Cairo - African countries need to boost regional trade and investment to keep pace with growth in other emerging economies that have large consumer bases, such as India and China, Trade and Industry Minister Rob Davies said on Monday.
Davies, in Cairo for a high-level, bilateral state visit to the continent's second biggest economy, said Egypt and South Africa were trying to seal a Cape-to-Cairo free trade agreement that could help reduce dependence on flagging European economies.
"The fact of the matter is we don't as single countries begin to touch the sizes of the domestic market of China and India, but as a grouping from Cape-to-Cairo we do start to hit that league," Davies said.
Africa boasts some 30 regional trade arrangements, but the continent receives less than 4% of global foreign direct investment, in part because small markets often cannot attract big money and because onerous bureaucratic requirements tend to discourage foreign business.
Widespread corruption is another hindrance.
South Africa, faced with a strengthening rand that has hit its main export and manufacturing sectors, is eager to diversify trade with emerging markets, particularly as "seismic changes in the world economy" make it more pressing, Davies said.
The agreement is being pushed by COMESA, the 19-country Common Market for Eastern and Southern Africa, which includes Egypt, and by SADC, the 15-country Southern African Development Community, and the East African common market.
A pact could cover 700 million people from the world's poorest continent, Davies said.
Exports from sub-Saharan countries to one another accounted for 11% of their total outbound trade by 2006, according to the United Nations trade body UNCTAD, compared to 46% among the states of emerging Asia and 71% for developed Europe.
Analysts have said freer and greater trade between African states will stimulate local economic growth and create jobs by attracting more domestic and foreign investment and by cutting reliance on expensive external imports.
"We see that emerging markets and developing countries are becoming the growth forces and the new poles of economic power and the ones that are making headway are also the ones that have sizeable internal markets," Davies said.
President Jacob Zuma will visit Cairo on Tuesday with more than 100 South African businessmen, including executives from power utility Eskom, national oil company PetroSA and several ministers.
South Africa's exports to Egypt were a modest R1.2bn and its imports R231.3m in 2009. This compares to R48.7bn of exports and R70.8bn of imports with China, their single biggest trading partner, in the same year.
"The new prospects are in emerging markets. The fact of the matter is we are in that category, Egypt is in that category," Davies said, adding that interest was in energy, agro-processing and tourism ventures.
Egypt's Trade and Industry Minister Rachid Mohamed Rachid is expected to visit South Africa by mid-February to continue talks started in Cairo this week, Davies added.