African lion ready to surpass Asian tigers as continent ripens

WE BELIEVE Africa is the new Asia, the Asian tiger is to become the African lion,” says Finland’s Minister for European Affairs and Foreign Trade, Alexander Stubb. “We think it’s very old-fashioned to think of Africa as the continent of development aid,” he said recently, explaining why he was leading a delegation of 23 Finnish companies to South Africa and Namibia.

“It’s the continent of the future, of business and of growth. So we come very much with a partnership mentality.”

Stubb turned to Robin Lindahl, the head of the business side of the delegation and vice-president of the company Outotec, which says it “develops and provides technology solutions for the sustainable use of Earth’s natural resources”.

Stubb said Outotec had not come to Africa to sell “but to make local-content business. They want to help mines process metal and minerals here rather than selling raw materials to be processed elsewhere.”

The other members of the delegation are in education, heavy industry, telecoms and clean technology, among others.

Stubb said Finland was an easy country to do business with, being among the top 10 countries in gross domestic product (GDP) per capita, among the top five in competitiveness and top in the world for its secondary school education.

Conversely it was easy for Finland to do business with South Africa, partly because it had been one of the strongest advocates of the anti-apartheid movement.

He noted that Finland was a trading nation, deriving about 40 percent of GDP from exports and its primary products had evolved from fur and tar, through paper and wood, to information and communications technology – with Nokia Siemens as its flagship – and was now moving ahead again, towards clean technology.

“So we are quite adaptable in our industrial structure – and we come here with good intent.”

Stubb said the delegation included three big providers of applied education, which specialised in delivering tailor-made teaching programmes such as teaching teachers and teaching skilled labour and professionals. This was “because one of the biggest deficits South Africa has right now, according to many of the ministers I have spoken to – for instance the ministers of transport and education – is the lack of skilled labour”.

He said Outotec also did a lot of teaching, itself providing the skills which it found lacking in a country that it did business with.

“That’s the mentality that a lot of our companies come in with.”

Lindahl agreed that for many of the Finnish industrial and technology companies coming into South Africa, skilled labour was a scarce resource so they looked for opportunities to participate in the education of labour.

“Also the companies are prepared to look at in-job learning and also offering training opportunities [for South Africans] outside South Africa in other countries where our companies are present.”

He said Outotec had offices in 27 countries and was doing business in 80 countries. In Africa it was operating in South Africa, Ghana and Zambia and was investigating expansion beyond these three locations on the continent.

Lindahl said improving skills was a major part of his and other Finnish companies’ contribution to the beneficiation of South African raw materials as the skills deficit was a big part of the problem of beneficiation – the adding of value by processing raw materials.

And many of the Finnish companies in South Africa were boosting small local businesses by developing “ecosystems” around them, of suppliers and partners.

He said the number of jobs indirectly created through these ecosystems was about four times the jobs directly created by the Finnish companies themselves.

Stubb said he had had very positive responses from the South African government to the Finnish strategy of enhancing skills and boosting beneficiation because that was directly in line with the government’s industrialisation strategy.

He added that as “a minister of trade and an avid free trader, open borders and the rest of it, I am of course a little bit reluctant when I hear the words ‘local content’. It worries me. I get the sort of French local content dirigiste, protectionist alarms going off all over the place.

“I’ve had that feeling when I go to Brazil. But when I come to South Africa… it feels a natural way of pushing through. And that’s on the African continent in general. And that’s why I think local content here is quite welcomed.”

Stubb said Africa needed different treatment because the foundation of capitalism was that production had to be distributed fairly evenly around the world and for historical reasons Africa had not received as much as it should.

Stubb and Lindahl denied Finland was focusing on processing minerals only because it had those skills, saying the country was also strong in basic mining, especially of gold, copper and steel.

“So we do have knowledge on the whole process, from the mining to the end product, the pure metal,” Lindahl said.

He added that Finland was looking wider than wind and solar energy in its new push into cleantech. “We are also looking at biomass and biofuel. And the oil reserves of the world are diminishing, but we are also looking at creating technology for refining oil out of oil sand and oil shale.

“But we are quite advanced on biomass and renewable energy waste, and all these kind of energies.”

Stubb said 25.8 percent of Finland’s energy production now came from renewable sources, and as part of the EU it had signed up to the “20:20” commitment to reduce its carbon dioxide emissions by 20 percent by 2020 and to have at least 20 percent of renewables in its energy mix. The EU average for renewables was now 8.5 percent.

He added that this was only part of the cleantech business which covered anything that made the world more environmentally sustainable. “So Outotec is a cleantech company because it has a clean way of processing metals and cleaning and purifying waste water.

“We firmly believe that the green economy is the future, that the third industrial revolution will be built on environmental pillars; for instance housing that is completely self-sustaining in terms of energy use [such as] an apartment block where the people living in it produce their energy themselves.”

Stubb said trade between South Africa and Finland was not large and the balance favoured Finland. By South African government figures, South Africa’s exports to Finland were about R2.2 billion last year and its imports from Finland about R3.6bn.

But Stubb said trade balances were an old-fashioned, “mercantile” way of measuring trade relations. Countries added value to their products in completely different ways.

For example, the combined turnover of three Finnish companies in South Africa, Outotec, Metso and Konecranes, was R3.5bn, which was more than the trade between South Africa and Finland.