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South Africa: Gateway to Southern Africa

by Hon. David Kilgour, Secretary of State (Latin America and Africa)
Comments to International Development Days Conference
Sponsored by Alliance of Manufacturers & Exporters Canada and CIDA
Westin Hotel, Ottawa, May 28, 1998

It is a pleasure to speak to people who already believe in the large potential of Canadian trade with Africa. My own enthusiasm was greatly strengthened by a recent business development mission to the western and southern parts of the continent.

I was aware of some of the opportunities in South Africa since the end of apartheid, which will be the main focus of this talk. A more surprising discovery was the extent of opportunities for Canadians in West Africa; I’ll spend a few moments discussing them because they are less well known.

Democratic South Africa clearly offers many opportunities for Canadian business. Its large population and modern infrastructure make it an attractive market/production location. The Mandela government is anxious to increase the standard of living for the majority – extending benefits that were long enjoyed only by a minority.

South Africa is also well-placed as an access point to the rest of southern Africa and its government wants to extend stability to the entire region. An example of this is South African investment in Mozambique, particularly in the Maputo Corridor. This huge South African-led initiative will modernize the transportation infrastructure between Gautung and Maputo, furthering development of Maputo’s port facilities and contributing to regional prosperity.

The advantages South Africa offers to Canadian business can be described as both lynchpin and access. It is by far the largest and most diverse economy of the region with the widest range of resources, including a trained labour force. Under Nelson Mandela, South Africa has a very forward-looking government. It is a transportation and communications gateway to much of southern Africa.

Canadian trade with Africa in general and South Africa in particular is growing rapidly. Canadian exports to sub-Saharan Africa alone last year reached $776 million – up $115 million from the year before. Canada’s exports to South Africa alone were $361 million in 1997. Two-way merchandise trade grew to $855 million last year from $306 million in 1993 – almost a three-fold increase.

But South Africa continues to face a number of challenges, including the shortage of management expertise from the previously disadvantaged communities. In response to this need, I was very pleased to help launch the Junior Executive Training, or JET program on my recent visit. This allows small groups of young executives from disadvantaged backgrounds to come to Canada for six-week internships and international business training. The JET program is funded by CIDA, but relies mostly on the initiative and participation of our business community.

The JET program is interesting not only because it is an excellent example of Canadians contributing to building the business capacity of South Africans. It also highlights the importance of social responsibility in our dealings with the new South Africa. Years of inequity in South Africa skewed the economy and society. It is in our interest to participate vigorously in the rebuilding process. Encouraging the development of business expertise and networking among Africans is not just socially responsible; it’s good business. The politics of southern Africa remain complex; it appears to be important for Canadians to link up with local partners who understand the situation.

The success of some Canadian companies in the new South Africa is worth noting:

  • SNC Lavelin completed the pre-feasibility study for the new La Mercy Airport in Durban and it is hoped they will be successful in securing the overall project management contract once the partial privatization of airports is complete.
  • Bell Helicopter last year delivered six Model 407 helicopters worth $11.3 million and one Model 430 worth $5.9 million to various customers in South Africa. They have also been short-listed for a contract to supply 60 light utility helicopters to the South African Air Force.
  • S A Express, a subsidiary of South African Airways, upgraded half its fleet of 12 Dash 8 aircraft to Regional Jets during 1997. Four out of six regional jets have been delivered so far, and the order exceeds $140 million.
  • SouthernEra Resources, a Toronto firm and the fourth largest diamond company in the world, has begun operating a high-grade diamond deposit in the Northern Province. It will employ between 400 and 500 persons.
  • Telesat of Canada was awarded two contracts totaling $14 million by African Continental Telecommunications, a Johannesburg satellite-based telecom network.

The list could go on, and there are many smaller examples, but you get the idea. There’s a lot happening in South Africa and Canadian companies are well placed to take part. Aside from our obvious linguistic ties with South Africa, and most other countries on that continent, we are also strong in some sectors where the needs of southern Africans are greatest.

Canadian junior mining firms are heavily involved in prospecting and exploration activities throughout Africa. More than half of all new mining ventures in Africa reportedly have some Canadian participation!

Transportation, with helicopters and regional aircraft, and agrifood with genetic expertise in both livestock and plants, are two sectors in which Canadian know-how is a valued asset by South Africans.

Power generation is another, especially in neighbouring countries such as Zimbabwe, Zambia, Malawi, Tanzania, Uganda and Kenya, where the power grid is underdeveloped. With peace in Mozambique and hopefully soon fully in Angola and changes in the Democratic Republic of the Congo, there are opportunities for both hydro and thermal power generation – often in collaboration with South African partners.

We often don’t think of education as an export commodity, but it can be. There is great demand for upgrading of educational skills throughout Southern Africa, as governments try to raise living standards. We Canadians have good expertise in distance education, courseware and education management.

But, before closing, let me touch briefly on West Africa. The situation varies greatly from country to country, but everywhere there was enthusiasm to do business. Among the countries the business development mission visited – Côte d’Ivoire, Ghana, Mali, Guinea and Togo – several are enhancing their regulatory regimes to make them more attractive to foreign investors.

Canadians are well positioned to compete in West Africa, especially with our ability to do business in both English and French, the major international languages of the region. Our ties through the Commonwealth and Francophonie, our lack of colonial baggage and our technological expertise – especially in resource development and services such as telecommunications – all give Canadians a long leg up.

Côte d’Ivoire, Ghana and Mali were particularly impressive. Côte d’Ivoire has the most advanced infrastructure in the region and is moving beyond trade in primary commodities to more advanced and value-added products. Canadian business is very active in Ghana, both in traditional fields, such as mining, and in modern service sectors. Mali lacks the infrastructure of its neighbours, but it has a very forward-looking government that has acted to resolve old conflicts and to implement sound economic reforms.

In short, my recent visit to Africa impressed me deeply with the vast array of economic opportunities open to Canadian firms and the extent to which Canadians and our investments are welcome across the continent. Many of you are already committed to doing business with Africa. To those who are still contemplating such a move, I’d encourage you to begin by doing your homework and then seize the moment. Thank you.

 
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