06/02/2014 - 06:04

Well placed to take Africa opportunity

06/02/2014 - 06:04

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Mining Indaba conference highlights infrastructure and transport concerns as Barnett seeks to solidify relationships with African companies.

Well placed to take Africa opportunity

The Indian Ocean has been Colin Barnett’s worst enemy and his best friend – in the same week.

Controversy over his shark-kill policy has followed the premier to South Africa, where he was a keynote speaker at the continent’s biggest mining investment conference, Mining Indaba.

Over time, as the negative publicity associated with the shark policy fades, the importance of what he said about the budding relationship between Africa and Western Australia will get a wider hearing – as it should.

WA’s relatively close proximity to Africa has the potential to become almost as important as its trade connections to Asia.

Just as WA has been able to build a north-facing relationship that has helped the state outperform the rest of the country, so is it now poised to develop a west-facing relationship that will widen the gap with the eastern states, which have become bogged down by trying to preserve failing manufacturing industries.

If the ‘best/worst’ contrast is not sufficiently interesting when considering WA’s exposure to the Indian Ocean, then try comparing the outward, trade-development focus of Mr Barnett’s African visit with the hot topic in eastern Australia – saving the SPC fruit canning business with a taxpayer-funded handout.

A glimpse into the future of WA’s budding trade relationship with Africa could be seen during the premier’s whistle-stop tour of southern Africa and his high-profile appearance at the Mining Indaba conference in Cape Town.

While he was just a face in the crowd at the event, it was a remarkably impressive crowd, comprising 7,500 delegates from more than 100 countries, mainly in Africa but with a strong representation from Europe, North America and Asia.

What attracted the international contingent is a chance to get involved in one of the world’s ‘hot’ regions, with the forecast economic growth of a number of African nations expected to exceed 10 per cent this year and in future years, albeit off a low base.

It is the latest attempt to develop the unquestioned potential of Africa that makes Mr Barnett’s tour particularly well timed, because it seems that the 54 countries that occupy the continent are tired of endless civil wars, and tired of the corruption that has thwarted past attempts to break out from a poverty trap.

Whether the promise of sustainable growth can be achieved will take time to prove, but this time around there are signs that demand for Africa’s mineral and agricultural potential will deliver what has proved to be elusive in the past.

For Australia, talk about developing an Indian Ocean trade and security policy has been a background topic for all governments over the past 50 years, occasionally floating to the surface and then being consigned to the too-hard basket.

The problem has always been a combination of distance, lack of transport options and the poor levels of economic development in most African countries, which means they simply could not afford to buy goods and services from Australia.

Each of those impediments is being overcome. It has become easier to travel to many parts of Africa, and economic development is accelerating.

Mining companies and the service companies that feed off mining have been first to capitalise on opportunities in Africa, a point demonstrated in some of the numbers, such as the fact that close to 200 Australian companies are exploring or mining in Africa, and that Australian companies are operating in 42 of the continent’s 54 independent countries.

Apart from Australian mining companies at this year’s Mining Indaba, there was a big contingent of Australian professional service firms, including lawyers, engineers, equipment vendors and technical consultants.

If there is a single number that underlines the potential for WA to gain the lion’s share of what Africa has to offer it is the estimate from the state government officials that 70 per cent of Australia’s investment in Africa has come from companies based in WA.

There is no chance that Africa will ever match WA’s relationship with Asian trading partners; that’s simply a numbers game with Asia’s population around 10 times that of Africa.

But there is also no doubt that opening up a fresh trade front to the west will give WA businesses an opportunity that is not as readily accessible for businesses based on the east coast.

Africa’s awakening is an opportunity to good to miss.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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