SUBTRACTING GAIN
South Africa’s export industry, which comprises about 23 000 to 25 000 exporters in any one year but the country loses and also gains 6 000 exporters a year
Photo by: Duane Daws
If South Africa retains 50% of its exporters in one year, the country, whose projected growth for 2016 is forecast at about 0.7%, can grow the economy by an additional half a percentage point, said independent economist Dr André Gouws.
Speaking at the international export/import multisector business and trade exhibition the Southern African International Trade Exhibition in Midrand, Gauteng, earlier this month, he noted that this potential growth would amount to a 50% increase in South Africa’s gross domestic product (GDP) growth.
If exporters could each increase exports by 6%, South Africa would increase its GDP by about 3%, he added.
While South Africa’s export industry comprises about 23 000 to 25 000 exporters in any one year, the country loses, but also gains, 6 000 exporters a year.
“Had we been able to retain half the exporters since 2000, South Africa would have had more than 60 000 exporters,” Gouws lamented.
Consequently, Gouws stressed to industry stakeholders – including the City of Johannesburg, the Department of Trade and Industry, the Department of Small Business Development and the Gauteng Provincial government – that existing exporters must be fostered and maintained, as they “have proven themselves competitive”, with sufficient knowledge in exporting.
Existing exporters can be retained and further developed for expansion in the export market, while new and emerging exporters should also be supported, strengthened and assisted to increase their export volumes, Gouws suggested.
He highlighted several key concerns for the export industry, such as South Africa’s losing of its global market share, from about 2% to the current figure of about 0.5%.
Despite Statistics South Africa indicating that exports to sub-Saharan Africa comprise almost 20% of South Africa’s total merchandise exports, excluding gold, about 93% of all exports come from 5% of superfirms, while almost all export sectors are dominated by these superfirms, according to the World Bank.
“These superexporters are losing dynamism and competitiveness,” Gouws said, adding that they were neither exploring new markets nor sufficiently exploiting current markets, but exporting mostly basic raw materials or foods, instead of high value-added products.
Other challenges hampering exports included the cost of capital and logistics, as well as a lack of required technology and skills, while firms could not achieve economies of scale, as South African markets were too small, Gouws averred. He suggested, however, that, if South African firms could collaborate on the export market, they could start achieving economies of scale.
Additional proposals to support exports also include the establishment of export villages for small businesses and export consortia for bigger firms to assist companies in achieving export economies of scale; a closer alignment to policies, such as the Industrial Policy Action Plan; and the improvement of an entrepreneurial culture, said Gouws.
Nevertheless, “no amount of support from government can bring success unless businesses are ready to show their worth on the highly competitive international markets that are now open to them,” Gouws said in quoting former President Nelson Mandela, and stressing that government and businesses should play their role in supporting the export markets.