2018 South Africa-Italy Summit/Indaba: all you need to know

The 2018 edition of the South Africa-Italy Summit/Indaba, which takes place on October 23 and 24, will be the third event hosted in Gauteng, the economic powerhouse of both SA and the African continent.

The summit is a crucial networking event that provides business leaders of the two countries with a formidable tool to deepen their established and robust trade and economic relationships and share their mutual knowledge.

"To understand the significance of trade relations between Italy and SA, it is important to contextualise the trade volumes and quantitative trends. Specifically, we are currently experiencing consecutive periods of double-digit growth in trade volumes between the two countries," says Pietro Giovanni Donnici, the Italian ambassador to SA.

According to data provided by the Italian embassy, in 2017, bilateral trade between the two nations increased by 10.5%. However, that figure has already been eclipsed in 2018, with bilateral trade growing by 11% in the first seven months of this year, compared to the corresponding period in 2017. Overall trade between the two countries amounted to $3.3bn (about R47bn) in 2017, but by July 2018 this figure had already reached $2.17bn (about R31bn).

“Italy’s most prolific export to SA is industrial machinery. This entry alone accounts for 30% of Italian exports,” says Donnici.

According to data available from the South African Revenue Service, the other main entries are mineral products, in particular fuels and industrial oils, and chemical and pharmaceutical products; vehicles, predominantly in the form of cars, trucks, vans and bikes, in addition to locomotives, railway stock, ships and aircrafts; rubber and plastic products; iron and steel products; and agri-food products.

The main products exported by SA are base metals and articles of base metal, especially iron and steel, aluminium and articles thereof, which accounts for 35% of South African exports. Agri-food accounts for 24.3% of South African exports to Italy, predominantly in the form of fish, crustaceans and aquatic invertebrates, as well as edible fruit, nuts and citrus fruit. Other entries include wool and animal hair, rawhides and skins, and mineral products, especially ores, slag and ash.

“However, merely looking at the aggregate figures does not adequately explain the nature and depth of relations between our two countries,” says Donnici.

Roughly 70% of Italian exports to SA comprise capital or intermediate goods. This reveals a pattern of business-to-business transactions that provides production inputs to South African companies and increases their productivity, without undermining local manufacturers. This also applies to South African exports to Italy, as these are goods included in the country’s production processes and appreciated in the Italian market.

“Such a trade structure is mutually beneficial because the goods imported and exported reciprocally contribute to the productivity of the national industries and to the quality of the manufactured goods, which positively contributes to the respective value chains,” says Donnici.

Given the recent developments in bilateral trade, Donnici believes it is noteworthy that this steadily growing relationship has occurred in parallel with the establishment of the SA-Italy Summit/Indaba as an annual event in SA.

"The summit has over the past five years played a crucial role in deepening the mutual knowledge of and collaboration between the business communities of our two countries. SA also has a large and well-respected Italian community. It is the largest Italian community in sub-Saharan Africa and consists mainly of entrepreneurs who have developed a deep knowledge of the African continent. The size and strength of the Italian community in this country is, without doubt, an additional factor that helps Italian companies to settle in and thrive, together with the South African economy."

Of interest and relevance to economic development in SA in general, and Gauteng in particular, is the number of these Italian companies that have invested in the country since the summit launched.

According to figures provided by the Italian-South African Chamber of Commerce, which is once again supporting The European House, Ambrosetti in hosting the summit, Italian companies that have recently invested in SA include:

• Enel Green Power RSA, the South African division of Italian multinational manufacturer and distributor of electricity and gas, Enel Group. The renewables company recently signed project financing agreements with two local lenders for €950m (or 80% of the total €1.2bn investment) for five new wind-farm projects that will deliver a total capacity of about 700MW.
• Lucchini RS, a renowned Italian manufacturer of forged railway products, invested R200m in its Germiston production plant in 2013, and will be making further investments in the second phase. The plant has the capacity to produce 25,000 wheels a year for the local market and is supplying wheels to major rail service providers in the country, including Transnet, Prasa, the Gautrain and the Blue Train.
• Mapei is a global leader in the production of adhesives and chemical products for the building industry. The company constructed a local hi-tech manufacturing facility in 2017.
• Mollebalestra is an Italian suspension products provider. The company signed a joint venture agreement with springs manufacturer Golden Spring & Engineering services in September 2017. The JV is facilitating the manufacture of Mollebalestra’s range of products in SA.
• Ariston Thermo Group produces geysers, air-conditioners, heat pumps and more, and is making significant inroads into the geyser market in SA.
• NeOn Energy operates in the renewable energy space. As an independent power producer (IPP), it will operate a 200kW solar generation plant over the next 15 years.
• New Holland is an agricultural machinery producer that has significantly grown its market share since investing in SA in 2017. The company is part of CNH Industrial, one of the world leaders in capital goods, which already has a presence in SA with an Iveco plant.
• Building Energy is an Italy-based global IPP that produces electricity from renewable energy sources such as wind, solar, hydro and biomass. In April 2018 the company concluded a deal with Eskom to build, own and operate a 147MW wind farm and a 4.7MW mini hydropower plant in SA.
• Tokai Carbon Italia, the manufacturer of graphite electrodes and carbon products, recently entered the local market.

A number of these companies will contribute to the realisation of the Gauteng provincial government’s strategic plan, implemented under the leadership of Premier David Makhura, to re-industrialise the Gauteng economy through infrastructure development.

For example, the massive roll-out of public transport infrastructure across the province will be used to revitalise and modernise old industries that will locally manufacture or assemble buses, trains and locomotives.

The government is working closely with state-owned enterprises Prasa and Transnet to reindustrialise the province and build economic infrastructure that will boost employment creation and economic inclusion through investing in post, freight, rail and pipeline capacity.

This infrastructure will not only boost provincial prosperity. Because Gauteng is the economic hub of SA and a gateway into Africa, these projects will also have significant benefits for both the country and the African continent.

In addition, the Gauteng provincial government has identified key sectors that have the potential to address the twin policy imperatives of creating employment and greater economic inclusion. These include finance, ICT, tourism, the automotive industry, renewable energy, manufacturing, construction, pharmaceuticals, creative industries and real estate.

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