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Ladies and Gentlemen,
Mr Yotaro Kobayashi, Chairman Keizai Doyukai, Japan Association of Corporate Executives,
Mr Takashi Imai, Chairman Keidanren, Federation of Economic Organisations,
Mr Nobuo Yamaguchi, President Japan Chamber of Commerce and Industry,
Mr Hiroshi Okuda, President Nikkeiren, Japan Federation of Employers' Association,
Mr Kenji Miyahara, President, Japan Foreign Trade Council,
Distinguished Guests,
Ladies and Gentlemen:

I would like to thank you very much for extending this invitation to me to share some few thoughts with you today.

Many of us have on numerous occasions commended Japan for the dynamic economic development that it has achieved since the Second World War, resulting in the tremendous increase in the Japanese people's standard of living.

We are aware that you are currently grappling with the priority of dealing with the economic challenges facing you, and, we are confident that the energy and creativity that define the Japanese people will inspire this proud nation to success.

I am here today to talk about how South Africa and indeed the whole African continent can collaborate with Japan for our mutual good.

In this regard, we will hopefully explore the best ways of forming partnerships that would ensure economic growth, political stability and social prosperity.

Perhaps the starting point should be an overview of the South African economy. I would like to briefly sketch some of the salient features of the South African economy so that we can together have a better insight into the available potential of our country, our region and the continent.

When we attained our freedom and established a democratic order in 1994, we were faced with an ailing economy that needed urgent and far-reaching overhaul.

One of the priorities was to refocus the country's policies from mainly the demand-side support measures, i.e. tariffs and quotas, to supply-side support measures.

These supply-side support measures generally aim at raising fixed investment in manufacturing, restructuring domestic manufacturing towards greater international competitiveness, facilitating a higher degree of labour absorption and encouraging manufacturing in small and medium enterprises.

These measures were introduced in an era of accelerating globalisation. In this regard, our commitment to WTO-negotiated tariff reductions have been fulfilled and in certain instances actually exceeded the WTO obligations.

Accordingly, the openness of the South African economy increased from 41% in 1994 to 50% in 2000. Economic activity levels have increased with the number of new enterprises registered each year increasing from 42 076 in 1993 to 198 886 in 2000.

Through these and other economic reforms, we aimed at accelerating economic growth, create employment and new enterprises, advance black economic empowerment and increase competitiveness in the economy.

Clearly, essential to this is the development of infrastructure, technology, access to finance and human resource development.

Trade and Industrial Initiatives

In addition, the government has undertaken various trade and industrial initiatives, including among others, trade and industrial initiatives, the creation of Industrial Development Zones (IDZs); similar to Export Processing Zones (EPZs) which are aimed at increasing exports.

Feasibility studies for the establishment of these Industrial Development Zones are currently underway at six locations, close to existing ports and airports.

Government has already made measurable progress with its policy of fostering Spatial Development Initiatives (SDIs), which entail a clustering of public investment in a range of sectors such as transport, housing, small and medium enterprises, infrastructure, agriculture and water infrastructure.

Twelve of these local Initiatives are at various stages of delivery, while further initiatives are also planned for the Southern African region.

Examples include the Maputo Development Corridor, the West Coast Investment Initiative, the Wild Coast SDI and the Fish River SDI.

International Trade Relationships

A free trade and development agreement with the European Union (EU) has finally been signed, the trade protocol within the Southern African Development Community (SADC) is moving forward and the much-needed revision of the Southern African Customs Union (SACU) agreement is being pursued.

Furthermore, a Framework Agreement between South Africa and Mercosur, which include Brazil, Argentina, Uruguay and Paraguay, was signed during December 2000, establishing the terms of negotiation for a Free Trade Agreement (FTA) between the Southern African Development Community and Mercosur.

As we may be aware, the African Growth and Opportunity Act (AGOA) was also signed into law by the United States of America giving South Africa and a number of nations in sub-Saharan Africa free access to the US market for eight years for an array of products.

South Africa's progress with these key issues demonstrates how far down the road the country has come to maturity in international trade relations.

Relations with other countries in Africa

South Africa is a gateway to the rest of Africa and we will continue to stress the obvious fact that the continent is a relevant and potentially rich source of exports as well as an attractive investment destination.

Through the New African Initiative, we, together with other African leaders, have declared a firm and unequivocal commitment to the eradication of poverty and ensuring the sustainable economic development of the continent.

This pledge is based on a common vision, and a firm and shared conviction, to participate actively in the world economy.

Through the implementation of identified projects in key priority areas, we seek to accelerate efforts to eradicate poverty and significantly increase new investments, both domestic and foreign.

The New African Initiative aims to return control of development to the peoples of Africa as a process of empowerment and self-reliance.

We are now at the point where, having obtained consensus on this important Initiative, we are engaging our international partners so that we can move forward towards the implementation of this programme.

One of the urgent challenges is the need to diversify production. In this regard, the logical starting point is to harness the existing basis of African production, namely its natural resource base.

Value adding in agro-processing and mineral beneficiation must be increased and a broader capital goods sector developed, through a strategy of economic diversification based on intersectoral linkages.

There should be a wholesale support for private enterprise, both micro-enterprises in the informal sector and the principal engine of growth and employment, namely, small and medium enterprises in the manufacturing sector.

Of importance, there is a need to address such critical areas as the improvement of agricultural performance. This is, without doubt, one of the central prerequisites for economic development on the continent.

One of the positive outcomes of a positive performance in agriculture will clearly be the increase in rural people's purchasing power. This will, in turn, also lead to high effective demand for African industrial goods.

The induced dynamics would constitute a significant source of economic growth.

Trade Performance

Over the last decade we have seen a significant increase in the volumes of manufactured products. This contribution of manufactured products to total exports increased from 5% in 1988 to 41% in 1994 to 50% in 2000.

Furthermore, value added exports as a percentage of total exports has increased from 9% in 1994 to 24% in 1999.

Trade Opportunities

South Africa's economy displays a first world and third world mix both in the range of goods traded internationally and in the global spread of trade.

Like any developing and industrialising country, manufactured industrial goods make up 80% of imports, while a large proportion of South African exports consist of minerals or mineral-derived products and beneficiated and processed agricultural products.

However, examination of South Africa's manufactured exports shows the sophistication of sectors of her industry.

Exports include high-tech platinum catalytic converters for motor vehicle exhausts to Europe and America, mining machinery to North American mines, railway rolling stock to the Far East and electronic control and guidance systems for both civil and military applications in developed countries in the East and West.

In addition, virtually every type of manufactured industrial and consumer product is exported to the rest of Africa. South African construction companies are involved in projects throughout Africa, as well as in East Asia and the Middle East, while South African ship repair yards have a growing international reputation.

In contrast to many other developing countries, South Africa's foreign trade infrastructure is well developed.

As those familiar with South Africa will know, the physical transport and communications networks handle huge volumes of the flows of goods into and out of the country.

Financial institutions, clearing and forwarding companies, legal services, and engineering and other technical facilities are widely available.

Foreign Trade: A Significant Contributor to National Value Added

South Africa's foreign trade is increasing its contribution to the economy. Exports and imports of goods and services are together equal to more than 60% of national value added and this trend is expected to continue.

I am explaining these aspects of the South African economy in such detail because I think it is important that we have a fuller picture of the kind of economy we are talking about.

Working together for the African recovery

I want us to have a better understanding of the opportunities and potentials our economy holds for all of us who wish to invest in South Africa and the rest of the continent.

The position of the rest of the continent, we should perhaps restate the obvious, in the global economy is delineated by the reality that this vast landscape remains an indispensable resource base, which remains rich even after centuries of exploitation.

This offers the foundation for mining, agriculture, tourism and industrial development owing to its rich complex of mineral, oil and gas deposits, its flora and fauna, its wide unspoiled natural habitat and resourceful people.

However, despite these favoured blessings, Africa remains underprivileged and underdeveloped.

The reasons for this dire situation are well-known: the legacy of colonialism and apartheid, the consequences of the Cold War, the marginalisation by the workings of the international economic system and the inadequacies and shortcomings of the policies pursued by many countries in the post-independence era. A condition further aggravated in part by poor leadership, corruption and bad governance in some countries.

As a result of Africa's integration into global markets, principally as a supplier of cheap labour and raw materials, African resources have been sapped rather than employed for the continent's development.

Again, as opposed to developments in other markets, an infusion of investments activating the generation of wealth through value-added exports has been persistently absent in the continent.

Notwithstanding the shackles inhibiting growth in Africa, World Bank President James Wolfensohn on 16 July 2001 remarked to the United Nations Economic and Social Council that the African continent has experienced significant progress in the 1990s.

Dr Wolfensohn indicated that fourteen African countries had grown on average 4 per cent a year during this period, recording rising annual incomes of 2 to 3 per cent and higher.

In addition, another 10 countries followed close behind with growth rates above 3 per cent a year, while some countries grew at 7 per cent a year or higher resulting in significant benefits for the poor.

The international community's understanding of Africa's changing conditions has also been reflected in the earlier adoption of the United Nations Millennium Declaration in September 2000.

The Declaration confirmed the readiness to support the continent's efforts to deal with underdevelopment and marginalisation, pledging support for conflict prevention and the establishment of stable and democratic conditions.

A further commitment by the global community emphasised increased resource flows into Africa through improved aid, trade and debt relations between the continent and its trading partners, as well as increased capital inflows.

The New African Initiative pronounces that the continent will not permit itself to be conditioned by its circumstances anymore.

It is a programme anchored in the firm determination by Africans across the continent to disentangle Africa from the malaise of underdevelopment and exclusion in a globalising world.

Despite the setbacks of the past we would like to believe that the Japanese proverb is right when it states, "if one falls seven times, one stands up eight times".

I am confident that you will accept this invitation for more economic and business cooperation between South Africa and Japan, between Africa and Japan, for mutual gain - a Partnership for Prosperity.

As you are well aware, a journey of a thousand miles begins with the first step.

I believe we have already begun that journey.

I thank you.

Issued by The Presidency

2 October 2001