Ferial Haffajee
When Deputy President Thabo Mbeki returns from his Asian jaunt this weekend, he will bring little tangible home with him.
But his visit to China, Japan, South Korea and Hong Kong has done an intangible good for Africa. “Mbeki’s visit has helped overcome the barrier of perception,” says Rafiek Bagus of Investment South Africa, the government’s marketing arm.
Now Mbeki’s foot soldiers must add the nuts and bolts to his idea of an economic African “renaissance”.
“The concept is important because it shows African countries are able to present themselves in a more positive way and are reforming,” says Jenny Cargill of the BusinessMap consultancy. “But concepts like this get jaded if no reasonable results emerge.”
Mbeki and his aides have been fleshing out the idea as displayed in his speech, “Africa will surprise the world again”, delivered to a Tokyo audience last week. It paints a picture of Africa “as a chain of economies which, with time, might become the African equivalent of the Asian Tigers”, says political analyst Peter Vale.
Trade strategists have designed the industrial link which will join the different economies via spatial development initiatives. These initiatives were a key idea used by Mbeki and his team to sell the “renaissance”.
The planned initiatives cut across southern and central Africa, offering a dream of new roads, tourism projects, investment nodes and a plethora of untapped industries.
Cargill warns they may be over-ambitious. Many are still at a proposal stage and have to be sold to neighbouring governments uncomfortable with the leading role South Africa has assumed for itself on the continent.
South Africa is also selling itself internationally as the gatekeeper and the gateway to Africa. “Investors want bigger markets and 40-million people [the South African population] is not a market,” says Bagus.
“We are working to overcome disadvantages created by the small markets made up by the relatively small numbers of people in many of our nation states through regional economic associations,” Mbeki told his Tokyo audience.
But Mbeki’s Asian jaunt will not hasten the African “renaissance”. It’s going to be a slow dawn during which South Africa must first learn guanxi – the Asian art of relationship- building that is fundamental to business.
“There are no quick fixes. Chinese business is premised on good relations and those are defined over time. It’s not polite to push a deal,” says Cargill.
Deal-making in South Africa is snappy (some may say slap-dash) and the trend is growing with huge black empowerment deals being cut in a few short weeks.
Dispatches out of China told of trade with South Africa topping R17-billion this year, more than double last year’s figures. Some government insiders doubt this will happen quickly. “It can take days or months. But you have to be in touch with your potential business partner all the time,” says Nitesh Dullabh of the Department of Trade and Industry.
Add the Asian crisis to the art of guanxi and it’s even more apparent that South Korea and Japan will trade cautiously. Japan has always been circumspect in emerging market investments. In Seoul this week businesspeople told Mbeki they believed inward investment was a better option for South Korea’s battered economy.
Asia has in the past three years become one of South Africa’s biggest trading partners. Asian direct investment in South Africa has grown to R11-billion and three Asian countries are among the top eight investors in this country. It’s big news for South Africa, but a small slice of the investment-spend of countries like Japan and China. Japan’s investment of R1- billion in South Africa last year, for example, was just 0.5% of its total foreign investment.
China’s biggest trading partners – the United States, Western Europe and Japan – are cornering its market of 1,2-billion consumers. The space available for South African investors is likely to be small, although companies like Iscor, South African Breweries and Ceres report a healthy trade.
“It’s going to be difficult for South Africa to be anything but a player on the coat-tails,” says Vale.