HO TH T E P OF RE F SS
east3ROUTE October 2014
Foreword by the KwaZulu-Natal MEC for Economic Development, Tourism and Environmental Affairs, Mr Michael Mabuyakhulu
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t is now four years since the founding governments established the tripartite economic and tourism development initiative known as the east3ROUTE, the mandate of which has been to leverage strong regional bonds, the region’s exciting topographical features and the existing blend of cultural and historical heritage, to unlock cross border investment opportunities and synergies. The tripartite east3ROUTE bloc originally consisted of KwaZulu-Natal - South Africa, Mozambique and Swaziland. Last year, however, the member countries accepted Seychelles into the grouping resulting in the island-state enjoying limited participation in the annual Investment Seminar which, for the 2013 instalment, included an exhibition. We are all pleased to note, that in this fourth edition of the east3ROUTE Investment Seminar, Seychelles will participate fully thus enjoying equal status within the grouping and reaping the full benefits that membership bestows upon member states. The east3ROUTE initiative is important for many reasons. South Africa is the main trading partner for Mozambique, Swaziland and one of the main trading partners of the Seychelles. We are tied together historically, geographically and economically and the initiative provides a focused platform for the member nations to expand their developmental mandates, ultimately strengthening economies, creating sustainable jobs and improving living standards. In order to understand the opportunities available to us we need to have access to contemporary research and data, profiling and analyzing linkages that can be leveraged to yield tangible outcomes. Such research must provide a blueprint for the investment community outlining in detail the trade and investment regulatory environment, incentives, existing bilateral agreements, barriers to entry and details on the respective regulatory environments. We are therefore pleased to inform the east3ROUTE delegates and government representatives that the investment seminar
organising team led by Trade & Investment KwaZulu-Natal commissioned a study that will provide the necessary blueprint referred to above. Give our close economic bonds it is imperative we strengthen trade and investment within the east3ROUTE community. Harnessing synergies and leveraging each other’s strategic strengths and experiences makes us more efficient and competitive within the global context. We are fortunate though that each of the east3ROUTE member nations is uniquely positioned to offer the regional and international investor community attractive investment possibilities. From 2005 to 2010, South African investments into Mozambique were estimated at R3.5billion. The biggest of these include companies such as Mozal, Sasol, SAB, Vodacom and Standard Bank, among others. Mozambique is South Africa’s second largest export market with trade having increased dramatically over the past five years. A significant portion of Mozambique’s economic growth is driven by capital-intensive export sectors and foreign investment projects in the mining sector and aluminium smelters, which have also led to growth in the services and construction sectors. The industrial and services sectors contribute 30,9% of GDP and 45,6% of GDP, respectively. Mozambique’s agricultural sector contributes 23,5% to the country’s GDP. Swaziland’s largest trading partner is South Africa, from which it receives more than 90% of its imports and to which it sends 60% of its exports. Subsistence agriculture employs approximately 70% of the population. Sugar and wood pulp were major foreign exchange earners and sugar is now the main export earner. The manufacturing sector has diversified since the mid-1980s. Other key sectors that drive the economy of Swaziland are textiles and apparel as well as food and beverage. The main exportable commodities are soft drink concentrates, sugar, wood pulp, cotton yarn, refrigerators, citrus and canned fruit. Swaziland imports motor vehicles, machinery, transport equipment,
foodstuffs, petroleum products and chemicals. The economic makeup of Seychelles is reportedly 2% agricultural, 18.7% industrial and 79.4% services. The country’s main trading partners are Saudi Arabia (24%), Spain (12.1%) and France (5.9%), with South Africa positioning itself as the fifth largest source market for the Seychellois’ import demand. Seychelles is one of the most successful African stories, with an unemployment rate of 2%. The main economic sector in Seychelles is tourism. While in other parts of the world investment promotion is focused on inward investment, South African companies focus on outward investments on the African continent. KwaZulu-Natal is a major role player in both manufacturing, transport and logistics sectors in South Africa, with world class infrastructure that supports export led companies. The province enjoys the strategic competitive advantage of being a global gateway for trade into Southern Africa and the world. Its strategic location and highly developed industrial sector ensures a competitive advantage for investors and exporters alike. Key subsectors include aluminium, mineral processing, motor vehicle manufacturing, pulp and paper products, chemical and petro-chemicals and food and beverages. Manufacturing is a major contributing economic sector in KwaZulu-Natal, generating 15.0% of provincial employment and contributing an average of 19.2% to the GDPR between 2006 and 2010. The sector contributed 16.8% to the provincial GDPR in 2010. KwaZulu-Natal’s manufacturing sector is the second largest in the country, making the region an ideal destination to locate manufacturing businesses, whilst enjoying government incentives and support from the well-established sector. One seminar. Four countries. A wealth of possibilities! For the 2014 edition we have gathered, once again, an ensemble of high powered speakers, experts in doing business in Africa and helping the region unlock investment opportunities.