I’ve had so many people – both personal and professional connections – compare us to Zimbabwe or Venezuela. And while we may not be Singapore or the US or any of the Scandinavian countries, South Africa is not a basket case.
It’s worth remembering that South Africa is a developing economy with many first-world characteristics. In fact, we climbed seven spots in the World Bank’s Global Competitive Report for 2019, making us the second-most competitive economy in sub-Saharan Africa, after Mauritius.
We are a real gateway to the rest of Africa. We have advanced banking and telecommunications sectors and unsurpassed manufacturing capabilities compared with other major economies on the continent, including Nigeria and Egypt.
But that does not mean such assets cannot be run down and eroded over time. Former President Jacob Zuma’s administration shows just how easy it is to slide down the slippery slope to becoming Zimbabwe or Venezuela.
So possibly the solution for our economic doldrums is to look closer to home for economic solace. After all the IMF has sub-Saharan Africa pegged at 3 percent annual real GDP growth and the whole continent at 3.2 percent, which is something we can work with, and benefit from.
Of course, Africa is not a homogenous grouping; 54 different countries all operating differently, with different needs and varying economic strength as well as some offering more challenging governance and regulatory environments than others, but as the second most competitive economy on the continent, many African markets surely need us as much as we need them.
The continent’s population is expected to grow by 1.7 billion people by 2030 and it’s a well-known fact that consumerism on the continent is on the rise too, with combined consumer and business spending reaching $6.7trn by 2030 – this time last year the Brookings Institute reported that consumer expenditure on the continent had grown at a compound annual rate of 3.9 percent since 2010.
A growing population with money comes with an increased demand for goods and services. South Africa has both and some clever businesses have already been making the most of the lucrative opportunities the continent has to offer. In January however, we should have more clarity on the African Continental Free Trade Area (AfCFTA) which was proposed by the African Union in July this year and should be ready for implementation by July 2020.
Closer to home
In a nutshell, African counties don’t trade as much with each other as they should. According to Business Insider, almost two-thirds of African countries’ exports go to Europe with only 17 percent of exports going to other African countries. And an analysis by the Trade Law Centre (Tralac) shows that Africa only accounts for about a quarter of South African exports. The AfCFTA will make intercontinental trade cheaper and encourage more trading on the continent which means there’s a world of opportunity for us to expand trade beyond out traditional SADC trading partners of Namibia, Botswana, and Mozambique. Of course, it will mean cheaper imports for us too.
Enhanced intercontinental trade is not only going to benefit our banks, retailers and manufacturers, but smaller business and entrepreneurs too if they do their research to understand where the gaps in different markets are, and either fill those gaps or get into the supply chain that does.
In the medium-term, it is likely that South Africa’s GDP growth will continue to be laboured. Government needs to implement major structural reforms to stimulate greater foreign direct investment, economic competitiveness and productivity than a weak rand alone can provide. And, of course, most crucial for more than just economic growth, here and in Africa as our neighbours use our power too, is a clear, workable and immediate solution to the Eskom crisis.
I’ve worked successfully on the continent for many years. It’s true, Africa is not for sissies but it’s a place of possibility and easier trade agreements will ease the risks for those businesses – large and small – looking for new growth opportunities. If even a fraction of South African businesses succeed in their Africa strategy, we will see local economic growth, improved employment and hopefully less of us packing for Perth.
Andrew Robinson, co-founder & executive director, SiSebenza. Views expressed are his own.
Published on News 24