In 2020, South Africa will take over from Egypt as chair of the Africa Union. Which continental initiatives will be strengthened under South African guidance and how do they fit in with President Ramaphosa’s own stated strategy and objectives for Africa? What could be the implications for the African economy and the South Africa business sector?
In his recent State of the Nation (SONA) address, the South African president listed seven priorities with the seventh being “A better Africa and world.” In his response to the parliamentary debate on the SONA, he elaborated by stating that “As the incoming chair of the Africa Union in 2020, we will champion the aspirations of the AU’s Agenda 2063. Key to this is the movement of goods, services, capital and means of production across the continent.”
There is no doubt that South Africa as AU chair will give strong support to the African Continental Free Trade Area (AfCFTA) and there should be further impetus for this initiative during its term. The president also relates the AfCFTA to his country’s own commercial interest when stating “As the most industrialised country on the continent, South Africa is uniquely placed to benefit from a massive increase in trade across the continent. We must work towards a time when South African-made goods can be found on the shelves of every store on our continent. We must look forward to a time when the goods that we import do not come across the ocean, but from across the Limpopo.”
However, there are challenges for the South African chair to face within the context of the AU mandate. There has to be a new African Caribbean Pacific (ACP) and European Union agreement after 2020. How will duty-free access for African products into the EU market be affected and what access will South Africa have given its middle-income status?
Another challenge is continental peace and security against a backdrop of disturbances in much of West and Central Africa. South Africa has taken on a major peace-keeping profile in areas such as the eastern DR Congo and Burundi and has been substantially involved in attempts to resolve issues in South Sudan. “We will use our membership of the UN Security Council to promote the resolution of disputes particularly in the African countries.” To what extent will South Africa maintain its diplomatic efforts and military presence in troubled African countries? The list of issues that the AU should be addressing is long and includes the disputes and aftermath of the election in the DR Congo, instability in Sudan and the disturbances in the Anglophone areas of Cameroon (on which the AU has to date been quiet.) Lasting political solutions in the trouble spots will facilitate new trade and investment there.
If we dig a little deeper, we uncover relationship issues between South Africa and specific African countries and President Ramaphosa would do well to take advantage of his AU status to improve these relationships. There is a need to improve South Africa’s trade with Francophone African countries. Only some eight percent of the total value of its exports to Africa goes to these markets and the South African investment portfolio there is thin. There is also much to be done to improve trade and investment in the relative economic boom area of East Africa including Ethiopia. On the country political level, South Africa has nuanced relations to differing degrees with countries such as Angola, Rwanda and Nigeria and improvement of relations should also improve bilateral economic interaction.
President Ramaphosa’s statements indicate a preference for southern Africa where South African exporters are clearly more comfortable. “Our revitalised industrial strategy focuses on our trade and investment links with the rest of the southern African region and the continent at large. Within SADC, we will prioritise development of cross-border value chains in sectors such as energy, mining and mineral beneficiation, manufacturing, infrastructure and agro-processing.”
In order to achieve this goal of greater economic interaction between South Africa and the rest of Africa, the functional relationship between the South African government and the South African business sector will have to be improved. The concept of a ‘South Africa Inc’ should become more deeply installed and the methodology of ‘hunting in packs’ where the country’s financial institutions, manufacturers and services companies band together to realise specific trade and investment opportunities in the continent should become more practised.