The opportunity with Ramaphosa

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The people-to-people bonds between India and South Africa go back to the 1860s when the first Indians reached South African shores, but the state-to-state connection is more recent. This year marks the 25th year since the countries established diplomatic relations as the brutal apartheid regime was ending. The year also represents milestones in the lives of the two nations’ most iconic leaders. For India, the Pietermaritzburg incident in South Africa on 7 June 1893 – 125 years ago – launched a young lawyer, M.K. Gandhi, on the road to Satyagraha; his nonviolent resistance profoundly affected both nations. This year is important to South Africa too; its first president, Nelson Mandela, was born a century ago, on 18 July 1918.

India and South Africa are natural partners – two countries, unbroken in spirit after enduring oppression, struggle and hardship. Speaking of Mahatma Gandhi, Mandela said: “India’s soul truly does lie in South Africa.”

Why the celebrations?

The governments of India and South Africa are holding celebrations to mark these three landmark events. The India-South Africa Business Summit, held in Johannesburg on April 29-30, was a vital part of the proceedings. Other events will unfold in the coming months.

Both countries are eager to impart fresh momentum to their bilateral relations, which languished in the later phase of Jacob Zuma’s presidency (2009-2018) when it was marred by a series of corruption scandals and controversies christened “State Capture.” The term refers to the excessively close relationship between the presidency and an Indian business family that attracted widespread criticism in South Africa, and contributed to tarnishing Indian business’ otherwise positive image. The current celebrations are expected to remind the people about the unique bonds the two nations share and to keep governments focused on the future of this crucial relationship.

Cyril Ramaphosa, who took over in February as South Africa’s president, is masterminding a rejuvenation of South Africa’s polity and economy. He has committed himself to providing a corruption-free and transparent administration and ensuring accelerated economic development based on inclusiveness. He is serving the remaining part of Zuma’s tenure, but he – and his African National Congress (ANC) – face a tough election next year. The Zuma faction, though reduced to a minority, remains strong, so the new president has to tread with caution. His call for South Africa to open a new chapter in its history has received nationwide support. He has spoken of “a new dawn.” He plans to accord high priority to economic advancement – and, in particular, to attract $100 billion in direct foreign investment during the next five years.

The Indian angle

China is South Africa’s largest trading and economic partner today, but India continues to be a player that counts. More than 150 Indian companies operate in South Africa. In a recent study, Price Waterhouse and the Confederation of Indian Industry (CII) estimated that investment by Indian industry in South Africa exceeds R50 billion (more than $4 billion) and provides employment to over 18,000 South Africans.

The six sectors in which the Indian presence matters are pharmaceuticals, automobile, financial services, information technology, the mining industry and the green economy. Cipla and Ranbaxy have played a crucial role in the healthcare sector, helping South Africa provide affordable anti-retroviral drugs (ARVs) to the most needy. The Tatas and Mahindras are household names in the region. Many of India’s top IT companies are helping South Africa’s medium- and large-scale companies grow. Vedanta, with its $1 billion investment in South Africa’s mining sector, has emerged as a valued partner: Pravin Gordhan, South Africa’s minister of public enterprises, was alluding to this when he remarked recently in jest that Vedanta’s investments had reduced the president’s target of $100 billion as FDI to $99 billion only.

Trade is projected to show much potential for growth. It peaked at about $14 billion in 2012-13. But the value of trade declined to $9.3 billion in 2016-17. India is South Africa’s fourth largest import partner and seventh largest export partner. Both Indian and South African officials have spoken of $20 billion as the goal to be reached in the next five years. Its attainment would naturally depend on joint efforts in the future as well as the success of “an action plan” that Indian Commerce and Industry Minister Suresh Prabhu promised while speaking at the Business Summit on April 30.

Additional measures

A few days last month, spent in intensive interaction with a cross-section of South Africans and fellow Indians in Johannesburg and Pretoria, revealed that rejuvenation in India-South Africa economic cooperation is achievable in the medium term.

The skill gap is a major constraint in South Africa’s economic development. Indian companies have been assisting industry with this problem, and they can do more. An Indian initiative to establish the Gandhi-Mandela Skills Institute in Pretoria, with full assistance of the Indian government, promises to be an innovative step.

Two obstacles to the growth of economic cooperation are the difficulty employees of companies face in obtaining visas to visit South Africa and the absence of direct flights between the two countries. The South African government is addressing them.

Other challenges include the Broad-Based Black Economic Empowerment (B-BBEE) codes that require foreign companies to share ownership with South Africans, and South Africa’s bureaucracy and red tape. These constrain all foreign corporates, not just Indian companies.

India’s public diplomacy in South Africa is in high gear to showcase the rich legacy and enticing opportunities in the India-South Africa relationship. South Africa also plans to encourage its representatives to scale new heights. Both sides also need to consider favourably the proposal to initiate a Track 1.5 Dialogue between think tanks and officials.

Communication and interaction at the highest political level too needs to be boosted. President Ramaphosa and Prime Minister Modi are due to meet in South Africa at the BRICS summit in July. South Block could do well by inviting President Ramaphosa to pay a bilateral visit as soon as possible. This will help him politically and impart strong momentum to the relationship in an historic year.

 

References

  1. Martin, Michaela Elsbeth, Hussein Solomon, ‘Understanding the Phenomenon of “State Capture” in South Africa’, Southern African Peace and Security Studies, 5, 1, <http://www.saccps.org/pdf/5-1/5-1_DRMartin_DrSolomon_2.pdf>
  2. Indian High Commissioner Ruchira Kamboj stated: “The India-South Africa Business Summit is born from a conviction: a conviction that our two countries share a future as rich as our past.”
  3. Please see his inaugural speech. Ramaphosa, Cyril, ‘Full Text: Now is the time to lend a hand, says President Cyril Ramaphosa in inaugural SONA 2018 speech’, news24, 16 February 2018, <https://www.news24.com/SouthAfrica/News/full-text-now-is-the-time-to-lend-a-hand-says-president-cyril-ramaphosa-in-inaugural-sona2018-speech-20180216>
  4. Please see comment by the Editor (P.2-3) and the article by Oscar van Heerden (P. 8-11) in The Thinker, Quarter 2 – 2018.
  5. In contrast, China-South Africa trade stood at $26.5 billion in 2017, about three times higher than India’s trade with South Africa. In 2015-16, Chinese large and medium-sized companies were covering diverse sectors (viz, banking and finance, infrastructure, mining, manufacturing and marine cooperation) with a total estimated investment of $16.5 billion, four times higher than India’s.
  6. Pricewaterhouse Cooperhouse, Confederation of Indian Industries, Indian industry’s inclusive footprint in South Africa: Doing business, doing good, (South Africa: PWC)
  7. Ibid. The above study states: “A number of factors explain this decline, including South Africa’s credit rating downgrade, policy uncertainty, political and economic uncertainty as well as exchange rate fluctuations.” P.5.

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