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Mr Yoshio Utsumi, Secretary General of the ITU, Doctor
Matsepe-Casaburri, Minister of Communications, Mr
Shilowa, Premier of Gauteng, honoured guests, ladies and gentlemen:
A few weeks ago I read with deepening apprehension a headline in the Financial Mail which went: “Africa’s share of FDI slips.” Drawing on United Nations Conference on Trade and Development figures, the article pointed out that Foreign Direct Investment into Africa totalled $40 billion in the six years 1995 to 2000. And while this was almost three times the $15 billion received in the first half of the 1990s, our continent’s share of global Foreign Direct Investment inflows had slipped from 1,25% to just under 1%.
Was it just yet another example of Afro-pessimism? As an African who is a citizen of the world I can understand it. National markets do, after all, compete for international investment and capital on a global basis. But as an African who is in tune with the realities and opportunities developing on this continent, I believe the attitude is some years out of date.
The fact is this continent of ours is evolving. Recognising that the economy has become a global entity and acknowledging its knowledge and information-driven nature, the African communications market is opening up with many African governments committing themselves to promoting Information and Communication Technology.
In fact, Africa has overtaken both the Middle East and parts of Asia in opening up telecommunications markets and initiating regulatory reform. Kenya’s regional operator licences and the auction of Nigeria’s mobile operator licences are just two examples. South Africa, of course, is another case in point. Legislation is being finalised to licence a Second Network Operator while a third mobile licence has also been issued.
The short-term revenue advantages associated with state-owned monopolies are taking a back seat as Africa is increasingly showing its unwillingness to be left behind in the information race, while the urgency with which remedial action is being taken to rectify the situation is a clear indication that governments are serious about addressing lagging telephone densities and the fast-rising demands of the internet economy.
Privatisation and deregulation will, of course, not fill Africa’s communication vacuum. What is needed is a model that incorporates both privatisation and appropriate regulations combined with measures that will ensure service obligations, including roll-out obligations are met. Such a model must also address issues like the transformation of existing patterns of economic ownership, universal access and rural development.
The South African communications environment is currently undergoing rapid and far-reaching transformation. At Telkom we are prepared for this and are preparing for it every day. While Telkom remains for the present unlisted on any stock exchange, the company has been commercialised – it has to be run as any normal commercial enterprise – and government sold a 30% (twenty percent) stake in Telkom to Telecom Malaysia and US based SBC. Each of these shareholders is bringing in technical and commercial skills as well as investment underpins for our two-pronged investment programme.
Telkom is tasked with bringing telecommunications services to every corner of South Africa as well as providing state-of-the-art services to the commercial firms which rely on us for their own competitive advantages. Crucially, too, telecommunications are playing an important part in delivering internet-based education to schools in remote areas as well as in our burgeoning metropolitan centres.
If this century is to become Africa’s century, the continent, as a whole, needs to be able to count on modern telecommunications infrastructures – infrastructures that can be seamlessly integrated - one with another. 20% of the world’s population lives in Africa, and the scope for growth in modern telecommunications is obvious.
And because much of the continent is poorly-provided with telecommunications services, the infrastructure it puts in place can be the most modern available. We Africans should not have to be restrained by the older equipment that exists in other developed economies. We can also look at alternative service delivery techniques. For example providing opportunities for small service providers to deliver the last mile of services.
These are among the considerations underpinning the New Africa Initiative programme, the brainchild of South Africa’s president Thabo Mbeki and his counterparts, president Olusegun Obasanjo of Nigeria, president Abdelaza Bouteflika of Algeria and president Abdoulaye Wade of Senegal.
New Africa Initiative has been widely endorsed for it envisages African solutions to African problems. For too long a superficial outside view of Africa has been as a basket case continent. A continent that relied and would rely for years on hand-outs.
And while foreign investors would understandably invest in minerals, particularly oil, the basket-case image was scarcely conducive to investment in sustainable industries. Investment in businesses that processed Africa’s raw materials endowment and that added the value that creates jobs and rising living standards.
So, to revert briefly, to that Financial Mail article, and to counter the negative spin it placed on Foreign Direct Investment in Africa. While the greatest surge in Foreign Direct Investment entering sub-Saharan Africa in the six years 1995 through 2000, was into oil ventures in Angola, Gabon and Sudan, the largest single recipient nation was South Africa. The $8.8bn (eight point eight billion US dollars) South Africa received was aimed at manufacturing, at sustainable industries that added value and it was due to the stability that came with democratic elections and a transparent commitment to sound government and sound economic planning.
We should, of course, not delude ourselves. Africa’s share of FDI pales in comparison to, say, China’s. China has a population of 1.3 billion people. And though they are not, on average, wealthy, their numbers alone offer a tremendous market for consumer goods and services. In South Africa, our population is less than 50 million (fifty million), and the size of our domestic market is correspondingly smaller than China’s. So while South Africa has a stable economy with all of the factors in place for sustained growth, on the basis of population, and on that basis alone, South Africa and sub-Saharan Africa as a whole are viewed as less attractive investment destinations.
Sound governance has to be the under-pin of FDI. The market for investment funds is highly competitive, and most governments understand that no business person will invest in sustainable industries unless he or she feels confident that investment is safe and that his company will be treated even-handedly.
Governments across the continent are demonstrating their awareness of the fact that economics, and not politics, will make their countries proud citizens of the global community, and are adopting policies to promote investment. At the same time there is growing evidence that sound governance in many countries is increasing.
Together with regulatory reform, liberalisation and privatisation, governments must now allow private enterprise to partner them in building an infrastructure that will meet the requirements of international investors and local business alike.
Public-private partnerships will lead to government decentralisation which, in turn, will play a crucial role in improving financial accountability. Taking this to its logical extension, at the local or micro level, the participation in local projects by communities familiar with the prevalent country dynamics, will ensure proper accountability. In other words, the further decentralisation goes, the better the system.
Accountability goes hand in hand with transparency. That involves helping the public understand how budgets or spending programmes are structured. Here in South Africa, for example, we have moved away from national budgets disclosed annually. Now, our national budget forms part of national longer-term spending and development programmes that are themselves transparent.
Accountability and transparency are also crucial elements in deflecting the potentially corrosive effects of corruption. We should not forget that corruption is only possible when the corrupter and the corruptible meet. And openness in, for example, public tendering, is an absolute essential of honest government.
The last crucial factor in attracting Foreign Direct Investment is a sound regulatory environment. Accelerating liberalisation means more sophisticated and complex regulatory roles, but it is absolutely imperative that regulators apply consistent regulations. This, together with an environment with stable policies in place, contributes significantly to investor confidence.
In constructing appropriate legislative and regulatory regimes, open public debate is crucial. The power inherent in public debate was again demonstrated by the debate which followed the release of the draft Telecommunications Policy Directives and the Bill and it proved that, in this country, public debate is as healthy and influential as in any democratic nation. It is this transparency and debate which is an essential part of proving to investors that South Africa, and this continent, are safe-haven investment destinations.
Ladies and gentlemen, we may have a way to go, but the determination is there to prove that Africa is a safe, competitive and profitable target for FDI.
Thank you for your attention.
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