South African firms would do well to shift their expansionary strategies northwards, targeting the growing economies of sub-Saharan Africa that were increasingly buttressed by an emerging African middle class and expanding consumer base, Econometrix director and chief economist Dr Azar Jammine told a gathering of business on Friday.

“South Africa should look to the sub-Saharan [region] for growth . . . which is [emerging as] a saviour for the South African economy.

“A large percentage of the country’s growth can be attributed to trade with this region, with recent trade figures demonstrating how important sub-Saharan Africa is becoming for South Africa,” he told a Business & Marketing Intelligence-Building Research Strategy Consulting Unit (BMI-BRSCU) strategic forum, in Johannesburg.

According to Jammine, South African exports to sub-Saharan African in 2014 comprised 30.5% of the country’s total export basket value, coming in ahead of the value of exports to Europe in the same year – at 23.4% – and only slightly behind exports to Asia, which constituted 30.9% of total export outflow.

“South African companies have seen the gap and are investing in a meaningful way . . . they are going into sub-Saharan Africa and then buying the inputs they need [to operate in that market] from other South African companies.

“This creates a huge market for manufacturing, so we really need to be grateful [for the markets in this region],” he reasoned.

Jammine noted that the fixing of the Nigerian naira against the dollar further added to the attractiveness of buying South African goods for companies operating in that market.

Reuters reported in March that Nigeria's central bank – in a bid to prop up the currency, which had been hit by a drop in oil prices – had fixed the rate at which banks could buy dollars from oil companies at not more than a two-naira spread to its clearing rate.

The economist, however, cautioned South African companies active in oil-producing countries such as Nigeria and Gabon that moribund commodity prices would continue to weigh heavily on economies in sub-Saharan Africa.

His assertion was supported by the findings of an earlier report by Aon Risk Solutions, which stated that, of 163 emerging markets, oil-producing countries in sub-Saharan Africa continued to record the largest number of economic risk downgrades this year.

BMI-BRSCU principal consultant Dr Llewellyn Lewis added on Friday that several South African companies – particularly larger JSE-listed entities active in the engineering and construction sectors – had demonstrated their increasing prioritisation of the sub-Saharan Africa region in their growth and development strategies.

This was evidenced by South Africa construction major Murray & Roberts reporting in February that 93% of its profits before interest and taxes and 65% of its revenue in the six months ended December 31 had come from outside South Africa.

Business Day quoted CEO Henry Laas as saying, at the time, that the group had “never” seen such a high proportion of earnings coming from outside the domestic market.

“There is lots of profit for construction companies [north of the border], but they must have a solid home based on which to build their exports into the region,” Lewis commented.

Commenting on the broader South Africa economy, meanwhile, Jammine, put South Africa’s economic growth forecast at 1.8% in 2015, increasing to 2.1% in 2016.