FINANCE: Call for Greater Use Of Offsets in Africa
Recent Gauteng Business News
African countries – including South Africa – could be doing more to leverage offset or investment promotion programmes to finance and speed up development across the continent, says Dov Hyman, CEO of Dolin International.
“For Africa, Investment Promotion (IP) programmes can be an effective vehicle to harness the financial and commercial strengths and relationships of the multinationals,” he told delegates at an International Offsets, Countertrade and Industrial Participation conference in Port Elizabeth organised by the Nelson Mandela Metropolitan University.
Economic benefits to Africa will be in the form of job creation, investment in local industry, increased exports, technology transfer, and co-production.
Many African countries have been slow to take advantage of offsets to raise finance or transfer expertise, he said. In contrast, “most nations around the globe that have IP/offset programmes established those programs as an outgrowth of their defence procurements”.
IP programmes "arise when multinationals and foreign suppliers sell their 'big ticket' products, projects, services, and technologies to the government and state sponsored enterprises. The buyer imposes requirements that state that as a condition precedent to doing business, the seller must contractually agree to deliver certain economic benefits,” he said.
Africa's mineral wealth can also be used to leverage IP programmes to deliver significant and substantive environmental and economic benefits to Africa as a condition precedent to doing business in Africa.
Hyman said it was not neccessary for offsets to be used to build factories or for high-tech industires. “For some countries, IP programs could first target delivering internet access and as a second stage 'one computer for each child' initiatives that will open doors for education as well as distance learning where knowledge can be accessed with no geographic barriers.
“African IP programmes could also focus on the procurement of big infrastructure projects such as railways, power generation, water projects , roads, transportation, infrastructure, ports, etc,” he said.
IP programs can also be used to promote specific energy conservation initiatives , and pollution abatement, and can be “powerfully coupled with green initiatives that also generate carbon credits that can also improve financial returns for all parties”.
Eddy Russell from the United Nations Development Programme Africa welcomed the reference to “green industry,” and called for IP programmes to focus on projects such as water supply and sustainable agriculture.
“New” industries such as the production of solar water heating systems should also be developed.
Business News Sector Tags: Finance|