January 23, 2004

Schröder urges flexibility

Visiting German Chancellor Gerhard Schröder sounded a note of caution on black economic empowerment, saying it should be implemented with sensitivity and flexibility so as not to discourage foreign investment. Schröder told the Southern African-German Chamber of Commerce and Industry in Sandton that in the aftermath of apartheid, laws to promote black economic empowerment were "vital" as black participation in the economy remained lower than among whites. He warned, however, that "the South African government should keep an open eye, so that it doesn't limit the willingness of foreign investors to invest here". The warning was warmly applauded by his audience. Schröder furthermore said education was essential to achieve a fairer distribution of wealth.

That the warnings on black empowerment had not officially been part of the text of the speech suggested they may have been included after discussions with German businessmen operating in South Africa. Black economic empowerment is an especially important concern for small and medium-sized family-owned German companies operating in South Africa. With most large German companies already invested in South Africa, the greatest hope for raising investment is widely thought to lie among these medium-sized engineering and manufacturing companies. According to Schröder there were 450 German companies in South Africa employing about 70.000 people. Much of the investment was by the large German car companies and their prime subcontractors in the industry, which in recent years had also become significant exporters. He also pledged to work with South Africa in pushing for a resumption of world trade talks. Trade and Industry Minister Alec Erwin, who met Schröder with President Thabo Mbeki, said several ideas had been put forward on this in talks, but declined to give details. (Business Day, Johannesburg)

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