Central AfricaDoing Business in AfricaDRC

Remarks by His Excellency Mr Jacob Zuma, President of The Republic of South Africa, at the South Africa-DRC Business Forum, Kinshasa, DRC

29 Oct 2013

President Joseph Kabila
Prime Minister Augustin Matata Ponyo
Ministers present
Captains of Industry
Business delegates
Program Director
Distinguished guests
Ladies and gentlemen.

It is a distinct pleasure for me to be addressing the South Africa-DRC Business Forum which marks the advancement of relations between South Africa and the DRC.

In this regard I wish to express my gratitude for the hospitality accorded to me and my delegation so far by His Excellency President Kabila and his Government. Although our countries’ paths to economic prosperity and political independence differ, we now share a common destiny of mutual pursuance of stable democratic governance, economic growth and socio-economic development.

We therefore share a sense of kinship with the people of the DRC, which we believe forms a solid basis for the strengthening of business ties. The close political relationship that exists between our two countries has fostered not only economic but commercial co-operation as well.

We however need to explore ways and means of continuing, increasing and encouraging both trade and investment initiatives in the respective economies. The recent global economic crisis has just made it more urgent that “regional integration” should be at the top of our economic agenda.

South Africa and the Democratic Republic of Congo (DRC) have strategic relations which predate the formalisation of our ties, in January 2004 when both Governments signed the General Cooperation Agreements. These Agreements made provision for the establishment of a Bi-National Commission (BNC), which has paved the way for cooperation beyond the political sphere. Thus far, 32 bilateral agreements have been signed under the ambit of the BNC.

Your Excellency Mr President,

I am pleased to note that the Economic cluster’s Joint Bilateral Working Committee (JBWC) – under the leadership of Minister Rob Davies and Minister Remy Musungayi – is now giving practical implementation to the ethos of the agreements. These entail infrastructure rehabilitation and development through Spatial Development Initiatives (SDIs); institutional capacity building, technical assistance and co-operation on industrial development.

Ladies and gentlemen, distinguished guests,

We meet after a full day of discussions by the business people and I have received a very positive report on your deliberations. The feedback from the respective business leaders clearly indicates that the deliberations were fruitful.

These are the kind of reports that we would like to consider and we encourage business leaders to practically implement the resolutions that you have taken. We are also mindful of the challenges that you experience. I assure you that both our governments will continue to implement policies, and where necessary amend them in order to enable business to thrive in our respective countries.

To this effect, the DRC government has taken strides to inspire confidence in potential local and international investors through the adoption of wide ranging measures. These include the implementation of the investment code, acceding to the OHADA (Harmonisation of Business Laws) protocol and the continuous work in improving the business climate.

I believe the same rigour will be applied in the upcoming review of the mining code where private sector participation will be critical. It is my hope that the spirit of co-operation expressed in the sector sessions will culminate in profitable joint ventures between the South African and Congolese enterprises.

The South African government places great emphasis on these mutually beneficial business partnerships that are able to leverage off existing technical expertise, capital resources and high-tech capabilities. To support these partnerships and other types of investment, the DTI sets aside funding for feasibility studies for qualifying capital projects as well as other appropriate incentives.

I urge you to consider projects that have multiplier effects where value can be added both upstream and downstream in those sectorial value chains. I believe that the sectors that this forum discussed do meet the qualifying criteria and at the same time, they are pivotal to the trade and investment relations of both our countries.

We encourage more South African companies to invest in the manufacturing sectors and insist that skills transfer, technology transfer and expertise transfer must become integral to the joint venture partnerships.

Only when the productive capacity of the African continent is strengthened, can we manufacture quality products and services that can be consumed by both our domestic markets and export markets, especially in the region.

Your Excellency,
Distinguished guests,
Ladies and gentlemen,

There is no stronger case for intra-African trade than the recent global financial crises which decreased African export revenues generated from the traditional western markets. Africa has a potential market of US $2.6 trillion. The DRC and the countries surrounding it have a potential market comprising 200 million consumers. Yet, only 10% of global trade takes place between African countries.

Despite this lack of intra-African trade and the economic turbulence affecting the global economy, the economic outlook for Africa remains promising. A prosperous and growing African economy is good for our continent’s development.

It also offers many opportunities for mutually-beneficial trade and investment partnerships between our countries. Growth in the continent has remained relatively broad-based; oil production, mining, agriculture, services and domestic demand have been the main drivers that have enabled African economies to successfully navigate these global currents. In this regard, African growth rates will average 6% in 2014. In comparison growth in the developed world will average 3.6%.

The DRC is estimated to grow at 8.2% in this year alone. Against this backdrop, any investor would be hard pressed to find higher rates of return elsewhere in the world.

However intra-regional trade and sustained growth on the continent must be preceded by enabling technical and transport infrastructure. In addressing these challenges, various African governments have signed The Tripartite Free Trade Area (T-FTA) which is progressing well. One notable initiative already launched under the Arrangement is the Tripartite North-South Corridor Investment Program.

With initial funding of US$1.2 billion (a large proportion being funded from the African Development Bank and the Development Bank of Southern Africa), and strong support from the South African Government, actions are being taken to fast track this project.

This program supports some of Africa’s busiest trade routes: linking the port of Dar As Salaam in Tanzania to the copper belt in Zambia and into Lubumbashi in the DRC. It then continues down through Zimbabwe and Botswana to Africa’s largest and busiest port, Durban, in South Africa.

In effect, the North-South Corridor Initiative, will service eight countries, Tanzania, the DRC, Zambia, Malawi, Botswana, Zimbabwe, Mozambique and South Africa. By working together, we believe that both South African and Congolese enterprises can contribute meaningfully to the socio-economic development agenda of the DRC and the African continent as a whole.

As a continent, we have an opportunity to capitalise on our abundant natural resources, particularly now that the international commodity prices are high. In so doing we can promote economic transformation through commodity-based industrialisation.

This is important as it speaks to adding value to our resources, whilst at the same time harnessing skills and providing employment opportunities to our people. I assure you that South Africa is very keen and very willing to work with the DRC in this regard.

With the opportunities available in the DRC, there is nothing preventing us from developing and beneficiating these resources. I want to distinguish one sector that has a multiplier effect to other sectors and that is Energy.

A key outcome of this State Visit has been the signing of the Grand Inga treaty. This treaty outlines the development of the Grand Inga Hydro Electric Power complex estimated at USD 100 billion.

The Grand Inga Project has the potential to ‘light up’ the region and further boost economic growth of the surrounding countries, generating 40 000 MW of electricity when fully operational.

This key infrastructure project has many potential benefits for the SADC region and is a significant infrastructure project undertaken on the African Continent. This will also provide South African companies with further investment opportunities including in other areas of infrastructure. Once again, I urge South African companies to take advantage of the spin offs that will emanate from this milestone programme.

Ladies and gentlemen, distinguished guests,

As African Heads of State we are laying the infrastructure foundation that will enable a “take off”, thereby integrating and connecting the countries in our continent. With private sector participation, this foundation will unlock the economic potential and boost trade and investment on the African Continent to ensure our sustained growth is for generations to come.

His Excellency President Kabila and I are confident that the calibre of business delegates present here will participate in the improvement of the DRC’s economic landscape. I applaud South African companies that have already invested in the DRC in the mining, telecommunications, financial services, road infrastructure, construction, hospitality sectors, amongst others.

Total South African investment in the DRC between 2006 and 2012 was estimated at R12.5 billion (US$ 1.2 billion). Over 4 000 jobs were created from the investment projects. We have representatives of some of those companies present here today and those include but are not limited to, Vodacom, Standard Bank, Shoprite, Anglo Gold Ashanti, and the recent investor PPC in partnership with Barnet Group with total investment of US$ 230m.

In encouraging South African enterprises to invest in the continent we have mandated our development finance institutions to also establish their presence in several African countries. The Development Bank of Southern Africa (DBSA) works with Fonds de Promotions des Industries (FPI).

The Industrial Development Corporation has funded various projects in the DRC. Our Export Credit Insurance Corporation (ECIC) has also provided risk cover for projects in the DRC. President Kabila, all these efforts and outward investment drive initiatives should remove any doubt about South Africa’s commitment to the DRC.

In this regard, South Africa looks forward to utilising its technology, technical expertise, and productive capacity as well as private sector capabilities to make a direct and meaningful contribution towards regional integration, economic growth and poverty alleviation on the continent.

South Africa is looking to harness further opportunities by embarking on several projects that favour the promotion of value added products and services to the DRC and to give support to the DRC Government’s infrastructure and economic development initiatives

In conclusion, I want to reiterate the importance of working together for the enhancement of our economies and that of Africa at large. The role of business in this regard is important. We urge you to take this call forward.

Matondo mingi!
Lingala
I thank you.

 

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