Statement by Minister Dlamini Zuma at a Dinner of Business People, hosted by the Embassy of the Republic of South Africa, the Standard Bank (Argentina), and the Argentina South Africa Chamber of Commerce, 1 December 2008, Buenos Aires, Argentina
Distinguished colleagues from the Argentine Government,
Distinguished Ambassadors of African Governments represented in Argentina,
Our distinguished hosts from the Standard Bank in Argentina and the Argentine
South African Chamber of Commerce,
Distinguished representatives of the Argentine business community and representatives of South African investors in Argentina.
Ladies and Gentleman,
I am very grateful for the opportunity to be with you here this evening and I hope that you have all had an opportunity of enjoying this splendid setting overlooking the River Plate and the City of Buenos Aires.
I am also pleased that we have the opportunity of meeting here tonight on the top floor of the offices of Standard Bank, which is one of the most publicly visible of the South African investments in Argentina. This investment together with the others that have been made by leading companies from South Africa are representative of the growing economic ties developing between our two countries and, even more importantly, representative of the untapped potential that still exists, and which must still be brought into fruition.
In these times of economic difficulties that we see over-shadowing the world, we must ensure that we do not succumb to a mood of pessimism before we have even explored and availed ourselves of the realities of the opportunities that exist. My government is fully cognisant that while we have an important role to play in providing a positive context in which business can take place, it is the companies of the private sector (motivated by the need to make profit and create wealth in a sustainable manner) that are primary engines of economic growth and job creation. My visit to Argentina is not only a part of the work that we are doing to encourage business between our two countries and between the continents of Africa and South America, but it is also to help in the creation of a favourable environment for that business to thrive in. It is the job of the private sector to make use of these opportunities. You can be sure that as government we will take full advantage of, and be grateful for, the very important socio-economic benefits that your business will create, whether it is directly or indirectly; through increased trade or through investment. The fact is that jobs will be created, the economies will grow and trade patterns will become more diversified.
The financial and resultant economic crisis, having such a turbulent impact on the world today, clearly has its cause in the economies of the northern hemisphere. It will impact on all of us, to a greater or a lesser degree. South Africa and Argentina are fortunate to find themselves amongst those countries which are better placed. In South Africa’s case we are fortunate that our financial sector was not exposed to the seemingly inappropriately regulated financial practices that are at the root of the crisis. Our government has been following a counter-cyclical economic policy, where we have been saving when things were going well, and where we are in a position to stimulate the economy now when times are more difficult. We are looking forward to continued economic growth, although this will not be at the same pace for the next year or so. The government already had a significant infra-structural development programme in place that was aimed at increasing South Africa’s potential and competitiveness as a trading partner, and which has now become an important part of the engine that will drive us through the difficulties that are being experienced. We are confident about South Africa’s future and our confidence is well placed.
One of the reasons that the contagion of the north has spread so quickly around the world is because the phenomenon of globalisation has tied us all much more closely together. Another factor has been that countries such as South Africa and Argentina have strong ties to the economies of the northern hemisphere. If you look at our trading and economic partners, you will see that that in both of our cases northern hemisphere countries have preponderance. While we should work to maintain and expand our markets in the northern hemisphere, we should also concentrate on the benefits that can accrue through the diversification of our trading patterns through South-South cooperation. South-South diversification will not make us invulnerable, but it should make us less dependant. “Argentina and South Africa” and “South America and Africa” are ready examples of the potential for South-South diversification for our two countries. The opportunities are there, they are being utilised, and they must be explored even further. For example, in the case of South Africa and Argentina our trading figures have been consistently growing since 2003. The bilateral trade is over US$ 1 billion. Using Argentine trade statistics, the figures of this trade in the first 9 months until September of this year have come very close to already surpassing the total for 2007, with 3 more months of the year to go. Until the month of September, South African trade with Argentina has increased by 108.4 % when compared with last year and the Argentine figures have increased by 11%. Importantly also, our trading profile is moving towards a more healthy situation for our longer term relationship with the trade discrepancy moving from 9 : 1 to 4.36 : 1 (if the current trend can be maintained).
All of this has happened with only a small proportion of our true potential for working together being tapped. A needs analysis of the Argentine economy, which looked at the products that you are not producing yourself and which need to be imported, resulted in the identification of over 25,000 individual products (at the 11-digit Mercosur (NCM) tariff code level) where South Africa already has an exporting history and where South African manufacturers are in a position to be alternative sources of supply. These figures are phenomenal in terms of demonstrating the potential that exists and I have little doubt that a similar situation exists with regard to the potential of Argentine companies to supply South African needs. The supply routes between our two countries are shorter and less costly than the routes to our traditional suppliers in the Northern Hemisphere. It is not just that our two governments are encouraging you to look at the potentials that exist; we believe that any company motivated by its own interest in increasing its profit margin will find that it makes good business sense to do so. All that is needed is for the companies, whether South African or Argentine, to become aware of the potentials that exist for them in both markets and for it to become clear to them that there is often the possibility to obtain the same products and services from one another at very competitive prices when compared to those being offered by other markets.
Added to these opportunities is an important shift that has already taken place in the approach being followed by our South African and Argentine officials that are working continuously on improving the economic links between our two countries. The “competitive” approach to trade has been consigned to the past and they are focused on an approach that is based on seeking out and concentrating on the areas where South Africa and Argentina can “complement” one-another. In other words: Where are we able to satisfy one another’s economic and import needs. “Complementarity” benefits both parties, whereas in competition there is always a loser. “Complementarity” focuses on looking at the needs of each country and working together to fill these needs, it seeks to create joint ventures where the partners on both sides benefit, and it achieves technology transfers that allow both countries to develop. It is our conviction that an approach that works for the positive outcomes of “complementarity” as opposed to the negative consequences of “competitiveness” is an approach that will inevitably be reflected in the further development of our two countries. It will also inevitably lead to more successful and profitable South African and Argentine companies and to the South African and Argentine peoples enjoying the benefits of new jobs and a better quality of life.
The “complementarity” of Argentina and South Africa will also soon be increased as a result of the finalization of the negotiations for a preferential trade agreement between Mercosur and the countries of the Southern African Customs Union (SACU). The Agreement, which is the first of its kind between any two developing country regions of the South, will provide your companies with an even greater competitive edge in the products that have been identified and it will also provide them with access to markets that are bigger than those offered by our two individual countries. An important and, for us an exciting, new development that is taking place in Africa has been the successful outcome of the Kampala Summit that took place between the 26 member countries of the Southern African Development Community (SADC), the East African Community (EAC) and the Common Market of East and Southern Africa (COMESA) in October 2008. This Tripartite Summit saw agreements between the three Regional Economic Communities (RECs) to move expeditiously towards a joint Free Trade Area (FTA). This achievement has the potential of creating a market for Argentine and South African companies of 26 countries, with a combined GDP of US$ 624 billion, and of 527 million people. Those that will enjoy the most benefit will be those that position themselves the earliest. Those that will think only of parachuting in and then parachuting out will gain some success, but those that position themselves within the market, whether through partnerships, joint ventures or investment, will enjoy the real benefits. This is how we will continue to endeavor to add commercial value to a predominantly political notion of South-South cooperation.
South Africa and Argentina are sometimes referred to as neighbors with the slightly troubling inconvenience of the South Atlantic Ocean as our common boundary. We are countries with roughly the same size population and we are countries with similarly sized economies at more or less the same level of development. We are closer to one another in geographical distance than we are to our traditional Northern Hemisphere economic interlocutors. Argentina supplies goods and services that we need and South Africa supplies goods and services that you need. We have made significant progress, but we have only begun to realize our potential.
What I have come to say to you tonight is that the political will of both countries to develop these relations exist and the opportunities for business, Argentine and South African, to succeed are there. South Africa and Argentina have enjoyed a long history together and the opportunities are there for us to turn it into an even greater success.
I thank for the coming here this evening and for taking the time to listen to me. Please enjoy your dinner and the remainder of your evening.
Issued by the Department of Foreign Affairs
Private Bag X152