The South African Institute of International Affairs

1
South Africas Engagement with Angola Mozambique

• 27-28 March 2006, Lisbon
• Organised by Instituto de Estudos Estratégicos e
  Internacionais

2
Outline

• South Africas Africa Policy
• Historical context of relationship
• Angola
• Mozambique
• Key challenges

3
SAs Africa policy

• Past history as a determinant of SA diplomacy
  post-1994
• Big brother fears hence multilateralism
• Domestic apartheid eliminate global
  apartheid, and focus on democracy human rights
  in Africa
• Conviction of relevance of SA miracle
  transformation
• Africa key pillar
• Key drivers SAs future linked to Africa. Role
  in addressing Africas challenges
  politically-economically. African ownership

4
SAs Africa Policy (2)

• Political and economic tools
• Conflict resolution (informed by own experience)
• Economic development investment and capacity
  building
• Work with progressive leaders/countries on
  continent to achieve this.
• Africa on global agenda (G8)
• Restructuring continental architecture
• Shift in discourse (state sovereignty vs
  democratic governance)

5
SAs role in Africa

• Benevolent/malevolent? Perceptions vary
• Emerging middle power
• SA in international arena admirable (landmines
  NPT conflict diamonds)
• SAs acceptability as regional leader not always
  acnowledged
• or hegemon?
• hesitance to lead esp. in Southern Africa.
• Regarded as more aggressive in commercial terrain.

6
Politics, Economics Cooperation

• Schizophrenic approach
• Govt sensitivity to big brother. Not seen to
  giving SA business advantage in investment.
• Ambiguous about profit motive of business codes
  of conduct???
• SA business entry into post-conflict
  environments.
• SA not a donor.
• Capacity building and logistical support etc in
  DRC, Southern Sudan systems of monitoring
  evaluation not developed yet.
• Trilateral cooperation training/logistics e.g.
  DRC.
• Tools for funding IDC, DBSA.

7
Historical context of relationship

• Relations with Angola Mozambique ? Janus face
  of perceptions of SA.
• Apartheid SA supported UNITA and Renamo. It had
  troops in Angola, and both states were targets of
  its destabilisation strategy.
• Both provided support to ANC.
• Different relationships post-1994.

8
Angola-SA Political

• Could be better.
• Different political value systems
• Traditional militaristic understanding of
  threats security cooperation to bolster regime
  security against internal/external military
  challenges. (DRC)
• Angola key regional power militarily,
  politically. Primary sphere of influence, ROC,
  DRC.

9
Angola-SA Political (2)

• Resentment towards SA
• New kid on the block, Seniority FLS
  contribution. (Zimbabwe too)
• SAs attempt to mediate in mid-1990s. Different
  approaches to conflict resolution (Angola DRC)
• Sense that SA does not give government respect it
  should be accorded. (SA officials flying in
  quickly Rwanda-DRC accord, no credit)
• SA probably ranks below US, Brazil, Portugal and
  China in importance.

10
Angola-SA Political (3)

• Several high-level visits number of bilateral
  agreements
• Angola-SA Joint Commission February 2003. Next
  due in Luanda in 2005. Not happened.
• Many of these not implemented with enthusiasm.
  Reflects approach of both sides to the
  relationship.
• February 2005 PM visit. Signed 4 agreements

11
Angola-SA Political (4)

• SA offered logistical support for Angolan
  election. Not taken up.
• But, cooperating on training of brigades for DRC
  army recently joint training for the regional
  stand-by brigade.

12
Angola-SA Business linkages

• Relationship strengthened since 2003
  establishment of chamber of commerce.
• SA companies ABSA Bank, SA Breweries, Protea
  Hotels, Shoprite, Murray Roberts, De Beers.
• Opportunities in infrastructural development and
  spatial development projects (SA dti)
• West African Corridor (Wesgro)

13
Angola-SA Business Difficulties

• Absence of concerted strategy between govt and
  business.
• Bribery, corruption and poor governance practices
  on both sides.
• SA business difficult environment delays, red
  tape. Ranked 135/155 in World Banks Doing
  Business in 2006.
• Angolans suspicious of SA business contacts who
  seem to have BEE credentials.

14
Trade with Angola
15
Mozambique-SA Political

• Excellent. Joint Permanent Commission for
  Cooperation and Heads of State Bilateral
  Economic Forum
• Common approach to regional politics (negotiated
  solutions to regional conflicts). Key ally of SA
  in various forums, SADC, Nepad)
• Policing Fighting cross-border crime (vehicle
  theft, drug, arm smuggling). Support of SA
  business community and SAPS.

16
Mozambique-SA Political (2)

• Home affairs Cooperating on border controls with
  Swaziland. Visas scrapped
• Humanitarian Floods
• Naval cooperation SAN helps to patrol coastline.
  
• Numerous agreements in place Business success
  due to govt support in implementation of
  projects with problems taken up at govt-to-govt
  level.

17
Trade with Mozambique
18
SA FDI in Mozambique

• SA largest investor (49 of total foreign FDI
  1997-2002, value 1.3bn).
• In 2005 single largest investor 58. (93.7 m,
  52 large infrastructure construction projects.
• Followed by UK, Zimbabwe, Portugal. China in 6th.
• Leading sector Industry (Mozal aluminium
  smelter, Sasol, development of gas fields and
  pipeline to SA)
• ABSA Bank, SABMiller, Shoprite Checkers, Illovo
  Sugar
• Individual outlays small (85 of projects gt 1m)

19
SA FDI

• Investments by state-owned enterprises in Africa.
  Perceived to be politically driven. Eskom,
  Spoornet, Telkom.
• Yet, political will is critical Maputo
  Development Corridor.

20
Positive impact of SA FDI

• Trade balance, economic growth, revenue Mozal in
  2002 contr 2.1 to GDP growth, 53 to
  exports/SABMillers purchase of 3 breweries
  increased tax by 700 - operation provide 5 of
  total tax revenue.
• Technology transfer Industrys contribution grew
  from 16 in 1996 to 30.9 in 2002 (agriculture
  decreased from 30.5 to 19.5)
• Mozal smelter highest pot efficiency for AP30
  technology in the world (set two records, phase 1
  completed in 31 months (100 million under
  budget) and phase 2 completed in 26 months (195
  million under budget)

21
Positive impacts of SA FDI

• Increase in consumer choice, price stability
• Bolstering foreign business confidence in
  Mozambique
• Labour market Wage levels, skills levels,
  productivity, good corporate practice, job
  creation (SA FDI created 24,000 jobs in a
  country where 12 of population was in paid
  employment in 1999)

22
Negative impacts of SA FDI

• Limited linkages between investing companies and
  local business community (some exceptions)
• High import dependency of SA companies (source
  less than 10 locally)
• Spikes in Mozambican trade deficit (import
  dependency of mega projects in construction
  phase) difficult to sustain high growth levels
  between mega projects

23
Key challenges

• Clarity on objectives of diplomacy (pol-eco).
  Nexus btwn self-interest and broader goals.
  Win-win?
• What is possible bilaterally and what
  multilaterally. EU, SADC?
• In SA context Africas regeneration can lead to
  new consumer markets, well-functioning states,
  greater confidence in Africa. Islands of wealth
  cannot survive in oceans of poverty.

24
Key challenges

• Role of innovative self-grown mechanisms for
  improving governance (APRM)
• Conflict resolution and stability
• Chinese entry
• Resource demand, revenue boon for states
• Growing awareness of sense of threat Policy
  paper. Elites versus ordinary people
• Interests of local actors should not be
  neglected.
• International trend Codes of conduct for
  business and sustainability reporting.