South Africa woos India to check Chinese play

With Chinese influence in the smaller countries in the southern part of Africa on the rise, South Africa has started wooing India to maintain its pace of growth and foreign direct investment (FDI) in the country.

South Africa, which is a prominent member of the South African Development Community (SADC) and was long treated as a launch pad for global companies to enter the African continent, has been witnessing increased Chinese influence among its neighbours.

“Our labour union in South Africa is very active and strongly protects the exploitation of our labour force. As a result, Chinese companies find it difficult to enter the country,” said Brian Robertson, a senior official at South African International Steel Fabricators (ISF), a privately promoted association of value-added steel manufacturers in the country.

Robertson was a part of a 150-strong South African trade and industry delegate that visited Mumbai and Delhi last week.
Robertson said since other members of SADC offer relatively easier labour laws, it is being observed that China is gradually tilting towards the other members than bringing its investments in South Africa.

“To maintain our leadership position and not be left behind in the race of bringing in FDI, we want Indian players to invest in our projects,” he said.

SADC is an association of 15 South African, nations formed in 1992, to bring in economic liberalisation and integration among the South African countries. Some of the prominent members of SADC are South Africa, Botswana, Democratic Republic of Congo, Mozambique, Zambia, Namibia, Zimbabwe etc.

Robertson, whose ISF is promoted by steel baron Lakshmi Niwas Mittal, was here to scout for mid-size value-added steel manufacturers to supply steel for ISF’s annual steel requirement of 60,000 tonne per annum. “While 58% of our requirement is met by the Mittals, we are looking at India aggressively to supply steel to us,” he said, adding that in the last three days in India, he has had discussions with some keen Indian players interested to supply steel.

Mzwakhe Lubisi, investment promotions manager, Richardsbay Industrial Development Zone (IDZ) said it would be too early to say that we are losing out to other SADC members in terms of Chinese investments. “We still attract a lot of investments from China, but it is true that Chinese companies exploit our labour. Since we have strong labour federations, it becomes difficult for China to get an easy access,” he said.

Lubisi said IDZ in South Africa is similar to a special economic zone (SEZ) in India and offers a vista of benefits to prospective Indian players to choose from.

“Apart from giving smooth access to land, water electricity, we also provide import duty waiver on capital goods and plants, waiver of VAT on raw material, 15% off on capex, offer foreign investment grant etc,” he said. 

He said manufacturing, heavy industries, agro processing, capital equipments, logistic parks and automotive are some of the sectors where IDZs are trying to attract Indian investment.
While Tata Motors is already present in South Africa in a big way, Tshiamo Ngakane, acting business development manager, Automotive Supplier Park at Rosslyn, South Africa said he had discussion with the company to set up manufacturing facility at the park too. “We also had discussions with few more automotive companies India and expect good response,” he said.

The automotive park is like a smaller version of ITZ, which is dedicated to the automotive sector. “We are spread across an area of 130 hectares and currently have 12 manufacturing companies. In the subsequent phases of development of the park, we are looking at Indian investments,” he said.
According to a note released by the visiting delegation, the purpose of the visit was to take forward on the commitments and consolidating some of the achievements of President Jacob Zuma’s 2010 visit to India.

“South Africa and India have set an annual bilateral trade target of US$10 billion by 2012 and there is every expectation we will meet or exceed that target,” the note said.