EXPORTS from South Africa to the rest of Africa may have more than doubled between 2004 and last year – from R39 billion to R89.3bn according to the South African Revenue Services (Sars) – but export consultants believe local firms are still not taking enough advantage of the increasing opportunities on the continent.
Duncan Bonnet of Whitehouse and Associates, said South African companies continued to use the rest of the continent to simply mop up excess production.
Many local companies had also left the continent, he said pointing to mineral-rich Zambia and Katanga, in the Democratic Republic of Congo, where not “a single” South African mining company was operating there anymore.
Bonnet believed the biggest single stumbling block to any entrepreneur wanting to get into the rest of Africa was the perception that it was difficult to do business in the continent.
He said despite logistical and infrastructural challenges, the rest of the world, particularly China, was increasingly doing more business with the continent.
Michael Gamwo, international trade manager of Africa for the Western Cape’s investment and trade promotion agency Wesgro, said despite a recent “wave of interest” from South African companies wanting to export their products to Africa, the rate of the country’s involvement in Africa was far from being satisfactory.
“There is a lack of export culture and adventurous mentality from most South African companies. Very few are prepared to face the unknown and venture into lucrative markets to explore available opportunities. Instead they sit back and expect to be presented with clear-cut opportunities to exploit, or they prefer to follow in the footsteps of competitors once they realize how well they are doing in Africa,” he said.
Africa, he said, had always been cast as a difficult place to do business, but he pointed out that consumer spending in those countries had kept business flourishing despite the political turmoil and corruption.
On top of this the recession didn’t hit Africa as hard as it hit the rest of the world, and Sars figures that showed that while South Africa’s total exports fell by 22% last year over 2008, exports to Africa declined by a lower, 14%.
The effects of the recession are still linger and exports to Africa for the period January to February were down 15% when compared to the same time last year.
Gamwo said across the continent there was a growing need for goods such as automobile spare parts, paper products, plastic goods, cosmetics, stationery items, lubricants, machinery and raw material for local industries, he said.
Testimony to this is that the Automotive Industry Export Council’s Automotive Export Manual – 2010 South Africa reveals that South Africa exports a diverse range of automotive components to the rest of Africa, most of these consist of aftermarket replacement parts such as tyres, engine parts, transmission shafts and instrument panels.
The biggest increase having been in batteries – which rose from R25.8 million in exports in 2005 and R119.4m in 2009.
Gamwu said many goods were being imported in increasing quantities into the continent through Dubai, China and Europe. However he said Africa’s various economic blocs such as the Economic Community of West African States (Ecowas) and the East African Community, provided “huge” market opportunities for South African firms.
A number of small firms from South African were involved in Nigeria and Angola as technical partners to local operators providing services in the oil and gas service, particularly in engineering, IT, construction and property development, he said.
“With the prospect of stable growth for the foreseeable future, an expanding domestic economy, and increased interest in key sectors, Africa as a whole is a market that should be given due attention at every level by South African companies looking to expand their business interest outside the borders,” he said.
While most of South Africa’s exports on the continent still go to neighbouring countries, with Mozambique and Zimbabwe topping the list, many exporters are eyeing Angola as a potential new market. Exports from South Africa to the Portuguese-speaking country shot up from R4.7bn in 2006 to R7.3bn in 2008, before the onset of the recession.
Rodger Ballard-Tremeer chief executive of the SA-Angola Chamber of Commerce, said eight years after the end of the civil war, the country was increasingly becoming a more viable export destination with ongoing infrastructural improvements.
The biggest hurdle remained transporting goods into Angola, but he said once a 300km strip had been repaired on the national road, trucks would be able to travel from South Africa to the capital.
South African firms wanting to spread their wings there could contact any number of buying arms in South Africa that sourced goods for Angolan firms from manufacturers based here.
The SA-Angola Chamber of Commerce has over 250 members, two thirds of which were small businesses, said Ballard-Tremeer.
This article appeared in Business Day on 18 May 2010.
Stephen Timm is a