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SA manufacturers have turned export attention to Africa - survey

16th May 2013

By: Terence Creamer

Creamer Media Editor

  

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A new Manufacturing Circle survey shows that South African manufacturers are responding to the market opportunities opening up as a result of strong growth in the rest of Africa, which has already emerged as a “prime” export destination.

In fact, the 50 respondents to the first-quarter survey indicated that the share of exports to Africa had become larger than those to Europe, the traditional export destination for locally manufactured products, as well as exports to South Africa’s fellow Brics-bloc economies, Brazil, Russia, India and China.

About 26% of responding companies – including large and small manufacturers from a diverse range of industry subsectors, from fabricated metal products and electrical machinery, to furniture and chemical products – reported that between 81% and 100% of their total exports were absorbed by African markets.

In total, nearly three-quarters of those surveyed indicated that they had at least some exposure to Africa through exports.

By contrast, more than half of respondents did not export any product to regions such as Europe, North America, South America, Japan, China and India.

Somewhat surprisingly, nearly 60% of respondents indicated that they did not export to Europe at all, while 82% indicated that they had no export exposure to the Chinese market.

Pan-African Investment and Research Services economist Dr Iraj Abedian, who oversees the compilation of the survey for the Manufacturing Circle, said that it was apparent that Africa had become a “significant” market for South African manufacturers.

“It’s quite clear that our manufacturers have embraced – and have gotten themselves into riding the wave of – Africa’s growth,” Abedian said.

The International Monetary Fund reported recently that sub-Saharan Africa grew by 5.1% last year, and should accelerate to 5.4% in 2013 and 5.7% in 2014.

Abedian added that the results suggested that, for manufacturers, Africa was “infinitely more important than Brics” and that efforts to foster regional integration should be intensified.

Prior to the release of the survey, Trade and Industry Minister Dr Rob Davies told parliamentarians that negotiations for a trilateral free trade agreement (T-FTA) between the members of the Southern African Development Community, the East African Community and the Common Market for Eastern and Southern Africa were proceeding.

The T-FTA would combine the markets of 26 countries with a population of nearly 600-million people and a combined gross domestic product of $1-trillion.

But Davies also stressed that the T-FTA needed to be complemented by the promotion of both infrastructure development and cooperation to transform productive sectors and industrialise the continent.

Another key message to emerge from the latest Manufacturing Circle survey was the primacy of the domestic market in the fortunes, or otherwise, of South African manufacturers.

The lion’s share of domestically produced goods was still consumed within the borders of the country, with 70% of respondents indicating that domestic sales accounted for 60% or more of total sales.

A new section to the survey also showed that the majority of respondents considered the government’s local-procurement programme to be important in the process of maintaining and growing their manufacturing operations.

However, it also indicated that only a small number of surveyed firms had actually benefited from current programmes, which Abedian argued was indicative of a “mismatch” between policy pronouncements and the actual experiences of manufacturers.

Nearly 80% of respondents also reported sourcing 40% or more of their inputs locally.

“This shows that South African manufacturers put their money where their mouths are when it comes to local procurement, expanding the market and creating jobs,” executive director Coenraad Bezuidenhout argued.

Edited by Creamer Media Reporter

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