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Thursday, 07 March 2013 09:29

Pravin Gordhan: on regional integration, BRICS

Written by Pravin Gordhan, Minister for Finance
The South African Finance Minister Pravin Gordhan addressing the National Assembly, Parliament The South African Finance Minister Pravin Gordhan addressing the National Assembly, Parliament Photo © South African Government

Cape Town:  Africa is our home, and it is our future. It is a market of over one billion people and it is growing rapidly. The National Development Plan acknowledges the global shift of economic power from West to East, and highlights the rise of Africa. Indeed, we have already begun to see our trade patterns shift from traditional partners in Europe and the United States to new markets in Asia and Africa. Africa now accounts for about 18 per cent of our total exports, and nearly a quarter of our manufactured exports. Over the past five years, the South African Reserve Bank has approved nearly 1 000 large investments into 36 African countries.

These are mutually beneficial, as they support development in those countries, and also generate tax revenue, dividends and jobs both abroad as well as in South Africa. To further support the private sector in expanding operations in Africa, I will announce simpler rules that will reduce the time and costs of doing business in Africa.

A number of measures are proposed to relax cross-border financial regulations and tax requirements on companies, making it easier for banks and other financial institutions to invest and operate in other countries. Similar measures will apply to foreign companies wanting to invest in African countries using South Africa as their regional headquarters. The outward investment reforms that apply as part of the Gateway to Africa reforms will also pertain to those companies seeking to invest in countries outside Africa, including BRIC countries.

In addition, substantial direct investments in regional development are underway:

•  We are helping to build infrastructure that will create opportunities for South African companies to expand trade and investment across the border. The DBSA is accelerating investment into the SADC region. We are supporting infrastructure projects in multiple countries, particularly in the key areas of electricity generation and transmission, and in strengthening road links in the region.

•  Investment by the Industrial Development Corporation in 41 projects across 17 countries totalled R6.2 billion in 2012. The bulk of those projects are in mining, industrial infrastructure, agro-processing and tourism.

•  As part of its long-term strategy to help secure energy supply for South Africa and the region, Eskom is considering options for investment in several regional generation and transmission projects.

Working with our BRICS Partners

Next month, we will host the 5th annual BRICS Summit, which brings together Brazil, Russia, India, China and South Africa. The Summit will unveil the work we have been doing with our BRICS partners on the following projects:

• The possible establishment of a BRICS-led bank is intended to mobilise domestic savings and co-fund infrastructure in developing regions

• The pooling of members’ foreign exchange reserves with the view of using them to support each other at times of balance of payments or currency crisis. Collectively, BRICS countries hold reserves totalling USD 4.5 trillion.

• Work is underway on creating a trade and development insurance risk pool. The aim is to establish a sustainable and alternative insurance and reinsurance network for the BRICS countries.

The above is extracted from: 2013 Budget Speech, by Pravin Gordhan, Minister of Finance, 27 February 2013. The full text of his address can be accessed here.

The full range of the 2013 budget documentation can be accessed here.

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