This summary was prepared by Whitehouse & Associates for the African Resource Network.
Africa is becoming an increasingly important export destination for South Africa with some 14% of total exports destined for the continent in 1999. This excludes South Africas trade with the SACU countries of Botswana, Swaziland, Lesotho and Namibia; if trade with these four countries, recently estimated at about R15 billion, were included, this would make Africa the second largest destination for South African exports after the European Union.
Only three percent of South Africas total imports originate on the continent, giving an overall export-import ratio of 5:1. While there is an acceptance that South Africa’s imports from Africa are never going to equal exports due to the nature of South Africas import needs and the limited range of products available in Africa, the potential in this trade has certainly not been realised. The issue of the trade imbalance is already a political issue within Africa and failure to address concerns could have a detrimental effect on continued growth of South Africa’s exports to the region.
Since the lifting of sanction in 1992, South Africa’s exports to Africa have grown by 276%, imports by 261% and total trade by 273%. Aside from the negative growth experienced in 1998, which was largely due to large decreases in trade with key trading partners such as Zimbabwe, Mozambique and Zambia, double-digit increases have been recorded throughout the last decade.
Another significant factor about South Africa’s trade with Africa is that to no other region in the world is the profile of trade so heavily weighted in terms of beneficiated and manufactured goods. Trade in beneficiated goods with Africa has contributed to structural changes in South Africa’s economy in 1990 only 5% of South Africa’s exports were manufactured goods. This figure had increased to 25% by 1997, largely on the back of African trade where 25% of South Africa’s total manufactured goods exports are destined. Future economic growth in South Africa has to come in part from an increase in manufactured goods exports and Africa will have to provide some of the markets for these goods.
During 1998, 72% of South Africas trade with Africa fell into the following categories:
- machinery and equipment (19%),
- base metals and metal articles (11%),
- chemicals (13%),
- transport vehicles and equipment (9%),
- prepared foods (9%),
- plastics (6%)
- and pulp and paper (5%).
The significance is highlighted if one compares this to South Africas exports to the European Union where 71% of exports to the EU in 1998 were in the categories of:
- mineral products (18%),
- base metals (16%),
- precious and semi-precious stones and metals (13%),
- machinery (9%)
- transport equipment (8%)
- · and vegetable products (7%).
A further feature of South Africas trade with Africa is that the bulk of trade is focussed within the SADC region. Annually about 78% of total exports and 74% of South Africas total trade with Africa is with SADC states. There are a number of reasons for this, not least of which is that Southern Africa is a logical trading region for South Africa – the markets are close, a number are accessible by road or rail transport and, for the most part, business can be conducted in the English language. The establishment of a Free Trade Area within the SADC should go a long way to further improving the trading environment and the volumes of trade within the region.
About 85% of South Africa’s exports to Africa are to 10 countries. Zimbabwe, Mozambique and Zambia are South Africas three largest trading partners. The remaining seven countries are Malawi, Angola, Kenya, Mauritius, Tanzania, the Democratic Republic of the Congo and Ghana. The order of importance of these markets changes from year to year as internal conditions in these country’s affects their ability to import. Interestingly, despite the internal problems in the DRC, it has remained in South Africas top ten export markets for the past eight years. The same applies to Angola. These two markets provide a valuable lesson for exporters and that is despite civil war and deteriorating economies, people still need to be clothed and fed and there is always someone with dollars to pay for these goods.
As is the case with exports, South Africa’s imports from Africa are focused on a few countries with the top ten countries accounting for between 80 and 90% of total imports from Africa. Zimbabwe is again South Africa’s top market in Africa followed by Malawi, Nigeria and Egypt. Zambia, Mozambique, the Cote d’Ivoire, Togo, Kenya and Madagascar are the remaining countries making up the top 10. In positions 9 and 10 the order changes regularly with Mauritius and Angola also featuring from time to time.
South Africa plays an important role in regional organisations. The South African government has taken note of the notion of the African Renaissance, which cannot be seen to be simply another ideal lacking substance or integrity. Thus South Africa has embarked on a strategy to maximise its position in Africa to the best possible advantage of all Africans.
South Africa is a member of the South African Customs Union (SACU) and the Southern African Development Community (SADC). The country has taken a 1% shareholding in the African Development Bank (ADB) which gives South African companies access to ADB funded projects in Africa. This has a greater importance, which is that the ADB looks at development of the region as a whole and sees South Africa as playing a key role in development of the region as a whole. This will hopefully lead to greater funding flows into southern Africa.
South Africa has also been granted qualified access to the Lomé Convention. This means that South Africa gets no trade or aid preferences under Lomé but is granted access to the ACP institutions principally the 8th EDF. South African companies can therefore get involved in projects funded under the 8th and consecutive EDF’s in ACP states. South Africa has joined the Commonwealth and sits with a number of other African states at this forum.
In addition to these institutions, South Africa maintains bilateral agreements with Malawi, Mozambique and Zimbabwe, which facilitates trade between states.
This summary was prepared by Whitehouse & Associates for the African Resource Network.
