The Western Cape Trade and Investment Promotion Agency

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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
2
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

4
The Western Cape Trade and Investment Promotion
Agency

About Wesgro
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Our Vision
Wesgros 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 worlds population consumes 86 of all
  goods and services
• The poorest 20 of the worlds 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

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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 undesirable

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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
Source World Bank
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African Exports of Goods
Source World Bank
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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
Source World Bank
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FDI Net Inflows - Africa
Source World Bank
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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 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 markets / newcomers Volumes (8-9 pa) / mnf exports sensitive to exchange rate
Source Bureau of Economic Research
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Western Cape Sectoral real economic growth
2004/5 2007/8
Source Bureau of Economic Research
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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 dont have access to basic sanitation
  facilities

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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

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The Western Cape Trade and Investment Promotion
Agency

Embedding Sustainable Development in Trade
Investment Strategies
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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
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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 Arcade 80 St. Georges
Mall Cape Town South Africa
Tel [phone] Email info_at_wesgro.org.za Web
site www.wesgro.org.za