ADDRESS BY DEPUTY PRESIDENT ZUMA TO THE GERMAN CHAMBER FOR INDUSTRY AND TRADE

Chairperson,
Government Ministers
Members of the German Industry and Trade Organisations
Members of the Diplomatic Corps
Ladies and Gentlemen,

Allow me to begin by thanking the Deutscher Industrie und Handelstag, (German Chamber for Industry and Trade), the Suedliches Afrika Initiative der Deutschen Wirtschaft (German Business Initiative for Southern Africa) the Afrika Verein (The Africa Association) and the Bundesverband der Deutschen Industrie (Federal Association of German Industry Association) for their initiative in organising this important gathering.

It would be appropriate for me to pay tribute to all these organisations for their ongoing endeavours to actively promote economic ties between Germany and South Africa, the Southern African region and Africa as a whole, while creating a better understanding of the challenges and opportunities on the continent. We owe you our gratitude for your significant contribution in this regard.

Germany remains one of South Africa's foremost economic partners, as manifested by the growing trade and investment flows between our two countries. In fact our economic relationship is of a growing, strategic nature, with great potential for further expansions.

South Africa offers attractive opportunities to German investors. It is therefore not surprising that a sizeable portion of South Africa's foreign direct investment comes from the expansion of existing German investors in South Africa. This investment reflects the confidence that they have in the political and economic future of our country.

Mr Chairperson, since 1994 we have succeeded in building a constitutional state, including the establishment of independent constitutional bodies such as the Independent Electoral Commission, the Human Right's Commission, the Gender Commission and the Public Protector. I am sure that German people will recognise many elements in our constitution that resemble their own.

Our society is irrevocably based on the rule of law, our people having accepted the binding force and legitimacy of decisions taken by our legislature and judiciary.

We have eliminated political violence and conflict. This has allowed us to focus more effectively on the task of overcoming the legacy of our past and transforming our society.

Our President Mbeki announced an economic action plan in his state-of-the-nation address to Parliament at the beginning of the year wherein he identified specific programmes to accelerate the growth of our economy.

This was an important watershed for several reasons: firstly, it signified a progression from the initial focus on macro-economic stability to micro-economic reform; secondly, the level of co-ordination in government to develop this action plan is unprecedented; and thirdly, the plan is action orientated.

In order to create the growth required to provide new economic opportunities and jobs for South Africans, we have embarked on a process of transforming our economy. I am pleased to state that we have made steady progress. The economy grew by 3% in 2000 and a similar performance is forecast for 2001.

This is the fastest rate of growth since 1996 in spite of the financial difficulties experienced in other parts of the world, and is strengthened by a strong consumer confidence, with inflation under control and interest rates remaining steady.

In support of investment, a new tax incentive is proposed for companies investing in approved strategic industrial projects. Tax depreciation rules applicable to small business in the manufacturing sector will also be favourably amended.

On the path we have followed since tabling a macro-economic strategy in 1996, South Africa's focus has been firstly on building the foundation for sustainable long-term growth. Taking into account the global environment, economic growth is expected to continue strengthening across most sectors next year.

Manufactured exports in particular have grown rapidly in the last few years, across almost all manufacturing sectors. Chemicals, metal and metal products, machinery, auto and auto components have registered particularly strong growth. This is graphically illustrated in the automotive sector in which German companies played a leading role.

A few years ago South Africa's involvement in the motor vehicle export industry was very minimal. Currently, BMW produces the 3-series BMW, driven by people in the UK and other parts of the world, using right-hand drive vehicles. Exports of motor vehicles have thus risen from R58 million in 1995 5o almost R8 million last year.

Vehicle exports from South Africa are expected to exceed 100 000 units in 2001. Component exports grew from R987 million in 1995 to R2,25 billion in 2000.

Other areas of priority identified by our Government are:

Inter alia, to pay specific attention to development in historically disadvantaged areas through the Integrated Sustainable Rural Development and the Urban Renewal Programmes
To take specific steps to address the challenge of promoting small, medium and micro enterprises; and
Black economic empowerment, as a fundamental moral and economic imperative.
Allow me to make a few comments on the issue of black economic empowerment and outline the rationale for the policy. Apartheid policies denied black people an opportunity to participate meaningfully in business through a litany of laws and policies., This created a racial skew in the distribution of wealth in South Africa.

This irregularity, if left unattended, poses a threat to our democracy and social stability. Thus the policy is a business imperative rather than mere political expediency.

It encourages the participation of black business in the economy through partnership, joint ventures, and through public procurement.

Indeed some forward-looking German companies, such as Deutsche Bank, are already taking business advantage of black economic empowerment by partnering up with black owned consortiums in successfully bidding for public tenders.

As we all know, the transformation exercise in our economy takes place within the context of globalisation. Attempts by the trading economies in the developing world to create a more equitable, rules-based world trading system are gaining momentum and should hopefully culminate in a new round of WTO negotiations this year.

It is imperative for South Africa to play a big role in these efforts as we are among the larger economies in the developing world and particularly on the African continent.

Ladies and gentlemen, allow me to turn to our continent Africa and highlight some of the positive and exciting developments taking place there.

As we enter the 21st century, we do so alive to the fact that the last four decades have been turbulent for Africa. We are fully cognisant of the many challenges that lie ahead before Africa can claim its rightful place amongst the nations of the world. We recognise that things cannot be allowed to happen as they always have if we are to achieve our objectives.

But I believe, as I stand before you that we are at the dawn of the African century - a time in our history when we as a people of the continent are resolutely turning our backs to its ugly past.

The continent has set itself a daunting challenge of revival into the new millennium and a new generation of leaders have unambiguously rejected military and other unconstitutional regimes.

South Africa will continue to build strategic trading relations with the trading economies of the developing world, because economic growth in the 21st Century will, to a large extent, occur in the economies of the south. Thus the Southern African Development Community (SADC) Free Trade Agreement is a key instrument and regional economic integration needs to be strengthened further.

Africa and other developing nations are faced with the challenge of ensuring that globalisation is not allowed to further widen the gap between the world's poor and the world's rich - to ensure that the poor also benefit from it.

South Africa's approach is to strengthen regional and continental co-operation and unity, so that we are better equipped to engage the broader international community in these matters and to ensure that we are in a better position to take advantage of economies of scale.

Through our involvement in the regional development body, SADC and other African initiatives, we have moved a step closer to meeting these challenges. At the same time, the Organisation for African Unity, soon to evolve into the African Union, has mandated Presidents Mbeki, Bouteflika of Algeria, Obasonjo of Nigeria, Wade of Senegal and Mubarak of Egypt, to lead the process of developing a revival plan for Africa, namely, the Millennium African Recovery Programme.

This plan will be presented to the OAU Summit in Lusaka this month.

In fact, this was one of the key issues discussed by President Mbeki during his meeting with Chancellor Schroeder in Berlin last week. We were encouraged by Chancellor Schroeder's positive reaction in agreeing to support this plan.

The Millennium Africa Recovery Programme (MAP) is a plan that calls for a new partnership between Africa and the international community, especially the highly industrialised countries, to overcome the development chasm that exists between them and the continent.

The key priority areas of the programme are peace, security and good governance; investing in Africa's people; diversification of Africa's production and exports; investing in ICT and other basic infrastructure and developing financing mechanisms; reducing poverty and attaining the international development targets for health and education.

These priority areas must be implemented simultaneously and in interaction with one another. It is a plan in which African leaders will take joint responsibility for a comprehensive programme of action.

As we embark on this programme of action, our leadership on the continent envisages the development of a new partnership with developed countries and multilateral institutions based on the following principles that underpin the programme:

ownership and leadership by African countries themselves (this is seen as an imperative if the plan is to succeed);
partnership with the West, i.e. developed and industrialised countries, to reverse unequal relations that characterised past trade relations and
a comprehensive plan that addresses Africa's development needs.
The key programs of the Plan centre around:

peace and security;
commitment to democracy and human rights;
macro-economic management;
human resource development;
infrastructure development;
diversification of production and
capital flows.
The Millennium African Recovery Programme clearly signals Africa's commitment to seeking solutions that will stand the test of time and recognises the inextricable links between democracy, an end to conflict and economic development.

South Africa, accounting for a large percentage of economic activity in Africa has an obligation to lead in showing that the objective of African recovery is a possible one. As a starting point, South Africa needs to explore the opportunities provided by multilateral institutions and programmes to increase market access to both the developed world and the developing world.

Vehicles such as the South Africa-European Union Trade, Development and Co-operation Agreement and the US-initiated Africa Growth and Opportunity Act provide Southern Africa and Africa with growing opportunities to expand our productive capacities and engage new markets in a focused and effective manner.

It is against this background that we are saying that there are exciting and attractive opportunities for the private sector of the Federal Republic of Germany to enter into a genuine, equitable partnership with us based on mutual interest and shared commitment.

We do not doubt that our time has indeed come. We trust that Germany will be counted amongst the nations that will take up the call and walk with us towards the African Century.

I thank you.


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2003 Department of Foreign Affairs, Republic of South Africa