The South African government and the Industrial Development Corporation (IDC) signed two agreements to facilitate funding for investment and industrial development at the BRICS Manufacturing Forum at the Gallagher Convention Centre in Midrand today.
The agreements were between the Department of Trade, Industry and Competition (the dtic) and the China Africa Development Fund (CADF), as well as between the IDC and the Bank of China.
Announcing the agreements on Monday, August 21, 2023, South Africa’s Minister of Trade, Industry and Competition, Ebrahim Patel, noted that a range of agreements are due to be signed during a state visit by President Xi Jinping of China on August 22, 2023.
These funding facilitation Memorandums of Understanding (MOUs) open the door to investments in the South African manufacturing and productive sectors.
The first MOU enhances bilateral cooperation in the realm of industrial development between South Africa and China and will unlock value for manufacturing and job creation on the back of the CADF, which has an equity investment fund managed by the China Development Bank.
The Fund has invested more than five billion U.S. dollars on the African continent.
In South Africa, it is active in sectors such as electronics, capital equipment, steel and resources, among others. South Africa seeks to build on these investments and expand its industrial capabilities, especially in digital and green economy sectors.
The MOU outlines key principles of cooperation, including:
Encouraging deeper levels of industrial investment through stimulating increased industrial investments from China into South Africa. The focus of this investment is on industrial development, especially in the following sectors: medical devices, green economy, critical raw materials, electric vehicles, and hydrogen.
Collaboration in funding and investment, especially through Development Finance Institutions (DFIs) to co-fund and promote joint ventures in investment projects within South Africa. This includes projects in electric vehicles.
Focusing on Special Economic Zones (SEZs) and Spatial Locations to broaden economic activities and foster industrial growth.
Advancing the green economy and technological cooperation. The partnership will facilitate investment and technical cooperation in the green economy, including local production of components, processing of critical raw minerals, new energy vehicle manufacturing, green hydrogen, and more.
Promoting information exchange and capacity building. The MOU outlines plans for knowledge-sharing, expertise exchange, and information dissemination to further drive industrial advancements.
The MOU highlights promising opportunities for building value chains in key sectors across industrial value chains and in the development of SEZs.
Through the second MOU, the IDC and the Bank of China have signed a framework agreement aimed at strengthening regional trade and investment. As part of the agreement, the IDC and Bank of China will conclude a R10 billion funding package over the next five years.
The signing of these MOUs underscores the commitment of both parties to advance industrial development.
"These MOUs set the stage for transformative collaborations that will significantly contribute to South Africa's industrial growth, technological advancement, and economic prosperity," stated Minister Patel.
A photo of the signing ceremony