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Growth engine

20th September 2019

By: Terence Creamer

Creamer Media Editor

     

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For those still in search of evidence of just how beneficial a relationship South Africa enjoys with the rest of the continent – and Southern Africa in particular – a visit to any regional border post would immediately dispel any doubts.

Even more than a thousand kilometres north of Johannesburg, freight trucks with Gauteng plates wait in excruciating queues for a spot on the Kazungula ferry – still the only means for a haulier to cross the mighty Zambezi river from Botswana into Zambia.

Many, if not most, of the trucks are laden with goods made in South Africa or, at the very least, processed at a South African port. Each load therefore represents precious foreign-exchange earnings and even more precious domestic jobs. In fact, the Department of Trade, Industry and Competition calculates that exports to other African countries support about 250 000 South African jobs.

Information published by the Trade Law Centre, meanwhile, shows that South Africa exported goods valued at $25-billion to the rest of Africa in 2018 and that intra-African exports accounted for 26% of the country’s total exports. The main destination markets included Botswana, Namibia, Mozambique and Zambia. Regional imports have also grown, but still lag exports in value, with South Africa having imported goods worth $11.5-billion from the rest of Africa last year.

There now is broad-based agreement that the rest of Africa represents an important and growing market for South African products, especially its manufactured products. There is also a steadily increasing realisation, especially within government, that deeper regional integration could be one of the main tickets out of this country’s current low-growth and job-destroying trap.

Importantly, South Africa is probably still but scratching the surface of this regional-integration opportunity, which has the potential to increase further once the African Continental Free Trade Area (AfCFTA) comes into effect on July 1, 2020.

If actualised in line with the vision of the AfCFTA’s 54 signatories – 27 of which had ratified the agreement by early July when the African Union summit was held in Niger – the agreement will connect 1.2-billion people to a bloc in which trade will be conducted with “minimal” tariffs.

As evidenced by the lines of trucks waiting to board the Kazungula ferry, tariff liberalisation alone will not be sufficient to unlock this massive trade and investment opportunity. Without major infrastructure investments and the introduction of systems to streamline the processing of cargo at border posts, the AfCFTA dream will never materialise. The current situation is maddeningly inefficient, with truck drivers spending hours, sometimes even days, at borders before being allowed to carry out a service for which the cargo owners are, no doubt, paying dearly.

There is an even larger risk to igniting this growth engine, however: a potential backlash against South Africans and South African businesses as a result of the violent xenophobic attacks on foreign Africans living and working in our cities and towns. Addressing this ugly blight on South Africa’s image and reputation is not only a social imperative, but increasingly an economic one too.

Edited by Terence Creamer
Creamer Media Editor

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