The 2016 Africa Down Under, an annual conference to celebrate Australia-Africa week opens in Perth with the key note address delivered by the Australian Assistant Minister for Trade, Tourism and Investment, Hon Keith Pitt MP who revealed that trade between Africa and Australia in 2015 stood at $7.6 billion with $2.1 billion of that in services.
He also disclosed that Australian Government estimates that Australian companies have invested $30 billion and rising in extractive projects in Africa and that there are over 200 Australian companies, many of these Western Australian, with about 700 projects in 35 countries. Much of this is in exploration activity – especially in gold.
As such, the future is bright, especially as we come out of a period of particularly low commodity prices, he said.
According to the minister, African continent is one of the largest investment markets for Australian extractive companies beyond Australia. And there are many reasons why Australian companies have an edge over their competitors – and why they should be taken seriously in Africa.
“Aussie firms are at the cutting edge of international best practice”, he said. They have demonstrated innovation and resilience in engaging in challenging environments. And they are backed here in Australia by robust legal and financial regimes.
As you heard when I was introduced, investment – attracting new investment from overseas – is among my responsibilities in the Australian Government, the minister emphasized.
I know it is a goal shared by the African ministers attending this conference. But it’s a goal that can sometimes be controversial. Foreign investment must be carefully managed, but well-managed investment brings many benefits.
Australia has a long history of managing foreign investment successfully. At the end of 2015, the total value of foreign investment in Australia stood at $3 trillion. Of this, $507 billion was investment in our extractive industry.
Australia is a large, resource-rich country with a relatively high demand for capital and a relatively small population. So, foreign investment has been crucial for our growth, and it will continue to be key to our prosperity in the future. As it will in Africa.
The Australian extractive industry has attracted foreign investment since the 1850s, when funding flowed from London and New York into goldfields here in Western Australia and in Victoria.
Since the 1960s, a much more substantial wave of investment –from Japan, the US, the UK and China, among others – had a transformative effect on the industry, and on the Australian economy more broadly.
It laid the foundations of our modern mining and resources industry, financing large-scale projects, boosting our infrastructure and unlocking long-term markets in the nearby countries of Asia.
It has helped make us the world-leading extractive industry we are today – boosting productivity and creating jobs. It has created higher levels of growth.
It has opened up new export opportunities. And it has encouraged competition and world leading innovation, with the Australian resources sector developing new technologies and services, such as autonomous and remote operations technology.
Australia and Africa both have a rich endowment of natural resources. African nations are home to about 30 per cent of the world’s mineral resources – producing more than 60 metal and mineral products.
They’re also some of the world leaders in the export of crude oil and natural gas. And its share of the world’s diamonds, bauxite, manganese, platinum, cobalt and gold is even higher.
Despite strong deposits, Africa accounts for only about 8 per cent of global mineral production. Boosting this production will require considerable foreign investment.
In Australia – there are six key contributors to our success in investment attraction. One of these is our good fortune in geography: our shared strategic location in the Indo-Pacific region. And we all know that our region has led global growth for the past three to four decades.
But the other factors have required concerted effort. As such, they can be replicated. The next contributor is our resilient economy – capable of avoiding the worst of downturns.
Australia has experienced 25 years of uninterrupted annual growth, an exceptional achievement. The third factor is our highly-skilled workforce. Australia has the sixth-highest proportion of 25- to 64-year-olds with tertiary qualifications and our universities are among the best in the world.
Fourth, Australia enjoys strong governance. We were ranked equal first on judicial efficiency and impartiality in commercial disputes by the World Economic Forum. And 10th overall in the World Justice Project’s rule of law index in 2015.
Fifth, we have good infrastructure. Our ports are strategically located, our rail and road transport networks are well-planned and our logistics chains are efficient.
And finally, Australia has a business-friendly environment, ranking 13th in the ease of doing business index in 2015.
To a large extent, these all boil down to one thing: Australia is seen as a safe, low-risk place to do business. We all know that investors love predictability and hate risk. They value transparency and the rule of law. And they value a skilled and educated workforce.
Australia’s aid program in Africa has been reshaped to help African nations improve living standards and grow their economies. And in this regard, Australia welcomes the opportunity to work with its African partners through the Australia Awards scholarship program – the flagship of Australia’s development assistance to African countries.
For this reason, the Australia Awards program is focused on three priorities – one of which is governance in the extractive sector – alongside agricultural productivity and public policy.
In the past five years, over 450 students from African countries have studied extractive-related Masters and post-graduate short courses through the Australia Awards program, many of them here in Western Australia.
And hundreds of officials from the continent have participated in capacity-building and training activities, learning about Australia’s regulatory frameworks and mining operations and systems.
And this program will continue, with more than 400 African students expected to be offered Australia Awards this financial year. I would encourage you to take what these students learn and adapt it to meet your own circumstances.
Many of you will also be interested to know that the Australian Government is currently designing an Australian Resources Development Hub. This initiative will build on its predecessor – the International Mining for Development Centre.
It’ll be yet another way Australian expertise can help developing countries make the most of their resources. We look forward also to engaging with African partners, including on a commercial basis.
And commerce is the reason we are all here today! So, over the next three days of Africa Down Under, I wish you well as you either learn more about what Australia’s mining companies and related service providers have to offer, or discover what opportunities there are in Africa for Australian companies.
There is no shortage of potential partnerships here today. So I wish you every success as you build networks to grow your respective extractive industries, he concluded.
