The Enduring Partnership between Taiwan and South Africa

The Enduring Partnership between Taiwan and South Africa

The Enduring Partnership between Taiwan and South Africa

In November 2019, the Taiwan-Africa Business Forum took place in Taipei, with 20 business leaders from Eswatini, South Africa, and Nigeria participating. The forum aimed to provide a platform for African and Taiwanese businesses to discuss trade and investment opportunities. Citing Africa’s vast free trade area as well as its status of one of the fastest growing economies in the world, Taiwan’s Ministry of Foreign Affairs stated that “Taiwan is hoping to build closer links with African nations,” indicating that there is great potential for development of trade and investment opportunities. Aside from the Kingdom of Eswatini (formerly known as Swaziland)—Taiwan’s sole diplomatic ally in Africa—South Africa remains Taiwan’s most significant African trading partner. Despite Pretoria’s switch in diplomatic recognition from Taipei to Beijing in 1998, both sides continue to pursue strong economic and friendly bilateral ties.

History of Taiwan-South Africa Relations

Prior to 1998, South Africa was Taiwan’s last remaining major ally and the largest country among 30—mostly African—countries that still maintained diplomatic relations with the island. At a time when both were internationally isolated, Taiwan and South Africa’s white minority apartheid government opened full embassies and exchanged ambassadors in 1976. Later, in 1985, Taiwan and South Africa signed an agreement for a 10-year supply of South African uranium to Taiwan. A wave of Taiwanese families migrated and brought their businesses to South Africa near the end of the apartheid era. In the 1990s, Taiwan and South Africa enjoyed a robust trade and economic relationship; Taiwan was South Africa’s largest foreign investor and seventh-largest trading partner in 1995. [1] Taiwanese investments and exports to South Africa in 1996 also surpassed China in those two categories. [2]

Taiwan and South Africa were firm friends. President Lee Teng-hui (李登輝) donated USD $10 million in the 1990s to the African National Congress’ (ANC) general election campaign, which became a salient factor in Mandela’s desire to maintain strong ties to Taipei. President Lee, in turn, utilized the strong economic and political ties with South Africa to promote Taiwan’s bid to rejoin the United Nations. [3] Lee also attended the May 1994 inauguration of Nelson Mandela as South Africa’s first black president, which enabled Taiwan’s president the rare opportunity to meet with US Vice President Al Gore. [4] Taiwanese and South African navies also conducted joint military exercises in South African waters in 1996. [5]

Nonetheless, Pretoria had been under pressure from Beijing to derecognize Taipei and hesitated on choosing between Taipei and Beijing in the years leading up to the diplomatic switch in 1998. In an attempt to target South Africa’s trade links with Hong Kong, the Chinese government threatened to prevent South Africa and other countries that recognize Taiwan from maintaining a consulate in Hong Kong after the British handover to China in July 1997. [6] Mandela announced in 1996 that his country would sever diplomatic relations with Taiwan at the end of 1997. [7] In January 1998, Pretoria switched diplomatic recognition from the Republic of China (ROC) to the People’s Republic of China (PRC). Since 1998, Pretoria has maintained the Taipei-based Liaison Office of the Republic of South Africa (南非聯絡辦事處), which is responsible for maintaining and expanding economic, trade and investment, scientific, education, health and cultural exchanges between South Africa and Taiwan. Meanwhile, Taiwan’s government set up the Taipei Liaison Office in the Republic of South Africa (駐南非共和國台北聯絡代表處).

Taiwan-South Africa Relations Today

Despite the diplomatic setback, the Taiwan-South Africa relationship is experiencing a new wave of revitalization in recent years. In 2016, Taiwan’s Legislative Yuan established the Taiwan-Africa Parliamentary Association designed to enhance Taiwan’s bilateral and multilateral relationships with African countries in the areas of trade, education, and culture. In late 2016, Tshwane Mayor Solly Msimanga of the opposition Democratic Alliance made a business trip to Taipei and met Taipei City Mayor Ko Wen-je (柯文哲) in a form of city-to-city diplomacy to explore trade and investment opportunities. However, Msimanga’s Taiwan trip became a politically sensitive topic for South Africa, whose foreign ministry claimed that Msimanga had violated the country’s “One-China” policy. By contrast, the ANC’s main foreign policy tenet is only sustaining a strong relationship with China. Nonetheless, Taiwan and South Africa have continued to build on its historically strong relations. President Tsai Ing-wen has held several meetings with South African leaders, including former President de Klerk, to discuss transitional justice and national reconciliation, further highlighting the common issues that bind Taiwan and South Africa.

President Tsai Ing-wen called on her National Security Council to put forward an “Africa Plan” (非洲計畫) following her April 2018 visit to Eswatini. The plan aims to strengthen Taiwan’s business layout (強化台商布局) on the continent with emphasis on boosting bilateral investment and trade with three countries—South Africa, Mozambique, and Eswatini. The idea behind this initiative is to work with government agencies, representative offices, as well as businesses to pursue closer relationships with Africa. In July 2018, a southern Africa investment seminar under the Africa Plan was held in Taipei. About 100 officials and businesses gathered to discuss investment and market opportunities in southern Africa, emerging commercial and industrial sectors, state support programs, and the investment climates in Eswatini, Mozambique, and South Africa.

These initiatives are likely meant to serve as a response to the trend of declining Taiwan-Africa trade relations in the past decade—aside from the more obvious reason to further bolster its diplomatic relationship with Eswatini. In the prime years of Taiwan’s economic ties in Africa, Taiwan’s annual imports from Africa reached USD $10.5 billion in 2011 while its exports were USD $2.9 billion. However, by 2018, Taiwan’s imports from Africa dropped by USD $8 billion (to USD $2.5 billion) and its exports by USD $700 million (to USD $2.1 billion). Taiwan’s trade with South Africa followed a similar trend. Taiwan’s exports to South Africa had fallen by USD $600 million (from USD $1.3 billion in 2011 to less than USD $700 million in 2018), while its imports declined by USD $500 million (from USD $1.5 billion in 2011 to USD $1 billion in 2018).

Currently, South Africa is Taiwan’s largest trade partner in Africa in terms of both imports and exports. From January to November 2019, South African imports constituted 37 percent of Taiwan’s overall imports from Africa, while Taiwanese exports to South Africa made up 27 percent of total Taiwanese exports to the African continent. During this same period, bilateral trade reached USD $1.06 billion. Taiwan enjoyed a USD $17.6 million trade surplus in its trade with South Africa, with Taiwanese exports to South Africa reaching USD $539.6 million and South African imports to Taiwan constituting USD $522 million during this time period. Taiwan’s key imports from South Africa are natural resources and low-tech industrial products, such as iron and coal, precious stones and gold, electrical machinery, motor vehicles, and tobacco; its exports to South Africa include electronics, bicycles, plastic resin, iron/steel products, sports equipment, and rubber goods. Given South Africa’s outsized stature as a major emerging economy on the continent, Taipei focuses on boosting their bilateral trade relations and other forms of cooperation.

In comparison, Taiwan-Nigeria bilateral trade reached USD $345.9 million from January to November 2019, owing largely to the dramatic growth in Taiwanese exports to Nigeria, which increased 111 percent compared to the same period (January to November) last year. Between 2017 and 2018, Taiwan’s exports to Nigeria grew 16.3 percent from USD $98 million to USD $114 million. Meanwhile, Taiwan’s imports from Nigeria fell 60 percent from USD $441 million in 2017 to USD $175 million in 2018.

By contrast, Taiwan’s trade relationship with Eswatini pales in comparison to Nigeria and South Africa, though bilateral trade has been expanding in recent years. Taiwan-Eswatini overall trade reached USD $9.58 million between January to November 2019. Taiwan’s imports from Eswatini grew 101 percent, whereas Taiwan’s exports to the kingdom fell 7 percent compared to the same period in 2018. Bilateral trade grew from USD $7.6 million in 2017 to USD $10.5 million in 2018.

For South Africa, Taiwan remains economically important. As of 2017, there were about 800 Taiwanese factories and companies based in South Africa, according to the Taipei Liaison Office. [10] These Taiwanese businesses have provided an estimated 40,000 local jobs and about USD $1.69 billion in cumulative direct investment each year. [11] Over half of these businesses are in the fields of finance and servicing, while the rest falls into the industrial and manufacturing category. The reasons why Taiwanese businesses invest in South Africa include well-established infrastructure, natural resources and minerals, good living environment and education system, as well as the potential for their products to be sold to neighboring African countries and on the European market.

There are various governmental and non-governmental organizations aimed at enhancing Taiwan-Africa trade relations. The Taipei-based Africa Taiwan Economic Forum (非洲駐台經貿聯合辦事處, ATEF) was formed jointly by African embassies and trade offices in Taiwan and Taiwan’s Ministry of Foreign Affairs. It presents itself as “a one-stop service to Taiwan’s business community by providing valuable information on trade and investment opportunities” and offers guidance to prospective Taiwanese investors before expanding into Africa.

The Ministry of Economic Affairs’ Taiwan-Africa Trade Promotion Office (經濟部非洲市場推動辦公室, TATPO) was established in March 2016, in order to coordinate the resources of multiple government units working on Taiwan-Africa trade. TATPO’s mission is to “tap the enormous potential of the continent’s high-growth emerging markets.” As TATPO’s deputy director put it, “Africa is home to many rapidly developing economies, while Taiwan needs to boost its sluggish exports.”

In addition, there is also the Taiwan-Africa Business Association (社團法人台灣非洲經貿協會, TABA), founded in 2006. In cooperation with African government agencies, the Taiwan government, and ATEF, TABA provides a platform for Taiwanese businesses to learn and exchange information about conducting business in Africa. For this purpose, TABA holds African market seminars and has organized annual events and conferences in South Africa.

Other Taiwanese organizations that explore business opportunities globally have also engaged with Africa. For instance, in 2018 the Taiwan-based Chinese International Economic Cooperation Association (中華民國國際經濟合作協會, CIECA) sent a delegation to South Africa, Mozambique, and Eswatini in 2018 to explore business opportunities in those countries. Furthermore, the Taiwan External Trade Development Council (中華民國對外貿易發展協會, TAITRA), with overseas branch office in Johannesburg, signed memorandums of understanding (MOUs) in 2017 with four African trade promotion groups to bolster opportunities for Taiwanese businesses in Africa though business exchanges and information sharing.

As South Africa continues to face pressing political and economic issues at home, ranging from worsening corruption, a declining economy, and rising unemployment, Taiwan’s trade and investment relations with the African country may also continue to be adversely impacted. Taiwanese businesses would be wise to diversify its trade relations with emerging African economies, such as tapping into rapidly growing East African markets, in addition to its current focus on South Africa, Eswatini, and Mozambique. Nonetheless, South Africa remains the second-largest African economy (after Nigeria) and a historically friendly nation that Taipei should continue to leverage for its economic, diplomatic, and strategic plans in Africa.

The main point: Taiwan and South Africa’s historically strong economic and political relations prior to Pretoria’s diplomatic switch to China in 1998 remain relevant today. Despite the break in diplomatic relations and South Africa’s recent economic woes, Taiwan’s economic lure to South Africa, and vice versa, remains strong and is a main factor driving bilateral relations today.

[1] “Taiwan Suspends Most Aid Projects in South Africa,” Deutsche Presse-Agentur, December 5, 1996, Retrieved from Lexis Uni.

[2] “Mandela Drops Taiwan and Backs Beijing,” Australian Financial Review, November 29, 1996, Retrieved from Lexis Uni.

[3] Yomiuri Shimbun, “Lee Winds Up 4-Nation Tour Promoting Taiwan’s U.N. Bid; Ryoichi Hamamoto,” The Daily Yomiuri, May 18, 1994, Retrieved from Nexis Uni.

[4] Yomiuri Shimbun, “Lee Winds Up 4-Nation Tour Promoting Taiwan’s U.N. Bid; Ryoichi Hamamoto,” The Daily Yomiuri, May 18, 1994, Retrieved from Nexis Uni.

[5] “Taiwan and South Africa to Hold Joint Naval Exercises,” Agence France Presse, May 23, 1996, Retrieved from Nexis Uni.

[6] Laura Tyson, “News: Asia-Pacific; S Africa’s Taiwan Ties Irk Beijing,” Financial Times, July 2, 1996, Retrieved from Nexis Uni.

[7] “Mandela Wants Everything But Diplomatic Ties with Taiwan,” Associated Press International, December 4, 1996, Retrieved from Nexis Uni.

[8] “Taiwan, South Africa Reaffirm Close Ties,” Agence France Presse, November 15, 1991, Retrieved from Nexis Uni.

[9] “Taiwan, South Africa Reaffirm Close Ties,” Agence France Presse, November 15, 1991, Retrieved from Nexis Uni.

[10] “Foreign Parts Too Much to Stomach after Taiwan,” Cape Argus (South Africa), January 7, 2017. Retrieved from Nexis Uni.

[11] “Foreign Parts Too Much to Stomach after Taiwan,” Cape Argus (South Africa), January 7, 2017. Retrieved from Nexis Uni.