FOCUS ON THE EU

Ambassador of the European Union to South Africa, SANDRA KRAMER, shares her views on the excellent relationship between South Africa and the EU

African and European Union leaders met in February 2022 in Brussels and stated that they would work towards a renewed partnership. The Final Declaration included specifically sustainable and sustained economic development among their priorities.

I greatly value the invitation to connect with the Progressive Business Forum through this article to discuss the important trade and investment links between the European Union (EU) and South Africa.

I started my assignment as the European Union’s Ambassador to South Africa by presenting my credentials to the President of the Republic of South Africa on 11 August this year.

For the past few years, I served as Africa Director at the EU’s Directorate-General for International Partnerships, a period during which the ties between the EU and the African continent deepened significantly, as showcased by the successful EU–Africa Summit mentioned above.

Prior to that I worked on trade, investment and business when serving at the EU delegations to Indonesia and India. Economic and industrial policy was my focus when I worked at the DirectorateGeneral for Enterprise and Industry. By way of background, allow me to note that the EU, founded on representative democracy, is far more than an inter-governmental body representing 27 sovereign European member states – including Belgium, Bulgaria, Croatia, Czech Republic, Denmark, Germany, Estonia, Ireland, Greece, Spain, France, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Hungary, Malta, the Netherlands, Austria, Poland, Portugal, Romania, Slovenia, Slovakia, Finland and Sweden. For instance, the EU institutions have exclusive competence over trade and investment policies, while working in synergy and collaboration with member states who lead on trade, investment and business promotion.

The EU is the largest economy in the world, comprising the largest trading block, with a customs union and a single market of close to 450 million consumers. The EU is at the forefront of fighting against climate change and aims to achieve climate neutrality by 2050, which underpins our commitment to the Just Energy Transition Partnership with South Africa.

The EU and South Africa enjoy a strategic partnership, the only one the union has on the African continent. It frames our relations, dialogues and cooperation at all levels, from presidential summits to technical cooperation.

The EU is South Africa’s largest investor, with 40% of FDI stock, as well as South Africa’s preeminent trading partner, making up 22% of SA’s total trade. This success is firmly based on the legal framework governing our trade relations – the EU–SADC Economic Partnership Agreement – and the certainty and predictability it provides.

Thanks to this agreement, trade flows have continuously risen, leading for the first time to a positive trade balance for South Africa in 2021 of some R15 billion.

More than 1000 EU companies are active in South Africa. They contribute substantially to South Africa’s economic growth and transformation.

The EU is strongly committed to foster economic transformation in South Africa and supports tackling the triple challenge of poverty, inequality and unemployment. • EU companies provide an estimated 350 000 direct jobs and almost triple that in terms of indirect jobs in South Africa. • EU companies are geographically spread across many parts of South Africa: while the majority are in Gauteng, a significant number are also based in the Western

Cape, KwaZulu-Natal and the Eastern Cape.

• EU companies make a notable contribution to broad-based black economic empowerment: › 27% of EU fi rms have a B-BBEE rating of Level 4 or better › 22% of EU companies have B-BBEE ratings at Levels 5 to 9 › 88% of maximum targets in social economic development objectives › 74% in supplier development › 65% in skills development › 48% ownership targets, of which 17% black owners and 9% black females. One of the most important outcomes of the EU–Africa Summit is the Global Gateway investment package. Global Gateway provides for investments to enhance partnerships between the EU and Africa in the fi elds of digital, climate/energy, transport, health, education and research. For example, we currently work in close partnership with the Department of Small Business Development to improve small businesses’ competitiveness, access to fi nance as well as an improved regulatory environment, including the reduction of red tape. And with the Departments of Basic Education, Higher Education and Training as well as Labour and Employment, we are closely collaborating to improve pathways from learning to earning, focussing on skills development. The EU is fully committed to the swift implementation of the Just Energy Transition Partnership and will mobilise R520 million (€30 million) in grants, and through the European Investment Bank, some R17 billion (€1 billion) to support South Africa’s priority investments for just energy transition. During my mandate, I look forward to establishing closer links with the business community and working together to improve the investment climate, so that South Africa can reap the benefi ts of being an attractive investment destination. Beyond doubt, South Africa enjoys many assets that are attractive to foreign businesses, including a solid fi nancial sector and a strong judicial system. But challenges remain such as aging infrastructure, the energy crisis, and the need for a more predictable environment from a policy and legislative perspective, as well as tackling corruption and enhancing security. To constructively address these challenges, the EU works together, including through the EU Chamber of Commerce and Industry in Southern Africa based in Johannesburg. Its mission is to work towards an attractive investment climate in South Africa by engaging with South African stakeholders and business associations. I look forward to a fruitful engagement with all of you in the Progressive Business Forum. We see great potential for cooperation and for business. Together, in a partnership of equals, we can make the most of the economic and investment opportunities that lie ahead of us.

AMBASSADOR OF THE EUROPEAN UNION TO SOUTH AFRICA