ON SITE
Let’s look north
T
Leon Louw
[email protected]
Many South
African
companies
have survived
the malignancy
by focusing on
and expanding
operations into
the rest of Africa.”
www.equipmentandhire.co.za
he constrained economy and
dearth of major infrastructure
projects has taken its toll on South
African business. All sectors have
come under pressure. The construction
industry, especially, took the brunt of the
economic whiplash. Whether it can be
saved, remains an open-ended question.
The mining industry is slowly lifting its
head, but it is hard to tell what the real
impact of the Zwane and Zuma years will
eventually be. I spoke to a manager of a
timber mill in KwaZulu-Natal at the Bell open
day in Richards Bay recently, and she told
me that her business took a major blow as
a result of Eskom’s perpetual woes. The
company used to supply Eskom with timber
poles, but with no money in the Eskom
coffers, it is not expanding its service, and as
a result is not buying any timber poles. The
Eskom contract was the timber company’s
main business. The result: they will not be
ordering any new equipment for the next
few years. So, the ripple effect of Eskom’s
failure continues to spread through South
Africa like a dreaded disease.
Nevertheless, many South African
companies have survived the malignancy
by focusing on and expanding operations
into the rest of Africa. In fact, this strategy
has not only saved their bacon while South
Africa drowns in a deluge of economic grief,
in some cases it has resulted in spectacular
growth. Expanding into Africa is something
South African companies don’t always
consider as an option, which is astounding if
one considers the opportunities, right here
on our doorstep. Africa is a huge market,
and it is about to become more accessible
with the creation of the African Continental
Free Trade Area (AfCFTA). Yes, it is risky to
invest in some African countries, but is it
really riskier than sitting on your hands in
South Africa hoping government makes the
right decisions?
When all the countries in Africa sign
the AfCFTA (which is not far off – Nigeria
finally signed earlier this year), it means
the economic block created would include
55 countries, 1.2 billion people and
USD2.2-trillion worth of GDP. Simply, what
it really means is that it will be one of the
largest markets in the world.
Currently, African countries export only
18% of their products to other African
countries. In Europe, intra-continental trade
is 70%, while it is 60% in Asia. An increase
in trade within the continent will open up
unthinkable opportunities for manufacturers
in South Africa. At the moment, South
Africa mainly exports cars, refined petrol
and coal to countries north of its border,
while demand for other products will
continue to grow. The planned infrastructure
development, the mushrooming mining
industry and increasing quarrying activity
across the continent will create obvious
opportunity for experienced South African
suppliers and manufacturers. It is something
South African entrepreneurs should not lose
sight of.
Naledi Pandor, South Africa’s Minister
of International Relations and Cooperation
summed it up recently when she said
that with the agreement, an immense
opportunity for trade within Africa has come
in to being. “South Africa must ensure that
it is ready to take advantage of the potential
offered by this expanded market access. The
development of the necessary infrastructure
for this expanded trade is going to gather
speed and we, as South Africa, must be
ready to play a key role,” she said.
Leon Louw
NOVEMBER 2019
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