Address by President Cyril Ramaphosa at the South Africa – Kenya Business Forum during the State Visit by President Uhuru Kenyatta of Kenya, CSIR Conference Centre, Tshwane, 23 November 2021
Your Excellency, President Uhuru Kenyatta,
Ladies and gentlemen,
We gather here today to celebrate the promise of the relationship between our two great nations that spans over several decades.
This is a promise of shared growth and prosperity.
It is the promise of a united Africa able to realise its potential.
This Business Forum is an opportunity not only to discuss trade and investment opportunities between South Africa and Kenya, but also to explore the vast economic potential of the African Continental Free Trade Area.
The value that we can expect the Continental Free Trade Area to unlock in the short term will be immense, but it is the prospect for future growth that is truly remarkable.
It is estimated that by 2050, Africa’s population will grow to 2.5 billion people.
This next generation will be more urbanised, better educated and wealthier than any that has come before it.
It is envisaged that the urban population of Africa will be larger than that of China and India, and four times larger than that of the United States.
To realise the opportunity of this demographic dividend, we will need to rapidly expand and diversify our industrial capacity.
We must become leading producers in the type of consumer products a growing working and middle class demands.
We must manufacture the complex industrial commodities needed for core industries like mining, construction and agriculture.
This is best achieved through collaborative and complementary production approaches.
The development of regional value chains that allow for specialisation while also fairly sharing the benefits of growth will allow our economies to grow as our populations do.
With these regional value chains as a base, and as Africa becomes more interconnected, we will be able to competitively integrate into global value chains.
This will open a new era for African exports.
Meeting the challenge of population growth and rapid economic growth will require an infrastructure revolution.
The African Development Bank estimates that Africa needs to spend between $130 and $170 billion a year to meet its infrastructure needs.
That spending will connect the continent through new road, rail and port infrastructure, while investment in information and communications technology will support the growth of a modern services and manufacturing economy.
Infrastructure development will improve the business environment and unlock a number of growth opportunities for African manufacturers, construction companies and services firms.
Effectively mobilising the scale of funding needed for such infrastructure requires risk-sharing partnerships among numerous private and public partners.
At the same time, developers and implementers must be supported by comprehensive project preparation funding and support programmes.
As two leading economies in our respective regions, South Africa and Kenya have a key role to play in driving continental integration.
Our existing regional value chains can be integrated by deepening bilateral economic relations, and specifically by more direct collaboration in industrial and infrastructure projects that are of mutual interest.
These efforts build on a long-standing trade and investment foundation.
In the past two decades, over 40 South African companies have invested in the Kenya market.
Altogether these projects have an investment value of R6.84 billion and created over 2,700 jobs in Kenya.
South Africa ranks amongst the top five investors in the Kenyan market.
Kenya is South Africa’s largest trading partner in Africa outside of the Southern African Development Community, and South Africa is the biggest exporter of goods to Kenya on the continent.
The depth and breadth of this trade and investment relationship makes Kenya a key partner for South Africa in East Africa.
South Africa could be a strategic partner in implementing President Kenyatta’s Big Four Agenda, which has a specific focus on the sectors of manufacturing, food security, universal healthcare and affordable housing.
For this to happen, our trade relationship needs to involve greater value-addition, with more focus on manufactured and agricultural goods.
We need to take deliberate steps to achieve greater balance in our bilateral trade, which is currently heavily skewed in favour of South Africa.
We need to set ambitious targets for increasing imports from Kenya over the next few years.
As South Africa, we are committed to improving the levels of intra-African investments by facilitating Kenyan investments into South Africa and by investing in Kenya’s infrastructure and manufacturing capabilities.
We call on Kenyan companies here today to reach out to their South African counterparts as they search for new markets for their goods and services.
African hands must make the goods and provide the services that Africans use.
We must correct the distorted trade relationships that exists between African countries and the rest of the world.
We can no longer simply be a supplier of raw materials to the world and importers of consumer and capital goods.
The African Continental Free Trade Area provides an opportunity for Africa to redefine its relationship with the rest of the world and meet the needs of our people for decent work and better standards of living.
The value of African self-sufficiency was further underlined by the outbreak of the COVID-19 pandemic early last year, which exposed the vulnerabilities of the continent when supply chains were disrupted and we were left without critical goods.
Left without critical supplies in those first few months, the South African government worked with business and other stakeholders to repurpose and expand our industrial capacity to meet the need for medical ventilators, face masks, sanitisers, basic medicines and, later, vaccines.
As soon as production was up and running, South Africa was able to provide critical medical supplies to other African countries.
More than 100 million doses of COVID-19 vaccines have now been produced in South Africa and there is agreement that the bulk of what is produced here will be targeted specifically to supply the African continent.
Since those first steps just 18 months ago, the market value of the COVID-related goods produced in South Africa is estimated to be in excess of $2 billion.
This shows the great potential that exist for collaboration among all economic partners in pursuit of a common, and urgent, goal.
Trade is built on a bedrock of investment and we must find ways of attracting more investment into our economies.
Crucially, we must encourage African businesses to invest in each other’s countries.
The African Continental Free Trade Area should be underpinned by strong and ambitious rules of origin that require a very high level of value-add here on our continent.
This is not about taking production away from any African country but a focus on replacing the large import bill that Africa has with the rest of the world.
We need to be proactive in developing a regional industrial vision that recognises and builds on each country’s unique capabilities.
The AfCFTA is about using the combination of the continent’s raw materials and industrial capacity, finance, services and infrastructure to produce quality finished goods for local and global markets.
It is about creating a market large enough to attract investors from across the world to set up their production facilities on the continent.
The vision of African integration is closer than it has ever been.
The promise of the African Continental Free Trade Area will only be truly realised through engagements like the one we are having today.
We need governments, investors, entrepreneurs and business leaders from different African countries to come together like this, to explore new partnerships and to reach agreements that drive new trade and investment.
By working together, by recognising the immense potential of our two countries and of the continent that we share, we can build a more inclusive, more resilient and more prosperous future for all our people.
I thank you.
ISSUED BY: THE PRESIDENCY