Ramaphosa stresses need for Africa-Asia collaboration

Thuletho Zwane

First published Mail & Guardian

South Africa is to partner with African and Asian countries in order to ward off economic stagnation and find new markets for trade and investment.

Speaking at the 60th commemoration of the Asia-Africa conference in Jakarta, Indonesia, Deputy President Cyril Ramaphosa said both the African and the Asian continents have recognised the urgent need to ­promote economic development both in their respective continents and in south-south relations.

Ramaphosa said it was essential that African countries learned from the success of their Asian counterparts, who have achieved remarkable economic growth over the last 20 years.

South-south co-operation is built on the need for developing countries to be self-sufficient. The Asia-Africa conference’s main objective is for developing countries to help each other reduce dependency on developed countries by building and strengthening partnerships through the exchange of information and experience.

Model of success

In his keynote address on Tuesday, Ramaphosa told delegates that African countries needed to learn from the successes of their Asian counterparts because they have made great strides in lifting a significant percentage of their people out of poverty. On trade relations, Ramaphosa noted that trade flows between Asia and Africa had increased over the years but said that was one-sided.

“We need to increase diversified trade within Asia and address current trade imbalance that exist between the two continents,” he said.

He said that Asia imported mainly natural resources from Africa but Africa’s imports from Asia included a mix of imports such as machinery, vehicles and electronics which accounted for 30% of the continent’s imports.

According to the Indonesian Chamber of Commerce and Industry, trade flows between Asia and Africa have increased from $2-billion in 1990 to $270-billion in 2012 and it is expected that trade between Asia and Africa will pass $1.5-trillion in 2020.

However, Asia only accounted for 26% of Africa’s exports – “something that needs to change”, he said. There was a need for Africa and Asia to address the ­current trade imbalances. This should be done by undertaking a number of reforms, including eliminating ­escalating tariffs on African exports at Asian ­country borders and improving trade facilitations and institutions aimed at reducing transaction costs. He also said that African countries had to take steps to improve their own competitiveness and strengthen their market institutions.

Post-colonial collaboration

The 2015 Asia-Africa conference is themed “The realisation of the Asian-African partnership programme and prosperity”. It is a continuation of the 1955 Bandung Conference in Indonesia, where countries from Africa and Asia met to condemn colonialism and discuss a strategic partnership between African and Asian countries.

At the time, the Asian-African conference discussed ways and means by which their people could achieve better economic, cultural and political co-operation. South Africa’s Moses Kotane and Maulvi Cachalia attended the conference as representatives of the South African liberation movement.

“Bandung came to shape the post-colonial world. Today our people are reaffirming a commitment made in 1955 and again in 2005 with the Asian-African strategic partnership that recognised the urgency to promote economic development in Asia and Africa,” said Ramaphosa.

In an interview with the Mail & Guardian, Yunus Hoosen, the acting director general at department of trade and industry, said the conference is an opportunity for developing countries to come together and join forces in order to create partnerships for business.

“On a bilateral level we have a very deep and historical relationship with Indonesia. As they now try to privatise and open up their economy, we need to consolidate and look at how we can work with them. We can certainly improve our trade and investment because you see a lot of our investment is coming from countries in South-East Asia,” said Hoosen.

Emerging markets

Indonesia and South Africa are both members of the G20, an international economic forum to address issues related to international financial stability. The two countries are both emerging markets and are major players in their respective regions, Indonesia in the Association of South East Asian Nations and South Africa in the Southern African Development Community.

The trade figures from the embassy of Indonesia in South Africa show that trade volumes between Indonesia and South Africa reached $1.64-billion in 2014 – of which Indonesia’s export total to South Africa was $1.23-billion while South Africa’s export total to Indonesia was only $420.44-million.

In terms of the foreign direct investment, South Africa’s investment in Indonesia was $1.2-million in 2011 and $500?000 in 2014. “These ­figures do not represent the full potential of both countries’ trade and investment. We expect to double the figures in the upcoming years,” said Suprapto Martosetomo, an ambassador of Indonesia in South Africa.

In an interview with the M&G, Martosetomo said Indonesia would like to have South Africa’s business communities invest in Indonesia. He said Indonesia was encouraging its business communities to invest in South Africa because South Africa was considered an emerging market with a high purchasing power. He said Indonesia had participated in international trade expos in South Africa, such as Africa’s Big Seven, Getaway and Decorex, to encourage trade between business people in both countries.

“Indonesian brand of instant noodles Indomie has become famous in some African countries such as Nigeria, Ethiopia, Sudan, and Egypt. Even more, it already built factories in these countries. We therefore would like to explore the possibility for Indomie to establish a factory in South Africa,” he said.

Rand resurrection

Hoosen told the M&G that the department of trade and industry had identified a number of opportunities where South Africa would benefit from bilateral relations with Indonesia.

Hoosen said South Africa had identified foreign direct investment opportunities from Asian countries, which it was hoped would not only direct funds into South Africa but also stabilise the domestic currency.

“If we strengthen south-south relations, we would see Asian investors who are less risk averse invest in South Africa. This will not only boost the local economy but would stabilise the rand,” said Hoosen.

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