Turkey and South Africa can and should do so much better
There has been an incremental but very committed dialogue recently going on between Turkey and South Africa, the African continent's economic powerhouse, not only on bilateral ties but across a host of regional and global issues ranging from the financial woes at the G-20 meetings to reform talks at the UN, the world's largest intergovernmental body.
Turkish Prime Minister Recep Tayyip Erdoğan's visit to South Africa on Monday is a testament to growing interest on the Turkish side in promoting ties with this country. The fact that a huge delegation of businessmen will accompany Erdoğan on his South African visit is a strong message that the trip is pretty much business oriented.
During the visit, both countries will agree to set up an intergovernmental mechanism to identify areas of further cooperation and examine the ones they already have to see if they serve the intended purpose or need to be revamped. This framework is very important to follow up on both ends in order to insure that Turkey and South Africa take the right steps in the future. Despite the geographical distance, a strong political will appears to exist in both countries to further deepen ties, as we have seen in the frequent exchange of high-level visits in recent years.
Turkey understands that South Africa is a key in Sub-Saharan Africa and will be a great strategic partner not only from a region-wide perspective but also for global issues. The economies are by and large not rivals but rather complementary. Turkish companies, for example, may benefit from the need for the South Africa to process mineral supplies into finished products to be utilized domestically or exported with added value rather than as raw materials. Turkish experience in the machinery, textile and construction industries may help the South African economy rise further. There are some big Turkish companies already operating in the mining and textile industries in this African country.
The stable government, booming economy, vast consumer market, friendly investment environment and solid financial system are attractive factors for Turkish companies to be involved in this country. There are already close to 200 Turkish companies operating in South Africa, generating about $1 billion in trade revenue. As the income of the average South African grows, consumers are moving away from cheap Chinese products, especially with regard to textiles, to high-quality Turkish goods. The fact that Turkish appliance giant Arçelik, Europe's third-largest home appliances maker, bought South Africa's leading appliance maker Defy Appliances in July for $327 million, is another signal that Turks are increasingly focusing on this market.
Turkey's largest trade advocacy group, the Turkish Confederation of Businessmen and Industrialists (TUSKON), has already put South Africa among the top priority countries that the Turkish business community should engage in its drive to open up to the African market. To that end, the group has organized business trips and held forums to bring together entrepreneurs from both sides. TUSKON's representative in this country, the South African-Turkish Business Association (SATBA), has been doing an impressive job in lobbying for further trade ties between the two countries. For example, the organization held a business gala dinner in December, bringing over 250 Turkish and South African businessmen together.
Interest in Turkey is partly fueled by a renewed commitment from South African leadership to reach out to the emerging economies to attract investment and trade because of the urgent need to create employment. In spite of forecasted growth of over 3 percent by the end of the year, the South African economy unfortunately suffers from high unemployment -- among the highest in the world at over 25 percent. Fearing that this may create problems in the social fabric of society, South Africa is trying to attract investment and trade to generate jobs.
Turkey acknowledges that South Africa can be a gateway to a much larger consumer market for its products as the African country is the leading dynamic force in regional organizations from the 15-member Southern African Development Community (SADC) to the five-member Southern African Customs Union (SACU), the world's oldest yet still functioning customs union. It can even open up the door for Turkish products to a wider market in the 26-member African Free Trade Zone.
But there is a downside to this as well. South Africa's obligations in these regional organizations as well as a free trade agreement (FTA) with the EU complicate the efforts of Turkey to strike a free trade deal with South Africa. Unfortunately, this is hurting Turkish firms because they are not on an equal footing with other companies that benefit from customs union or free trade arrangements with third countries. Though the South African leadership confirmed interest in pursuing an FTA with Turkey and the question is “when” rather than “if,” the country still needs to sort out a whole range of overlapping issues with other blocs before pursuing an FTA with Turkey. In the meantime, however, both sides can find a way to reduce tariffs and duties so that Turkish companies operating here do not get heavily penalized for a lack of an FTA between the two countries.
Though the trade volume peaked in 2007 at $2.8 billion, it fell to $1.3 billion last year. Analysts point out that even though the current figure between the two countries is not that impressive, they say it offers huge potential once the necessary structure is in place. Erdoğan's visit aims to secure that structure so that solid and sustainable growth can be attained in trade volume. There is already encouraging news confirming that potential. According to Turkish government statistics, in the first seven months of the year, trade with South Africa jumped 43 percent compared to the same period of last year. The trade volume heavily favors the African country, by the way. Hopefully, a visa liberalization program both countries have agreed to in principle will pave the way for the conclusion of a visa waiver deal soon. The increase in the number of weekly direct Turkish Airlines (THY) flights between the countries from five to seven will further boost trade relations.
Above all, I think, the most important element for a sustainable economic partnership is to have a sufficient pool of human resources, especially young ones, to carry the flag in the future. Both governments should develop and invest in partnership programs in education and media, two key sectors to keep the interest of citizens from both sides alive and well. In that sense, the seven Turkish schools operating in South Africa with close to 2,500 students gives much hope for the future. One only wishes to see more South African students coming and studying in Turkey. During Erdoğan's visit, the two governments can devise new programs to address all these issues.
Article by: Abdullah Bozkurt