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
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Overview
• About Wesgro
• Contextualising trade, investment & development
• Defining sustainable development
• Trade as a means of development
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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
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The Western Cape Trade and Investment Promotion Agency
About Wesgro
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Our Vision
Wesgro’s vision is to make Cape Town & the
Western Cape the most competitive business
destination in the world by 2014
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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 practice.
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Our Core Objectives
• Attracting Investment
• Growing Exports
• Marketing Cape Town and the Western Cape
as a competitive business destination
• Industrial Development Agent
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The Western Cape Trade and Investment Promotion Agency
Contextualising
Trade, Investment &
Sustainable Development
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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
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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
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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
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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
standards is essential Where Business is Beautiful
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”
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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
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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
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Trade Trends: Africa
& the World
Trends in Merchandise Exports 1960 - 2003
8,000.00
7,000.00
6,000.00
5,000.00
US$bn
4,000.00
3,000.00
2,000.00
1,000.00
0.00
60
63
66
69
72
75
78
81
84
87
90
93
96
99
02
19
19
19
19
19
19
19
19
19
19
19
19
19
19
20
Sub Saharan Africa World Where Business is Beautiful
except SSA
Source: World Bank
African Exports of Goods
Trends in Merchandise Exports 1960-2003
120.00
100.00
80.00
US$bn
60.00
40.00
20.00
0.00
60
63
66
69
72
75
78
81
84
87
90
93
96
99
02
19
19
19
19
19
19
19
19
19
19
19
19
19
19
20
Sub Saharan Africa Where Business is Beautiful
South Africa
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
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Global FDI Flows
Net FDI Inflows 1970-2003
1,600.00
1,400.00
1,200.00
1,000.00
US$bn
800.00
600.00
400.00
200.00
0.00
-200.00
70
72
74
76
78
80
82
84
86
88
90
92
94
96
98
00
02
19
19
19
19
19
19
19
19
19
19
19
19
19
19
19
20
20
World Sub Saharan Africa South Africa
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Source: World Bank
FDI Net Inflows - Africa
Net FDI Inflows 1970-2003
16.00
14.00
12.00
10.00
US$bn
8.00
6.00
4.00
2.00
0.00
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
-2.00
Sub Saharan Africa Where Business is Beautiful
South Africa
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
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Western Cape growth dynamics
Strengths Ave real growth, 1999-2003
Well diversified & open; coastal
WCape: 3.9% pa / RSA: 3.1% pa
location
Well represented in the national Fin & business services (6.3% pa)
fast-growing services industries, / retail & catering (6.6% pa)/ Tpt &
even outperforming SA peers comm (6.8% pa) tourism
High value-added agric
Niche manufacturing & services,
processing/ boat building / ICT /
not portrayed in aggregate data
profesional services / film
Construction & property Retail/ tourism infrastructure, etc.
development (6.6% pa vs 4% nationally)
Strong export growth – established Volumes (8-9% pa) / mnf exports
markets / newcomers Where Business is
sensitive to exchange rate Beautiful
Source: Bureau of Economic Research
Western Cape: Sectoral real
economic growth 2004/5 – 2007/8
Construction 7.5
Wholesale, retail & catering 5.6
Transport and comm 5.6
Finance & business services 4.6
Western Cape GDPR 4.0
CSP services 3.7
Manufacturing 3.1
Electricity and water 2.1
Agriculture, forestry & fishing 2.1
General government 1.6
Mining and quarrying 0.8
0 1 2 3 4 5 6 7 8
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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
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Cape Town & Western Cape
Development Initiatives
Western Cape Provincial Government City of Cape Town
- Ikapa Elihlumayo: Growing and Integrated Development Plan –
Sharing the Cape One City One Future
•Micro Economic Development Strategy •Sustainable Job Creation
•Strategic Infrastructure Development •Competitive Advantage
•Provincial Spatial Development Framework •Access and Mobility
•Human Resource Development •Developing Urban Core
•Building Social Capital •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
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The Western Cape Trade and Investment Promotion Agency
Institutional support for
sustainability in Trade and
Investment
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Standards-related institutions
• There is a need for national agencies to serve as a
communication bridge between foreign standard-
setters 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).
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Environmental-related
Institutions
• Need for improved environmental standards, on par
with those standards prevailing in export markets.
• Need for a more stringent regulatory culture.
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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.
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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
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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.
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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.
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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.
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The Western Cape Trade and Investment Promotion Agency
Thank you /Nkosi/Dankie
12th Floor – NBS Waldorf Tel: +27 21 487 8600
Arcade Email: info@wesgro.org.za
80 St. George’s Mall Website: www.wesgro.org.za
Cape Town – South Africa
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