Poverty and inequality. Both problems have to be solved in South Africa by 2030. Pumla Ncapayi, Deputy Director-General of Trade and Investment SA, explains that governmental efforts are insufficient in realizing these goals. They could be reached by drawing on the energies of people.
Since the fall of the apartheid one major focus of the governmental policy has been on development of the most favored environment for doing business and opening career opportunities to the black population of South Africa. Was it the right bet? Are there model stories of success or failure?
The South Africa government continuously endeavors to improve the business environment by lowering the cost and improving the ease of doing business. The government is acutely aware that it is imperative to maintain or improve in these areas in order to have a sustainable and competitive economy. In addition, through its Competition Policy it seeks to promote and maintain an environment that promotes and maintains competition within the economy. A fundamental principle of competition policy and law in South Africa is based on the need to balance economic efficiency with socio-economic equity and development. Specific legislation was also enacted to broaden economic participation of the previously disadvantaged groups. These include: The Broad-Based Black Economic Empowerment Act, the Preferential Procurement Policy Framework and the Employment Equity Act.
The interventions and policies mentioned here have most definitely provided millions of black South Africans access to the formal economy which would not have happened otherwise. Social and economic equity is an imperative for a stable democracy.
What is your assessment of the climate for doing business in South Africa on both regional and global scale? A progress made? Has there been any policy implemented to improve South Africa’s profile for investors and business? What specifically has been done and is being done?
South Africa has ranked relatively well by the World Bank’s Doing Business Survey. For the 2012 period, South Africa was ranked no. 39 out of 187 countries for the Ease of Doing Business. Regionally it is only surpassed by Mauritius at no. 19. In another survey conducted by the World Economic Forum, the Global Competitiveness Report 2012-2013, South Africa is ranked 52nd and remains the highest-ranked country in sub-Saharan Africa and the third-placed among the BRICS economies. The country benefits from the large size of its economy, particularly by regional standards (it ranks 25th in the market size pillar). We have also done well on measures of the quality of institutions and on factor allocation, such as intellectual property protection (20th), property rights (26th), the accountability of its private institutions (2nd), and goods market efficiency (32rd). Particularly impressive is the country’s financial market development (3rd), indicating high confidence in South Africa’s financial markets at a time when trust is returning only quite slowly in many other parts of the world. South Africa also does reasonably well in more complex areas such as business sophistication (38th) and innovation (42nd), benefitting from good scientific research institutions (34th) and strong collaboration between universities and the business sector in innovation (30th). These combined attributes make South Africa the most competitive economy in the region.
South Africa is supported by an investment promotion and facilitation strategy whereby it promotes the country as an investment destination. Trade and Investment South Africa (TISA) is the entity mandated for this function. It provides a full suite of services for the investor and undertakes promotion activities locally and abroad. It is supported by nine provincial agencies that promote their respective regions.
What is your approach to building relations with foreign investors? Do you offer any kind of preferences whatsoever to lure them into South Africa?
As mentioned TISA undertakes and coordinates all official investment promotional activities. A strategic three year plan is developed whereby the objectives are defined and the ways to achieve them are outlined. The plan focuses on sector priorities, and key markets. The promotional activities are undertaken in foreign markets and support is provided by the country’s foreign missions abroad. Ongoing relationship building is maintained both through the Head Office component and the missions abroad. Potential foreign investors are encouraged to visit the country and are facilitated by TISA operationally as well as financially.
All interested investors are treated equally and no particular preference exists. This also applies to investors who have invested – the assistance (financial and non-financial) is provided on a non-partisan basis. We subscribe to the most favoured nation status.
Do you have a policy or a plan to diversify from producing and exporting raw materials? Are there any special requirements or conditions to businesses willing to invest into raw materials in terms of their input to development of local infrastructure and communities?
The South African government has a specific policy on beneficiation and applies to the Minerals Industry. The strategy seeks to advance development through the optimisation of linkages in the mineral value chain, facilitation of economic diversification, job creation and industrialisation. It also aims to expedite progress towards knowledge based economy and contribute to an incremental GDP growth in per-capita mineral value addition in accordance with the vision outlined in the National Growth Path, National Industrial Policy Framework and the Advanced Manufacturing Technology Strategy (AMTS).
Another policy which is in place to further enhance beneficiation is the National Industrial Policy Framework (NIPF). In order to contribute towards government’s goals for 2014 and beyond, the vision for South Africa’s industrialisation trajectory is inter alia:
- To facilitate diversification beyond our current reliance on traditional commodities and non-tradable services. This requires the promotion of increased per-capita value addition characterised particularly by movement into non-traditional tradable goods and services that compete in export markets as well as against imports.
- The long-term intensification of South Africa’s industrialisation process moving to a knowledge economy.
How do you envisage South Africa 2020 in terms of economic and social development? Do you have a blueprint to meet the goal?
South Africa has a long term development plan for itself and this is enshrined in the National Development Plan 2030 (NDP). It offers a long-term perspective of the country’s future. It defines a desired destination and identifies the role different sectors of society need to play in reaching that goal. The main objective of this plan is to eliminate poverty and reduce inequality by 2030. South Africa can realise these goals by drawing on the energies of its people, growing an inclusive economy, building capabilities, enhancing the capacity of the state, promoting leadership and partnerships throughout society.
The Planning Commission believes that the country can create 11 million jobs by 2030 by:
- Improving economic policy coordination and implementation
- Building partnerships between the public sector, business and labour to facilitate, direct and promote investment in labour-intensive areas
- Raising competitiveness and export earnings through better infrastructure and public services, lowering the costs of doing business, improving skills and innovation, and targeting state support to specific sectors
- Strengthening the functioning of the labour market to improve skills acquisition, match job seekers and job openings, and reduce conflict.
The planning processes carried out by departments and other government entities will have a vital role to play in bringing the vision and proposals contained in the NDP to life. NDP proposals are being incorporated into the existing activities of departments and broken down into the medium and short-term plans of government at national, provincial and municipal level. The NDP provides the golden thread that brings coherence and consistency to these different plans. Within this context the Department of Trade and Industry is responsible for the implementation of the National Export Strategy.
Government has already started a process to align the long term plans of departments with the NDP and to identify areas where policy change is required to ensure consistency and coherence. Each government programme will have to be backed by detailed implementation plans which clearly set out choices made, actions that need to be undertaken and their sequencing.