Exports spearhead dramatic growth in trade with Africa

Posted On Monday, 29 September 2003 02:00 Published by eProp Commercial Property News
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SA's trade with Africa, particularly exports, has surged dramatically in the post-isolation years, with average annual export growth greater than with traditional trading partners.

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SA has diversified towards more value-added items, writes David Jackson

SA's trade with Africa, particularly exports, has surged dramatically in the post-isolation years, with average annual export growth greater than with traditional trading partners.

Last year almost 20% of SA's exports worth about R44,2bn went into Africa. The percentage share of SA's exports to the continent has more than doubled from 9% in the late 1980s and early 1990s, and represents about 19% of SA's total export basket.

Marthinus Havenga, director of strategic business development with FNB Corporate, says that SA's imports from Africa, although still relatively low, are also increasing. The percentage share of imports from Africa is about 4%, compared with about 2% a decade or so ago.

SA's overall trading pattern with the rest of the world is generally characterised by imports of high value-added items, such as machinery and vehicles for example, which typically are brought in from developed countries, mainly Europe, as well as the Far East, Japan and the US.

Imports from Africa have traditionally been made up of commodities copper from Zambia, for example.

In recent years, SA has been successful in diversifying its exports towards more valueadded items.

In 1988, of SA's total exports to the rest of the world gold comprised 44%. This had dropped to 15% in 2001, and is indicative of a major shift towards the export of manufactured products.

The percentage of manufactured goods for export rose from 5% in 1988 to almost 30% in 2001, and the figure for 2002 could well be as high as 33%, says Havenga.

Most of the exports to Africa would be in this higher valueadded category, and clearly Africa has been a huge contributor in this export drive, he says.

During the isolation years, most African countries relied on other first world countries for value-added products.

But one of the consequences of the New Partnership for Africa's Development (Nepad) from which SA stands to benefit, is that many African countries are now looking to source such products from within the continent where possible, often at a cheaper price but of the same quality than goods they could source from Europe, for example.

Zimbabwe was the leading African recipient of SA exports in 2002 with a total of R7,3bn.

Second was Mozambique with R6,4bn, followed by Zambia (R5,5bn), Angola (R3,4bn) and Nigeria (R2,7bn).

In 2001, Mozambique surpassed Zimbabwe for the first time as SA's leading export destination in Africa, largely due to major developments such as the Mozal aluminium project and political instability in Zimbabwe.

Somewhat surprisingly, Havenga says, Zimbabwe regained its number one position in 2002 and actually increased the margin of difference in exports with Mozambique.

A somewhat different perspective is obtained when looking at the average annual percentage growth in exports to the top five African countries over the period 1998 to 2002.

The growth to Zimbabwe over this period averaged only 7,2% a year, compared with Mozambique (25,3%), Zambia (29,5%), Angola (36,8%) and Nigeria a staggering 78,9% a year.

Havenga says that in Angola, for example, there is substantial activity from SA companies helping to rebuild that country, which arguably imports about 99% of all its requirements.

"There is huge potential in areas such as food provision and infrastructure, and SA companies are successfully exploiting that. It comes as no surprise that most of the SA banks have expressed interest in the opportunities that this country presents."

Over the same 1998-2002 period the average export growth to the rest of the world was 17%.

Exports to Africa as a whole grew at 34% the highest of all the regions compared with Europe (15%); North America (16%); South East Asia-Pacific (21%); and the Middle East (24%).

On the investment front, a recent survey by the Southern African Institute of international Affairs found that in less than a decade SA has become one of the top10 investors in many African countries, displacing European and North American countries in some instances.

In 2002, SA, with R3,4bn in investment, was the top investor in Africa, the survey showed.

Eskom, Spoornet, Portnet and the Airports Company of SA are among institutions providing services and equipment to other African states.

Shoprite Holdings is now the largest food retailer in Africa.

And in the communications arena, cellular phone operators MTN and Vodacom continue to expand their customer base in countries across the continent.

Last modified on Wednesday, 16 April 2014 19:37

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