The Western Cape Trade and Investment Promotion Agency

The Western Cape Trade and Investment Promotion Agency Incorporating Sustainable Development Principles in Trade & Investment Strategies Ismail Dockrat – Chief Executive Sustainable Development Conference 21 June 2005 Where Business is Beautiful

Overview • About Wesgro • Contextualising trade, investment & development • Defining sustainable development • Trade as a means of development Where Business is Beautiful

Overview cont. • Embedding Sustainable Development in Trade & Investment Strategies • Institutional support for sustainability in Trade and Investment • Raising human well-being by means of sustainable development Where Business is Beautiful

The Western Cape Trade and Investment Promotion Agency About Wesgro Where Business is Beautiful

Our Vision Wesgro’s vision is to make Cape Town & the Western Cape the most competitive business destination in the world by 2014 Where Business is Beautiful

Our Mission • Fulfilling our City and Provincial Government Mandates of attracting & retaining direct Investment, growing Exports & marketing the business image of the Western Cape globally. • Living the aspirations and spirit of the new South Africa • Contributing to the growth and development of Africa through our commitment to NEPAD • Driving shared growth and strategic alignment as priority approaches to development • Benchmarking ourselves against global best Where practice. Business is Beautiful

Our Core Objectives • Attracting Investment • Growing Exports • Marketing Cape Town and the Western Cape as a competitive business destination • Industrial Development Agent Where Business is Beautiful

The Western Cape Trade and Investment Promotion Agency Contextualising Trade, Investment & Sustainable Development Where Business is Beautiful

Some facts • 20% of the world’s population consumes 86% of all goods and services • The poorest 20% of the world’s population consumes 1. 3% of all goods and services • Between 1960 and 1990 more than 25% of the Central American forest was converted to pasture for cattle to be converted into hamburgers • Each US citizen contributes 60 times more to global warming than each Mexican Where Business is Beautiful

Some facts cont. • In Brazil, less than 1% of the population owns about 44% of the fertile agricultural land, and 32 million people are officially considered destitute • NAFTA, the EU and APEC together produce 62% of world manufactured output and 77% of world exports • Of the 45 countries on the bottom of the Human Development Index, 35 are sub-Saharan African • Grains fed to US livestock equals as much food as is consumed by the combined populations of India & China Where Business is Beautiful

Defining Development : Turning to the same page Development in economic terms: “A sustained increase in economic growth per capita” • Key elements: income growth & distribution of income Development According to the Human Development Report: “The purpose of development is to enlarge all human choices, not just income” Sustainable Development: “Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs. ” - Brundtland Report 1992 Where Business is Beautiful

Implications of Sustainability for Trade & Investment • Trade and investment strategy cannot incorporate “quick return, high cost” plans • Strategy must be longer term, using foresight beyond the current generation • Project identification must follow guidelines on environmental and social impact • Diversification to avoid dependence on one or two commodities will be necessary • Voluntary compliance with labour and environmental Where Business is Beautiful standards is essential

The Charges laid against Trade & Investment • Reaffirming or worsening the status quo of income distribution • Displacement of workers – structural unemployment • Increased vulnerability to volatility of world markets • Environmental degradation as the cost of economic efficiency • Deterioration of human rights in a “race to the bottom” Where Business is Beautiful

Trade & Investment for Sustainable Development • To meet societal demands in terms of material goods, growth is a necessity, not an option • Trade and Investment, by accelerating growth and creating opportunities, are the means through which we strive for development • There is a need for Trade and Investment strategy to ensure that the means do not get confused as being the end. • Trade & Investment at the cost sustainable development is Where Business is Beautiful undesirable

Trade as a Means of Development • International trade has grown twice as fast as world income since the end of World War 2 • Trade provides society with the foreign exchange necessary to purchase socially beneficial goods which may not be provided locally • Trade exposes an economy to technological innovation • Exporting enables local firms to expand their market beyond the limited domestic market. This expansion creates jobs Where Business is Beautiful

Trade Trends: Africa & the World Where Business is Beautiful Source: World Bank

African Exports of Goods Where Business is Beautiful Source: World Bank

Investment as a Means of Development • Foreign Direct Investment expands the economy by providing capital in key sectors • FDI represents more than just money, it also represents skills, technology and access to global markets • FDI can assist in economic transformation to maintain more value-added production at home Where Business is Beautiful

Global FDI Flows Source: World Bank Where Business is Beautiful

FDI Net Inflows - Africa Where Business is Beautiful Source: World Bank

Context: SA Economy • Budget Deficit below 3% for 7 years • Inflation within target range (3 -6%) for 19 months • Sustained increase in investment for the first time in 30 years • Lowest interest rate in more than 20 years • Economic growth heading for plus 4% • Supportive global economic growth • Consumer confidence increasing • Business confidence at 23 year high Where Business is Beautiful

Western Cape growth dynamics Strengths Ave real growth, 1999 -2003 Well diversified & open; coastal location WCape: 3. 9% pa / RSA: 3. 1% pa Well represented in the national fast-growing services industries, even outperforming SA peers Fin & business services (6. 3% pa) / retail & catering (6. 6% pa)/ Tpt & comm (6. 8% pa) tourism Niche manufacturing & services, not portrayed in aggregate data High value-added agric processing/ boat building / ICT / profesional services / film Construction & property development Retail/ tourism infrastructure, etc. (6. 6% pa vs 4% nationally) Strong export growth – established Volumes (8 -9% pa) / mnf exports Whererate Business is Beautiful markets / newcomers sensitive to exchange Source: Bureau of Economic Research

Western Cape: Sectoral real economic growth 2004/5 – 2007/8 Where Business is Beautiful Source: Bureau of Economic Research

Western Cape Development Challenges • Youth unemployment reaches 80% in some areas • Among the widest income disparities in the country • Urbanisation outstrips the ability to provide adequate housing • Many don’t have access to basic sanitation facilities Where Business is Beautiful

Cape Town & Western Cape Development Initiatives Western Cape Provincial Government - Ikapa Elihlumayo: Growing and Sharing the Cape • Micro Economic Development Strategy • Strategic Infrastructure Development • Provincial Spatial Development Framework • Human Resource Development • Building Social Capital City of Cape Town Integrated Development Plan – One City One Future • Sustainable Job Creation • Competitive Advantage • Access and Mobility • Developing Urban Core • Improving Existing Settlement • Cohesive Self-reliant Communities Wesgro: The Official Trade and Investment Promotion Agency of the Western Cape • Attracting Investments • Growing Exports • Marketing Cape Town and the Western Cape as a competitive business destination • Industrial Development Agent Where Business is Beautiful

The Western Cape Trade and Investment Promotion Agency Embedding Sustainable Development in Trade & Investment Strategies Where Business is Beautiful

Toward sustainability in Trade & Investment Strategy • Environmental and social impact guidelines for projects • Working with finance providers to ensure new investments are environmentally sustainable and socially viable • Active encouragement of voluntary compliance with environmental and labour standards • Sustainability criteria in Major Investment Project Development • Promoting sustainable business opportunities • Active identification of “greener” export opportunities in international markets • Promote sector-specific sustainable development activities Where Business is Beautiful

The Western Cape Trade and Investment Promotion Agency Institutional support for sustainability in Trade and Investment Where Business is Beautiful

Standards-related institutions • There is a need for national agencies to serve as a communication bridge between foreign standardsetters and domestic exporters, relaying standards and trends to the latter, and feedback from the former. • Need for regional/domestic accreditation agencies to perform conformity assessments ( agency must be in possession of the necessary technologies and skills to do advanced reliable testing). Where Business is Beautiful

Environmental-related Institutions • Need for improved environmental standards, on par with those standards prevailing in export markets. • Need for a more stringent regulatory culture. Where Business is Beautiful

Export-related institutions • Need for national and export –promotion agencies to disseminate trade knowledge on international best practice in both quality production and production processes, so that exporters can meet foreign standards. Where Business is Beautiful

The Western Cape Trade and Investment Promotion Agency Raising human well-being by means of sustainable development Where Business is Beautiful

Sustainable Development • If our objective is sustainable development, it necessitates the need for: - Informed policy –making - Capacity building Where Business is Beautiful

Moving towards more informed policy-making • More research regarding the varied impacts of trade on the environment and environmental standards on trade will result in greater understanding, which is a prerequisite for better trade and environmental policies- policies that will lead to sustainable development. • Research has two distinct values: - Informs negotiations at the international level. - Informs government as to how domestic policies may help improve export performance and environmental integrity. Where Business is Beautiful

Case for Capacity building • Knowledge and understanding of trade and sustainable development linkages are good foundations for policy-making, but they also need to be supplemented by technical training in areas such as trade law, environmental law, treaty negotiations, environmental management and regulation etc. Where Business is Beautiful

Sustainable development as the way forward • Sustainable development criteria in trade and investment provides both opportunities and challenges. • Challenges, however can be overcome and opportunities exists to be exploited. • Thus we need to be proactive and innovative if we are to maintain and sustain our economic activities as well as our environment. Where Business is Beautiful

The Western Cape Trade and Investment Promotion Agency Thank you /Nkosi/Dankie 12 th Floor – NBS Waldorf Arcade 80 St. George’s Mall Cape Town – South Africa Tel: +27 21 487 8600 Email: info@wesgro. org. za Website: www. wesgro. org. za Where Business is Beautiful