Building a new Silk Road that brings Asia and Africa closer
ADDRESS BY HIS EXCELLENCY DEPUTY PRESIDENT CYRIL RAMAPHOSA ON THE OCCASION OF THE ASIA-AFRICA BUSINESS SUMMIT; JAKARTA, INDONESIA, 21 APRIL 2015
His Excellency, the President of Indonesia, Mr Joko Widodo,
Fellow Heads of State and Government,
Ladies and gentlemen,
Sixty years ago, some of the most outstanding leaders of our two continents, Africa and Asia, congregated in Bandung, driven by a desire to build a free, just and peaceful world.
Many of those leaders came from countries that had just attained independence.
The conference resolved to ‘condemn colonialism in all of its manifestations’ and promote Afro-Asian economic and cultural ties.
The Bandung Conference helped to shape the post-colonial world.
It has a rich and enduring legacy, binding our two continents together in solidarity and cooperation.
This week we are both remembering and reaffirming the commitments made in 1955, and again in 2005 through the New Asian-African Strategic Partnership.
The Bandung Conference recognised the urgency of promoting economic development in Asia and Africa.
Since then, the two continents have experienced significant economic development.
Asia has led the way, achieving remarkable economic growth and making great strides in lifting millions of its people out of poverty.
It helped to keep global economic growth buoyant even as the financial crisis struck many national economies.
It is significant that the Asian region grew by 5.4% in 2014 compared to the world average of 3.3% in the same period.
There are many valuable lessons that Africa can learn from Asia’s success – a success from which Africa has benefited in recent years.
As demand has grown in Asia, Africa’s exports of natural resources have similarly grown.
Though dominated by extractive commodities, Africa’s exports have also included processed commodities, light manufactured products, household consumer goods and food.
Africa’s labour intensive capacity enables it to export these non-traditional goods and services competitively to our Asian partners.
Trade flows between the two continents have increased significantly over the years, totalling US$ 423 billion in 2013.
However, as of 2014, Asia accounted for only 26% of Africa’s trade flows.
In addition, all of the top 10 Asian imports from Africa were commodity-based, with crude oil and gas accounting for 58% of imports and ores and metals accounting for a further 20%.
Africa’s imports from Asia were more diverse, comprising of machinery, vehicles and electronics, which accounted for 30% of imports.
We need to increase trade between Africa and Asia to ensure the realisation of our respective economic development agendas.
We need also to address the current trade imbalance.
We are therefore delighted that a platform of this nature exists, allowing us to share best practice and explore opportunities for greater economic cooperation.
This gathering allows us to look at ways to grow value added exports, increase investment flows, improve trade facilitation mechanisms and create more conducive trade and investment environments.
To place Africa-Asia trade on higher trajectory of growth we need to
undertake a number of reforms.
The first can be described as ‘at the border’ reforms. These are aimed at eliminating escalating tariffs on Africa’s leading exports.
The second are ‘behind the border’ reforms, in which Africa takes steps to improve competitiveness and strengthen its basic market institutions.
The third – ‘between the border’ reforms – are aimed at improving trade facilitation infrastructure and institutions to reduce transaction costs associated with customs administration, transport and communications.
Lastly, a series of reforms would have to be instituted to leverage linkages between investment and trade to allow the participation of African businesses in modern global production.
Ladies and Gentlemen,
Allow me to elaborate on the African growth story.
Within the ambit of the African Union, we have made immense progress in promoting the unity and solidarity of African states.
We have improved coordination and intensified cooperation.
We have sought to harmonise political, diplomatic, economic, educational, cultural, health, welfare, scientific, technical and defence policies.
We have been steadily changing perceptions of our continent.
The continent has experienced robust economic growth and a rising population, combining to improve spending power across Africa.
In the past decade, Africa has grown two to three percentage points faster than global GDP.
Regional growth is predicted to remain stable above 5% in 2015, supported by increased foreign direct investment, public investment in infrastructure and higher agricultural production.
Because of its young population, Africa’s working age population is expected to double to 1 billion by 2040, surpassing both China and India.
The consumer market is rising in tandem with its growing population.
The environment for doing business is steadily improving.
Access to financial services is improving, largely thanks to the roll out of technology and innovation.
The continent is blessed with an abundance of natural resources.
Over the past five years, 30% of the world’s oil and gas discoveries were in Sub-Saharan Africa.
Further to this, Africa has 60% of the world’s arable land.
While these statistics are impressive, they cannot mask the harsh reality of the daily struggles of many of our people.
We need to make a concerted effort to free them from poverty and provide them with opportunities to improve their lives.
By improving cooperation between Africa and Asia we can contribute to the achievement of this objective.
There are a number of areas in which we can collaborate.
One of these is agriculture.
Because of the diversity of crops cultivated on the continent, Africa has the potential to increase the nutritional value of global food supply more than any other region in the world.
However, for African farmers to benefit fully from their contribution to global food supply, they need to be more involved in the food value chain – from seed to market.
African countries should seek to add economic value locally.
Another area for greater collaboration is manufacturing.
The manufacturing sector is key to economic transformation in Africa.
Few countries have managed to improve their national income by relying solely on the export of raw materials.
Manufacturing is vitally important to Africa’s economic future as it can contribute substantially to improving growth, reducing unemployment and addressing balance of payment issues.
With a market of close to 900 million people, Africa has the capacity to become a manufacturing success.
Infrastructure also holds great potential for Africa-Asia collaboration.
Africa’s ability to trade is hampered by a lack of physical infrastructure.
Many African countries – without adequate rail, road and port infrastructure – are unable to productively exploit their abundant natural resources.
Asian countries – with their skills, capital and technical and engineering expertise – can partner with African countries in developing this critical area.
For Africa to become globally competitive, we need a highly skilled workforce.
Africa is short of technical expertise and training.
This is a further area for collaboration, as many Asian countries are at the forefront of education and skills development.
Ladies and Gentlemen,
This year, a number of African countries will implement the Tripartite Free Trade Agreement, which will add impetus to Asia’s involvement in Africa.
This initiative will expand intra-African trade, promote collaboration between the regional economic communities and facilitate joint resource mobilisation and project implementation.
It will establish an integrated market with a combined population of 600 million people, a total GDP of US$ 1 trillion, and a long-term growth rate in excess of 5% per annum.
Infrastructure development is crucial to the success of the Tripartite Free Trade Agreement, both to connect markets and to generate enough electricity to support the development of manufacturing and other sectors.
Soon we will begin work, under the leadership of the African Union, to create a continental free trade area, bringing 54 countries together into a massive single market.
This Summit provides an ideal platform for African business to connect with Asian business.
Such partnerships are crucial for the economic growth and development of both our regions.
I wish this conference every success.
I sincerely hope that our respective business communities will be able to identify areas of mutual cooperation.
By strengthening South-South cooperation, we can begin a new era in global trade – one that will be driven and sustained by two of the world’s fastest-growing regions.
Initiatives of this nature enable us to deepen trade.
They enable us to identify and pursue untapped opportunities for intercontinental commerce.
They provide impetus to our efforts – now 60 years old – to build a new Silk Road that brings the people of Asia and Africa still closer together.
I thank you.
ISSUED BY THE SOUTH AFRICAN PRESIDENCY