Erwin forging stronger links with pro-nuke France

Speech by Minister Alec Erwin at the France-South Africa Chamber of Commerce and Industry luncheon, Johannesburg Country Club
25 September 2007

Thank you for the opportunity to speak at this luncheon.
France is one of South Africa's most important trading partners, and it is important for us to keep engaging on issues of mutual interest, and improve economic and trade relations between the two countries.
Europe remains the biggest source of trade for South Africa. Seven out of ten countries trading with South Africa are based in the European Union (EU), and we have seen a steady increase in bilateral relations between France and South Africa over the years. France ranks among South Africa's ten most significant economic partners in terms of trade, investment, development assistance and research and development, and has over 100 companies operating in the country, including multinationals such as Total and Lafarge.

French construction companies are also involved in the building of the stations and railway line for the Gautrain Rapid Rail Link. Bilateral trade has more than doubled over the past eight years, to R25 billion in 2006. This comprised of R8,2 billion in South African exports, and R17 billion in imports from France. We need to work harder to facilitate an increase in South African exports, and thus help support local manufacturing sectors. It is envisaged that the South Africa-European Union Trade, Development and Co-operation Agreement (SA-EU TDCA), which was concluded in 1999, will be one of the approaches which are instrumental in helping to promote local exports.
The France-South Africa Chamber of Commerce and Industry has been instrumental in providing support for South African companies wishing to set up business links in France, and this kind of assistance goes a long way in aiding local firms to increase their global footprint. Developing the country's manufacturing sector, which is the economy's second-largest, and making it more globally competitive, will give local firms a fair chance of competing with their international peers, and alleviate the pressure that a large trade deficit has on the economy.

Over the next few years government is embarking on an ambitious infrastructure investment programme (nuclear!!), which will position South Africa as an investment destination of choice, and aims to step up economic growth, which will be shared by all South Africans, through increased development and employment. This is no minor task, and requires of us an unwavering confidence in this economy, and the courage to take these daring, and sometimes even unpopular steps, to ensure that South Africa's economy is geared towards higher and more sustainable levels of growth.

The Department of Public Enterprises is responsible for about R170 billion in state-owned assets, with two of our biggest State-Owned Enterprises (SOE), Transnet and Eskom, investing approximately R240 billion in the economy over the next five years to upgrade rail, ports and pipelines as well as to ensure security of supply of energy, which is in short supply globally. France has made great advances in the generation of nuclear energy, with over 70% of its energy derived from this source, up from 8% in the 1970s, making France one of the cleanest energy producers in the world. South Africa currently derives only about six percent of its energy from nuclear, and we would like to increase this significantly in coming years.

Eskom's reserve margin, at about eight percent, remains low, and the build programme will, among other things, help us bring this figure closer to the internationally accepted level of 15%. The Competitive Supplier Development Programme, the impact of the Build Programme on the South African economy is expected to be huge, and it is important that we leverage this expenditure to develop the local supplier industry.

The programme, developed by the Department of Public Enterprises, aims to reduce the import content of infrastructure investment programmes by creating an enabling environment for the development of local suppliers who can compete with global competitors. The programme targets business sectors related to the infrastructure investment programmes of Transnet and Eskom. This includes rail, ports, pipelines electricity generation, transmission and distribution.

Transnet, Eskom and PBMR are now all participating in the programme. They are all in the process of developing their Supplier Development Plans (SDPs). Transnet and Eskom's plans will be completed by February 2008, and PBMR's by June 2008. The SDPs will provide a long-term strategic vision for the development of the local supply base of the SOE. In the meantime, the SOE are seeking opportunities for securing competitive local supply in their current procurement processes. This includes requesting Original Equipment Manufacturers (OEM) to provide information on local content in their tender submissions, and using local content as a criterion in the tender adjudication process.
The response from global suppliers has been positive (?), and we envisage that these procurement negotiations will result in significant foreign direct investments in South Africa, and the integration of South African suppliers into the global supply networks of international companies. The government has programmes in place to assist marginal South African suppliers to improve their capacity to participate in the supply networks of the international companies, and government agencies can assist international companies to identify local suppliers.

Empowering our youth is also a task that is close to our hearts. Developing skilled workers, trained in maths and science, is key for South Africa's advancement globally. Through initiatives such as the Denel Youth Foundation, learners are offered a second chance to improve their marks in the critical areas of maths and science. This will open up to them career opportunities in the fields of science, engineering and technology, where the country is currently experiencing a shortage of skills.

The only way we can ensure that South Africa has the necessary skills to take this country forward, is if we are willing to invest in their education and training. I therefore urge all of you here today to look at the companies you work for, and see how you can further the skills and training of your workers, so that they are better able to contribute to economic growth and development in our beautiful country.

Thank you to the France-South Africa Chamber of Commerce and Industry (FSACCI) for their hard work in helping to improve relations between France and South Africa. It is through efforts made by organisations such as yours that we can get closer to our goals of making the South African economy more competitive globally, and improving the lives of our people.

Thank you
Issued by: Department of Public Enterprises
25 September 2007
Source: Department of Public Enterprise (http://www.dpe.gov.za)