Boosting private sector participation stands out as a crucial priority as EU looks to strengthen economic partnership with SA

Image Title
Boosting private sector participation stands out as a crucial priority as EU looks to strengthen economic partnership with SA
Get In Touch
Boosting private sector participation stands out as a crucial priority as EU looks to strengthen economic partnership with SA
Get In Touch
14 February 2024

Urgent call for private sector collaboration to address infrastructure challenges to boost economic revival.

Increasing private sector involvement is paramount for South Africa to effectively address its numerous challenges, particularly those concerning electricity and logistics that have been holding back the economy. This was the resounding message delivered by speakers at the Wesgro and EU Chamber trade and investment breakfast held on Wednesday, which drew key stakeholders, including European investors deeply involved in South Africa.

The European Union is South Africa's largest trading partner and the primary source of foreign direct investment (FDI), with over 1,000 European companies contributing to 400,000 jobs directly and indirectly.

Eskom, South Africa's power utility, has grappled with frequent power cuts due to aging infrastructure unable to cope with demand. Concurrently, logistical bottlenecks within the port and rail systems have hindered the efficient transportation of crucial export commodities to their destinations. This subpar performance of South Africa's freight logistics network and unreliable power supply have not only hampered exports and business expansion but have also impeded efforts to reduce unemployment rates.

Wrenelle Stander, CEO of Wesgro, highlighted the increasing significance of the private sector in South Africa's economy, particularly in critical areas such as energy and logistics. She emphasised the importance of innovative problem-solving and collaboration across the public-private spectrum to stimulate economic growth effectively.

Stander noted the collaborative efforts between the government and private sector in the Western Cape, nurturing an investment-friendly environment through streamlined processes and proactive support for investors. This collaborative spirit extends to international partners like the EU, essential for driving sustained economic development.

“The economic leadership team in the Western Cape is aligned across the tiers of government. Our investment environment is relatively conducive with a focus on cutting red tape and rolling out the red carpet for investors. There is an openness to collaborate across the public - private ecosystem. With a capable administration and a commitment to public-private collaboration, the province is poised for sustained growth,” she said.

Looking ahead, Stander outlined Wesgro's innovative approach to trade, leveraging technology through initiatives like the Cape Trade Portal to connect exporters with global markets. However, she acknowledged concerns among exporters regarding climate regulations and committed to working with EU partners to facilitate a smooth transition. Furthermore, Stander drew parallels between the priorities outlined in the EU Strategic Agenda and the Western Cape Growth for Jobs Strategy, particularly focusing on leveraging the green economy and adapting to the digital era. Both the EU and the Western Cape prioritise initiatives aimed at promoting sustainability and technological advancement.


Further reinforcing the importance of collaboration, Alderman James Vos, Cape Town's mayoral committee member for Economic Opportunities, highlighted the economic toll of logistical inefficiencies, particularly port congestion.

“Our research shows that the South African economy is losing about R98m per day due to port congestion," Vos stated, underscoring the urgency of port upgrades to facilitate smoother business operations. He outlined initiatives to support high-growth sectors, aiming to overcome challenges like load shedding by 2026 through sustainable energy strategies.

Vos highlighted the region's commitment to enhancing its business environment through initiatives like the ease of doing business index, aimed at building a much more efficient business and investment environment to boost growth.

Her Excellency, Sandra Kramer, the EU's ambassador to SA, underscored the importance of strengthening the Economic Partnership Agreement governing trade between the EU and the Southern African Development Community (SADC). Kramer outlined the EU's sustainable investment strategy and its focus on catalysing private sector investments in areas such as climate, energy, transport, logistics, and education.

The Global Gateway initiative, a European strategy to bolster connectivity and infrastructure development worldwide, aims to mobilise significant investments for sustainable projects, creating opportunities for EU Member States' private sector while upholding environmental and labour standards.

“Unlocking private sector participation is extremely important and a priority. We will never do this without fruitful collaboration between the public and private sector,” Kramer said.

Mireille Wenger, the Western Cape Minister for Finance and Economic Opportunities, highlighted how crucial the EU is for the province's economy. She emphasised the importance of simplifying processes to attract foreign investment, skills, and tourism. Wenger also pointed out the ongoing efforts to enhance the Port of Cape Town's functionality, recognising its pivotal role in economic growth. In 2023, the province exported goods worth R37.57 billion to the EU, while imports were valued at R44.04 billion.

“Work to drastically improve the functioning of the Port of Cape Town, continues with determination. Because we know that, when our ports work, our economy works,” Wenger said. “Our research shows that an efficient Port of Cape Town with enough capacity and significant investment in key infrastructure, has the potential to contribute an additional R6bn in exports, roughly 20 000 direct and indirect jobs, over R1.6 billion in additional taxes by 2026. If we can increase Western Cape exports by 10%, our GDP will grow by 1%.”

“I am hopeful that our work towards opening up for private sector participation at the Port of Cape Town is coming closer to fruition, and so is our aim of sharing even more of Western Cape products with key markets across the world, and especially with our EU partners,” Wenger added.

Western Cape Premier, Alan Winde, also underlined the importance of public-private partnerships in tackling South Africa's challenges, particularly in logistics and energy. He expressed confidence in increasing private sector participation in energy projects and streamlining port operations to spur economic growth.

"We can only address our challenges through partnerships,” the Premier said. “Port inefficiencies incur significant costs to the economy, but there's a substantial opportunity to tackle this crisis with private sector involvement. This model is successful in ports worldwide, and our government is committed to resolving these issues.”

Regarding the energy crisis, Winde outlined plans to boost private sector investment in energy. He noted that many EU companies were already investing in energy projects in the province.

"It's fantastic news that EU businesses are investing in energy projects here. We need more businesses to seize these opportunities so we can address our energy challenges. Whatever obstacles arise, we must overcome them to elevate this partnership to new heights," Winde concluded.