05/11/2023 | By Busiswe Mavuso
Last week was an important one for SA’s trade and investment prospects, with the relationship between the United States and South Africa the focus both here and in the US. Locally, the AGOA Summit took place at Nasrec, bringing together business and policy people from across Africa to engage with their American counterparts. At the same time, the SA Tomorrow conference in New York saw our business and political leaders engaging with investors there to promote our country as an attractive investment destination.
I was fortunate to attend some of the AGOA conferences and see firsthand how AGOA supports businesses and entrepreneurs in South Africa. The African Growth and Opportunity Act gives duty free access for many South African goods in the US, but there is also a range of technical support that enables our companies to trade more with the Americans. We also heard stories of businesses that have been able to enter not only the US, but many other markets in partnership with American clients. The fruits of AGOA come from trade but also the technical knowhow that flows to our businesses and capacity created to service even more international markets.
The engagement also looked forward – the African Growth and Opportunity Act expires next year after 10 years of operation. It needs to be renewed by the American Congress before 2025 and indications are that it will be. There was, however, much discussion on how the programme can be improved. Secretary of State Antony Blinken told the conference that the US president wants to work with Congress to make it better. One way to do that was highlighted by President Cyril Ramaphosa who addressed the forum: extend AGOA for a sufficiently lengthy period so that African businesses can commit to long-term investments on the basis that AGOA supports demand for the long term. Governments also pushed for longer terms for the review of country eligibility. At the moment, eligibility is reviewed every year, which means in theory countries can lose AGOA preferences making it difficult for companies on the continent to make long-term investment decisions. There have recently been concerns about South Africa in Washington following the Lady R saga among others, but the indications are that we will continue to benefit beyond the annual review in January.
The dynamics have also shifted since the last renewal in 2015, in that the African Continental Free Trade Area has come to life. This provides US companies with access to a major market too. A future AGOA can engage ACFTA as a whole. Business has been concerned about the future of AGOA and South Africa’s place in it, but I felt last week that we are on a more positive trajectory than we have been for a while.
At SA Tomorrow in New York a joint effort by government and business was made to show some of the world’s biggest investors how our partnership is leading to real change. Several BLSA board members were there, alongside ministers including public enterprises minister Pravin Gordhan and deputy minister of finance David Masondo, with finance minister Enoch Godongwana addressing the event virtually. This was a record turnout of both business and political leaders and demonstrated an important part of the South African story: that business and government are working closely together to turn around our fortunes.
The event, which is held annually under the auspices of the JSE, allowed for mature conversations. US investors were keen to test just how serious government’s commitment to reform is. In one business leader’s panel, BLSA deputy chairman and Nedbank CEO Mike Brown was clear about the growth challenge we face with the need to escape the 1%-2% growth corridor we have been trapped in. Yet even within that there are opportunities, such as the rapid rollout of renewable energy infrastructure. Bidvest CEO Mpumi Madisa told the event how her company is investing in renewables, providing services to consumers and businesses. Capitec CEO Gerrie Fourie talked of how the impact of the partnership between government and business is leading to execution, creating opportunities for business and investors. Meanwhile government leaders, including Rudi Dicks who co-heads Operation Vulindlela, gave a credible account of the progress being made in implementing government plans. Leaders from Eskom and Transnet were also in attendance to give investors insight into how the two critical organisations are working to improve performance.
The mood, I am told, was highly positive. Investors are keen to find opportunities and risk appetites are improving. The South African story was one of positive momentum and a turnaround that is becoming entrenched among the investment community. It is a message that can build the already extensive investment relationships between our two countries.
These events are important for different reasons but also have some common strands. At both, the diplomatic relationship between South Africa and the US was much discussed. I think this relationship is healing, with the South African government now much clearer about its non-aligned stance. The two events will have helped that healing process by shining a light on the shared opportunities the two countries can deliver by working together. The investment and trade relationships we have with the US are already very important – certainly among our most important in the world in terms of volumes. The events last week will help consolidate that and build it.
BLSA is a business organisation that believes in South Africa’s future and shares the values set out in the Constitution. BLSA is committed to playing its part in creating a South Africa of increasing prosperity for all by harnessing the resources and capabilities of business in partnership with government and civil society to deliver economic growth, transformation and inclusion.
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