Obama visit to focus on economy

Trade is almost back to pre-2008 crisis

WITH US President Barack Obama declaring that Africa is the “next economic success story”, it’s no surprise that four of the six objectives of his South African visit, which started last night, have to do with trade and industry.

Obama’s three- country African tour takes him to Senegal, then South Africa and finally Tanzania, with the objectives including acknowledging Africa as a centre of global growth, communicating which US investment instruments are available to use to encourage growth, infrastructure development, and issues around regional security.

Speaking at a media briefing this week, Trade and Industry Minister Rob Davies outlined some of the success stories coming from the South African-US trade partnership.

He said the US was South Africa’s second-largest export destination, and the thirdlargest import partner for this country, with trade between the two countries totalling R122.7 billion last year. This was significant, Davies said, as the amount was nearly back to levels last seen in 2008, before the global economic crisis.

In addition, there were also 600 US companies currently operating in South Africa.“Last year we saw investment in 37 projects, with a Capex of R8.8bn; the year before we had 34 projects with a higher Capex value of R10.7bn. This year, we have also seen a number of significant announcements,” Davies said.

Key to continued good relations with the US was the extension of the Africa Growth and Opportunity Act, a key piece of US legislation which allows a range of South African products to enter the US duty-free. That legislation expires in 2015.

Davies said South Africa strongly supported the African stance that the legislation should be renewed for a “significant period of time” of between 15 and 20 years.

And while Obama’s visit probably won’t be used to lobby for this, as the legislation is passed by Congress and not by a particular administration, Davies said a trip to the US was scheduled for later this year to allow South Africa to lobby for the extension.

Davies also made it clear that trade between the two countries went both ways, and companies such as Dimension Data and Sasol outlined their US investment plans.

Sasol managing director Maurice Radebe said they had recently entered the US because the natural gas “boom”, created there by shale gas, was “very attractive”. The company had invested in a gasto-liquid plant, which made use of South African technology.

Jeff Nemeth, chief executive of the Ford Motor Group in South Africa, and president of the American Chamber of Commerce in South Africa, said Obama’s visit to South Africa was important because the country was seen as a gateway to the African continent.

“Thirty-four percent of our member companies base their African operations out of South Africa,” he said, adding that a survey of 80 US companies operating in South Africa revealed that they had invested R250bn in South Africa over the past 10 years, creating 150 000 jobs.