SA revisits neglected trade ties

Africa a viable choice

SOUTH AFRICA PRIDES itself as a First World country in a Third World continent, trading mostly overseas, but is starting to train its sights on its poor but fast-growing African cousins as turmoil in Europe slashes exports to its traditional markets.

The government said this month that it was looking to African oil producers such as Nigeria after bowing to Western pressure to cut imports from Iran – historically its biggest supplier – in compliance with sanctions over Tehran’s nuclear programme.

South Africa’s crude imports from Iran fell 43 percent to 286 072 tons in April from the previous month, while imports from Nigeria rose nearly fivefold to 615 834 tons in March, against 127 376 tons in the same month last year.

Besides Iran, the turmoil in Europe, South Africa’s biggest trading partner, is providing another lesson on the need to shift focus to more dynamic growth spots from the debt-ridden region where a 2008/09 slowdown triggered the first recession in South Africa in 18 years.

Sales to Europe – while still accounting for the bulk of exports – fell to 23 percent of total exports in April, from nearly 28 percent a year ago, according to customs data.

“We need to be prepared if there is either a serious downturn or stagnation,” Lionel October, director-general of the Trade and Industry ministry, told a business forum this month. “We must have a coherent response this time so we don’t suffer a knock, as we did in the last round.”

With its economies growing at 5 percent or more, Africa is the obvious candidate to plug the gap – and regional exports are showing gradual signs of growth, from just 15 percent of total sales in April last year to 17 percent in April this year.

However, South Africa’s trade with the continent – a three-fold increase since 2001 – has severely lagged behind that of China, whose trade with Africa grew 16-fold over the same period.

Exports to key economies such as Nigeria and Egypt were well below potential, said Standard Bank analyst Simon Freemantle. In 2011, just 0.5 percent of South Africa’s total exports to Africa were to Egypt, and 4 percent to Nigeria.

By contrast, 16 percent of China’s African exports were to Nigeria and 13 percent to Egypt. While some local firms have beaten a path into fron- tier Africa, including retailer - Shoprite, Standard Bank and cellphone operators MTN and Vodacom, politicians have been slow to follow.

For example, since his election in 2009, President Jacob Zuma has yet to make an official visit to Nigeria and Ethiopia – Africa’s two most populous nations – but has been to Britain and other Western countries as well as south and central America.

Nigeria, Africa’s secondlargest economy, is an important potential market with a population of 150 million people.

With official GDP due to jump 40 percent under an imminent rebasing, it will also come close to South Africa in size.

“There is a perception that South Africa tilts her nose up at its neighbours,” said a southern African diplomat who declined to be named.

However, this year, South Africa backed Nigerian Finance Minister Ngozi OkonjoIweala for World Bank president, although she ultimately missed out on the position.

South Africa’s proximity and advanced banking system mean it is still well-positioned to catch up with Asian rivals in the 21st-century “scramble for Africa”, however. – Reuters