South African Business 2018 edition

SPECIAL FEATURE
Fully 30% of South Africa’s
exports are to other countries in
Africa, but a massive 83% of this
volume is into Southern Africa.
This means that the potential
for South Africa to grow its exports
into other parts of Africa is
enormous.
The Export Credit Insurance
Corporation of South Africa
(ECIC) exists to help trade and
investment across borders. ECIC
provides insurance for bank loans
that are taken by investors and
South Africans can get insurance
for investments, and for small and
medium enterprises there is a
product available (performance
bonds) to anyone exporting
capital goods and services.
The South African Department
of Trade and Industry (dti) plays a
key role in promoting trade between
South Africa and the rest
of Africa. South African exporters
can enroll in the dti’s training
programme, Global Export Passport Programme
(GEPP). The dti wants to expand South African exports
in manufacturing (which it wants to double
in 10 years) and services (40% of the export basket
by 2030).
The Integrated National Export Strategy (INES)
is managed by a unit called Trade and Investment
South Africa (Tisa), which is targeting emerging
markets, including the BRIC states (Brazil, Russia,
India and China).
Connecting
Intra-African trade currently stands at 16% of trade
volumes. This is in contrast to the continent of
Europe, where 60% of all trade is conducted among
European nations, and in Asia, where the figure
is 40%.
Border delays, tariffs and infrastructure are the
biggest barriers to expanding this trade. Shoprite
spends about R20 000 per week in permits, and long
waits at border posts are routine. The revamped
Chirundu one-stop border post in Zambia has
reduced transit times by a third.
There are plans to create a Tripartite Free Trade
Area covering three regional groupings across
26 countries. Extending from South Africa in the
south to Uganda and Kenya in the north, the proposed
free trade area would encompass more
than 620-million consumers in three regional
organisations: the Southern African Development
Community (SADC), the Common Market for East
and Southern Africa (Comesa) and the East African
Community (EAC).
The Sustainable Development Investment
Partnership (SDIP) comprises 30 institutions and
aims to fund 16 African infrastructure projects, valued
at more than $20-billion. The founders of the
SDIP were the World Economic Forum (WEF) and
the Organisation for Economic Co-operation and
Development (OECD).
China has pledged to support the rehabilitation
of the railway line between Zambia and Tanzania
while the Industrial and Commercial Bank of China
is to invest R20-billion in renewable energy in Africa.
Railway upgrades will probably reap the quickest
rewards in the push to promote intra-African
trade. Fully 70% of the freight that arrives in South
Africa is delivered by road: this is both a problem
and an opportunity. One of the companies
eyeing that opportunity is South African rail operator
Sheltam Group. It has created a rail track
infrastructure funding vehicle with a dedicated
African mandate.
The Development Bank of Southern Africa and
Transnet have developed a financing scheme for
selected buyers of rail rolling stock and port equipment.
Transnet is already very active in African
countries north of the South African border.
This is part of Transnet’s Market Demand Strategy
(MDS), which aims to sell it products and services
around the world. Transnet Engineering’s Trans-
Africa Locomotive (for branch lines and shunting
yards) is being marketed to other African countries
and mining companies. Transnet Engineering plans
is establishing Maintenance Repair and Operations
centres in four African countries.
23 SOUTH AFRICAN BUSINESS 2018