Gauteng, South Africa’s city of gold, is the 6th largest economy in Africa. As the country battles with a recession for the second time in a decade it is imperative that the industrial hub continues to make clear that it is open for business. With initiatives like the Gauteng Growth and Development Agency, and the Gauteng Investment Centre, the region has been active in finding opportunities for advancement both within and beyond its borders.
CNBC Africa’s Esther Awoniyi, recently moderated a panel comprising of government officials and businessmen in Ghana, to explore opportunities for increasing trade and investment between Ghana and South Africa. The group provided much needed insight into what can be done.
According to the World Economic Forum, intra-Africa trade makes up about 15 per cent of all trade on the continent. It is a figure that Saki Zamxaka, the Chief Executive of the Gauteng Growth and Development Agency described as “woefully inadequate”. Trade between African countries pales in comparison to Europe and Asia. Intra-continental trade in those regions is 63 per cent and 53 per cent respectively.
David Makhura, the Premier of Gauteng said: “We have been talking a lot about deepening intra-Africa trade, but the progress is not satisfactory.” As the world economy gains momentum after a disappointing 2016, the Premier says the province is looking to investment and trade to solve economic stagnation: “We at the Gauteng province, we have identified investment and trade in Africa as one of the key interventions to solve slow growth.”.
As both Ghana and South Africa are countries with relatively developed mining sectors, there are a number of opportunities for collaboration between the two. However, Zamxaka was keen to highlight those in Ghana’s power sector. “The cost of energy here is still a little bit high which makes it viable for alternative energy sources, like gas, and solar, which we have a lot of experience with.” It is an opportunity that South African infrastructure development fund managers Harith are taking advantage of. According to a statement released by the company, Harith has started building the $550 million Amandi Energy Power Plant, which it hopes will eventually rely on gas acquired from Ghana’s offshore Sankofa oil field.
During the panel R. Yofi Grant, the CEO of the Ghana Investment Promotion Centre said the country is looking for more stories like this, as it has embarked on reforms to improve the ease of doing business. The Chief Executive hopes to see his native country become a conduit of business activity into West Africa. “Ghana is at the centre of the world.” He said. “We have these opportunities that we can harness to bring business to West Africa through Ghana,” he added.
Prudential Life Insurance Ghana is one of the companies that seems to be living Grant’s words to the letter. Inspired by the large number of uninsured Ghanaians the company, a subsidiary of Prudential, one of the world’s oldest life insurance companies, entered the Ghanaian market in 2014. According to Achumile Majija, the Chief Commercial Officer at Prudential Life Insurance Ghana, the factors that impressed the company were the country’s political stability, and the ease of doing business. “We’ve been talking to other markets to do similar business and we’re still in talks. We started some at the same time as we started in Ghana but there’s been a lot of red tape and bureaucracy, where you need to pay to see this person or you always have to get connections. In Ghana what I’ve found is that you guys appreciate foreigners more than your own.” He said when speaking on the panel. As Makhura, put it, “There’s a change of government in Ghana without blood flowing in the streets, it also has one of the more predictable business environments.”
According to World Bank figures, Ghana’s economy is expected to grow by 6.1 per cent in 2017. These are figures that South Africa cannot hope to match this year, as the country’s economy slipped into recession after contracting by 0.3 per cent in the fourth quarter of 2016 and 0.7 per cent in the first quarter of 2017. The country has however made plans that could boost economic growth in the future. “We as a government have decided to open up.” Zamxaka said when explaining his agency’s outward-looking investment strategy, promoting Gauteng as a favourable trade and investment destination. However to fulfil this mission, it is likely that the region will have to work hard to remove some of the negative stereotypes associated with doing business in Africa. As Makhura stressed, “Governance is important. We in government need to address issues of corruption. The idea that you can’t do business in Africa without having to pay a bribe must be something that we get rid of.”