Intra-Africa trade to create compelling opportunities for local exporters

South Africa’s largest intra-African trade partners include Angola, Nigeria and Kenya, which make up nearly 50% of export volumes. According to Matthew Conroy, Trade Manager of Maersk Line Southern Africa – a member of Maersk Group – these regions present a compelling opportunity for local businesses to explore, and provide an alternative to the traditional European and Asia export markets.

Conroy says that since 2012 the intra-Africa trade has grown steadily by about 10% per year, and the increase of South African exports to African countries can be attributed to the rapid economic growth experienced across the continent, along with growing population and accelerating rate of urbanisation. “The major commodities exported from South Africa to these African countries include foodstuff (20%), chemicals (12%), construction material (14%) and fruit (8%), and the increasing demand for these products can offer local producers new markets and customers. Trading with new markets in Africa will also stimulate the economy by promoting sustainable growth across borders.”

Conroy says that in addition to these commodities Nigeria has also experienced an increase in the volume of automotive parts over recent years. “Despite the recent slight decrease in vehicle sales experienced in the country due to the national elections, we expect sales to increase again soon, and when this happens, vehicle exports from South Africa to Nigeria are expected to grow significantly.”

He attributes the increase in demand of South African commodities to the rapidly emerging middle class in Africa, which is one the fastest growing in the world. “Reports from the African Development Bank state that in terms of economic growth across various Africa counties, rising real incomes will lead to higher consumer spending, and that this is predicted to almost double in the next ten years. Reports further predict that growth of 4.5% in per capita GDP compounded annually through 2015 will result in an increase of more than 35% in consumer spending in Africa. Africa’s rising middle class offers abundant trade opportunities for South Africa, especially as the country is often seen as the gateway into Africa.”

He says that while exports from South Africa into Africa have increased steadily over the years, imports from Africa into the country remain very low. “Madagascar and Mauritius make up 50% of African import volumes to South Africa. These commodities consist mainly of textile products (25), Chemicals (15%) and manufacturing components (11%).

According to Conroy, a significant challenge that is currently hindering intra-Africa trade, is customs clearance at African borders. He says that freight vehicles often have to wait for days at borders while documents are being processed.

He adds that expansion in road and rail will pave the way for economic growth and will form a critical part of the supply chain as these transport methods are able to move large volumes of goods efficiently across Africa, with little impact to the people and communities served. “The development and improved road and rail infrastructure will enhance freight channels on the continent, boost intra-Africa trade and enable growth across various sectors, thereby creating opportunities and wider trade for South Africa businesses to take advantage of,” he concludes.

Source: Maersk

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