,” he said.

Trading partners 

The President told delegates that the roundtable is taking place at an important time when both countries have begun the laborious task of rebuilding economies while working to overcome the Coronavirus pandemic.

“It is now more important than ever for South Africa and the US to deepen our strategic partnership conducted through a number of political and economic forums,” he said, adding that the United State was South Africa’s third-largest trading partner.

Also, last year, South Africa was the largest source of African imports to the United States followed by Nigeria, Egypt and Algeria in the continent.

Meanwhile, the country is a leading recipient of United State foreign direct investment in Africa, and the largest African investor in the United State.

The President also mentioned that South Africa is home to 600 American companies, which are key to economic growth and job creation.

“It is this firm foundation that we want to build upon as we prepare to host the third South Africa Investment Conference in a week’s time,” he said.

“I have no doubt that, as in previous years, there will be a strong showing by US companies and investors.”

According to the President, since the first conference in 2018, government has been working steadily to create an enabling environment for both foreign and local companies to thrive in South Africa.

“We are focusing on key reforms in the energy, telecommunications and logistics industries to improve the competitiveness of our economy.”

He said they are also fast-tracking measures to reduce the cost of doing business and lowering barriers to entry.

Economic Reconstruction and Recovery Plan 

He believes that the Economic Reconstruction and Recovery Plan launched last month is one of the key drivers to restart the economy after the devastating impact of the pandemic on growth and employment.

The plan identifies four priority intervention areas including infrastructure build programme, expanding energy generation capacity, employment stimulus through social and public projects, and accelerating industrialisation through local production.

“Even though it has been just a few weeks since the plan was announced, we have long begun work to deliver these commitments. As we say in the plan, there is ‘a ruthless focus on implementation’,” he added.

President Ramaphosa thinks infrastructure has immense potential to stimulate investment and growth, to develop other economic sectors and create sustainable employment both directly and indirectly.

“To this end, we have developed a robust pipeline of projects with an investment value of R2.3 trillion – or around $150 billion – that will transform the landscape of our cities, towns and rural areas,” he said, adding that sustained growth depends to a large extent on the ability to give all South Africans a meaningful stake in the economy.

Meanwhile, he said broad-based black economic empowerment is vital not only to correct the injustices of the past and overcome the inequalities of the present but also to ensure the economy can realise its full potential.

He has welcomed support received from the many United States firms that operate in South Africa in advancing empowerment, including using innovative and transformative equity equivalent schemes.

“There are many new opportunities for US companies to participate in our economy as we seek to increase investment in our productive capacity.”

Vaccine and manufacturing

President Ramaphosa also mentioned recently concluded deals involving Aspen Pharmacare, and two subsidiaries of Johnson & Johnson to manufacture a COVID-19 candidate vaccine locally.  

“This is yet another demonstration of the partnership between South African and American business, making use of our world-class manufacturing capacity to answer a pressing global need.”

He told delegates that growing domestic manufacturing is a key component of the country’s recovery plan and that much work is underway. 

“We have, for example, already finalised master plans in the automotive, clothing and textile, poultry and sugar industries.”

He said the country received R60 billion – or around $4 billion – in investment pledges from vehicle and component manufacturers.

“We are working with the respective industries to finalise master plans for the digital economy, forestry, aerospace and defence, renewable energy and a host of other important industries.”

As the country drives implementation of the economic recovery plans, interactions between government and business are vital, President Ramaphosa stressed.

African trade

He said African Continental Free Trade Area (AfCFTA), coming into operation in January, will have a massive impact on African economies, on trade and investment.

President Ramaphosa cited a World Bank report estimating that the AfCFTA could contribute to an increase in real income gains for the continent of 7%, or nearly $450 billion, by 2035.

“With its relatively developed industrial base and the measures underway to expand manufacturing capacity, South Africa is well-positioned to benefit from the opportunities that the Continental Free Trade Area will provide.”

He is also predicting that Africa’s export sectors will need more international trade agreements to access market opportunities and global value chains.

“We must strengthen collaboration on skills transfer, training and information sharing.”  

Meanwhile, he said impediments to trade, both tariff and non-tariff related, must be reduced.

“Let us continue to work together to strengthen the trade environment and investment climate in our respective countries,” President Ramaphosa added.

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