As the geopolitical ambitions of SA and Africa shift from trade links with established economies in favour of ties with the robust economies in the southern hemisphere, trade experts are encouraging Africa to engage actively with countries such as China and India to formalise ties.
Business Day reports Asian economies have considerably upped the investment ante on the continent over the past decade. Between 2002 and 2005,
Moreover, Africa`s exports to
SA`s share of Chinese investment is considerable, the paper adds. In 2005, bilateral trade surpassed $6 billion, representing a formidable 53% rise over the previous year. In the same year,
But some observe
Speaking at a session at the African Development Bank annual meeting in
Chinese FDI on the continent is seldom characterised by skills transfer, local job creation or linkages to local businesses, and it was pertinent that
“There is a cash-cow extraction threat if these investments are not linked up to the value chain of local manufacturers. Are we developing a local manufacturing class and involving local labour? And what kind of production do we see from these investments?
Is it simple assembling or complex production? There are fundamental challenges around harnessing value-add,” says Morris.
Morris said a “regional approach is the answer” when dealing with
Some experts also urge for the formalisation of so-called
Tralac executive director Trudi Hartzenberg believes it is important to have a rules-based system to ensure that investments take place in a proper and transparent legal framework.
“Foreign firms invest in our part of the world. But on what terms do these investments come to our markets? Capacity constraints in many state departments mean individuals end up with far too much policy space and make deals with foreign investors. There are government officials involved in business with foreigners … the sea of corruption looms large in the absence of a rules-based system,” she says.