Manufacturers urge more trade with Brics

MANUFACTURERS say trade agreements and infrastructure need urgent attention if local industry is to be helped to secure much-needed additional export markets in fellow Brics (Brazil, Russia, India, China, SA) nations and in other African states.

With a prolonged recession in SA’s single biggest export market — Europe — and modest demand from other export markets, including China and the US, South African manufacturers are being forced to look at boosting exports to other countries.

SA’s poor export performance was identified by Finance Minister Pravin Gordhan in his budget in February as an obstacle to economic growth.

The trade deficit hit a record R24.5bn in January, although it

narrowed to R9.52bn in February as SA’s trade performance picked up, helped in part by a weaker randdollar exchange rate.

Exports increased by R9.04bn or 17% from January to February, while imports fell by R5.97bn or 7.7% in the same period.

SA’s bulk export volumes rose 5.4% year on year last month to 13.6million tons, the highest level since a record 14-million tons achieved in October 2011, according to data released by the Transnet National Ports Authority this week.

But the outlook may be less bright for manufactured exports.

The industry body representing local producers — the Manufacturing Circle — has long complained of a flood of cheap imports from China, a member of the Brics group of major developing economies.

Last year, local producers urged the government to engage its Brics counterparts at a political level, particularly China, to stem the flow of cheap imports into the country, which they said was damaging local industry.

Manufacturing Circle executive director Coenraad Bezuidenhout said yesterday trade agreements and infrastructure development still needed to be resolved.

“What will be key, is the degree to which we are able to secure market access for our manufactured goods in the markets of our Brics partners, and in Africa,” Mr Bezuidenhout said.

“In the case of the former the problems are political. In the case of the latter, the difficulties are more around logistical issues and systemic harmonisation.

“None of these are likely to improve significantly within the next year,” Mr Bezuidenhout said.

While manufacturers lobby for more export markets, the rand has been working in their favour by maintaining a weaker bias.

Absa private client asset management head Craig Pheiffer said rand weakness alone was not enough to boost manufacturing on a longer-term basis.

“We have seen the rand weaken .. but we need something more sustainable. We need to see Europe picking up and we need to see our own economy picking up to well over 3%-4% to see some demand for our local goods,” Mr Pheiffer said.

“Recovery in the US and the eurozone will remain important, but will remain constrained as long as significant consensus around a way forward eludes those economies,” Mr Bezuidenhout said.

The economy’s second-biggest sector is unlikely to meaningfully add jobs this year, according to Mr Bezuidenhout.

He said employment was likely to “remain stable” with some monthto-month fluctuation over the next few months.