SAFM Market Update: SA investing: rules change too drastically

Stefan Sakoschek, Regional Director of the EU Chamber, was interviewed by Siki Mgabadeli.

The full podcast and transcript can be found here.

SIKI MGABADELI:  Today we are asking whether the rules for investing in South Africa have changed and if that change is taking place too quickly and in too drastic a manner.

Stefan Sakoschek is the executive chairman of the EU Chamber of Commerce & Industry in Southern Africa, and he certainly thinks so and he’s going to tell us why. The EU Chamber represents 2 000 companies from EU member states and they make up about 77% of South Africa’s total annual foreign direct investment stock, so it’s a significant core of our trading partners.

 

So let’s chat to Stefan. Stefan, thanks for your time this evening. Just give us a sense of the trading relationship that we as South Africa currently have with the European Union and how it has developed over the years, the relationship between business and our part of the world.

STEFAN SAKOSCHEK:  Hi, Siki. Thanks for giving us the time to say a few words.

I think I just need to set the background a little bit. The EU Chamber is a federation of bilateral chambers of commerce, so via them we represent in effect European business invested in as you say just short of 2 000 companies, some 77% of investment stock. And that converts into literally close to 500 000 jobs in South Africa, 250 000 direct jobs, 150 000 indirect jobs, give or take some.

I think that was also mentioned in the State of the Nation Address by President Jacob Zuma – that we represent close to 35% of South Africa’s GDP.

If you look at our trading figures between EU and SA, we are looking at an annual bilateral expend of close to R460 billion between the 28 European member states and South Africa in comparison to China as an example of R220 billion. So we are definitely the largest foreign direct investor in SA, but also the largest trading partner.

SIKI MGABADELI:  I want to get a sense of how the relationship has developed since South Africa went from being very closed econmy to one that’s as open as it is now.

STEFAN SAKOSCHEK:  Look, we are very committed to South Africa. I think it’s a consensus across all European business and that’s demonstrated by the fact that since the end of apartheid, I myself have been here for close to 25 years now. Europe was definitely bullish and still is, in fact, about South Africa. And we’ve demonstrated that by heavy investments over 20 years – close to R2000 billion in brick and mortar investments across all sectors of industry. We’ve got manufacturing in the automakers, of course. A big portion of that is across all sectors of industry – pharmaceutical, financial services and engineering. So very heavily involved financially, and as trading partners, and also very heavily involved in terms of investment.

SIKI MGABADELI:  In what way would you then say things are starting to change and the rules of engagement are becoming much tighter, and what should South African authorities do to make things more pleasant?

STEFAN SAKOSCHEK:  Well, I think that’s part of our portfolio and part of the messages we are conveying. As the EU chamber we have managed – and it’s not an easy task in itself – to federate multiple messages across all sectors, across all countries representing Europe and SA. And the messages we are trying to convey revolve around the fact that SA today is really a global trading partner by and large. It’s a member of Brics and that’s seen as a global trading partner for Europe and certainly worldwide. And as such I think we have a lot of success stories and a lot information to bring and a lot of guidance, if I may call it that, to bring to the table to the government, whether it’s manufacturing, whether it’s the investment bill, whether it’s property rights, whether it’s manufacturing incentives, and all sorts of things.

What we are trying to say is listen to our success or failure stories, in fact, and try to take information from that and take experience from us. So that’s what we are trying to do – showing our experiences with South Africa.

SIKI MGABADELI:  Fantastic, and hopefully we’ll engage even further, Thanks for your time today.