Local companies continue to export despite poor local market

3rd September 2021 By: Cameron Mackay - Journalist

Despite the fiscally constrained state of the local economy, local equipment suppliers are successfully exporting their products, says South African Capital Equipment Export Council (Saceec) CEO Eric Bruggeman.

“In 2017, we exported about R198-billion worth of equipment, and this has remained consistent. Our members are now starting to get full order books again, some with enough work to last them until next year February.

“Local manufacturing still comprises about 20% of South Africa’s gross domestic product, as our exporters are still doing well and increasing their exports. Companies are also continuing to do well in terms of exporting to existing customers; however, finding new customers to export to remains a challenge,” he explains.

Challenges posed by the Covid-19 pandemic, such as the closing of ports, harbours and border crossings, have made it more difficult for companies to export their locally manufactured products.

This has also led to companies outside South Africa being forced to use ports in nearby countries, such as Tanzania and Mozambique, to move their products.

However, Bruggeman argues that despite these challenges, Saceec members have successfully adjusted to interacting with and selling to customers remotely.

“This ability to interact with customers remotely will become more important as countries globally continue to vaccinate their populations and allow them to travel freely again,” he adds.

Moreover, Saceec is working with chambers of mines of other countries using virtual exhibitions and platforms, with marketing for its members on a virtual and media basis.

Bruggeman also confirms that the council has partnered with chambers of commerce of other countries, including those of Chile, Peru, Ecuador and Colombia.

“This will bring the respective chambers of commerce together, as the agreement was signed in July. We can now put Saceec members in contact with any chamber of commerce in these countries. This will be beneficial to local exporters, as it provides the right contacts for them to engage with and find new customers.

“When people are allowed to travel again, many are not going to travel because they’re already meeting their targets through communicating remotely with customers. In engineering you have to be on site, especially in manufacturing, but from a sales and marketing perspective, these methods of interaction have changed.”

Bruggeman adds that Saceec member companies have also continued to export, owing to partnerships they have formed with overseas companies. Such partnerships help local companies to export more effectively.

Saceec has about 203 members, of which 164 are actively exporting. Of these, about 50 members have formed successful partnerships.

The members who have successfully continued to export have mainly been in the water and water purification, power and alternative power, food and beverage, as well as mining, industries, he emphasises.

Saceec members have also been successful in exporting to African countries, such as Kenya, Ethiopia, Uganda and the Democratic Republic of Congo, as well as South African Development Community countries.

“Many of these countries have new presidents or governments. Governments from most African countries are quite stable, with little to no bribery and corruption. Uganda, for example, is running a transparent, effective and corruption-free government. Generally, investors go with these kinds of countries, and when they invest in them, there are opportunities for our members to export, and they’re using it,” Bruggeman adds.

“One of the most important things with exporting is financial support. South Africa is a niche market, especially with mining – we’re not a mass production market such as those of China or India,” he outlines.

Local Market

In contrast to growing African countries, Bruggeman stresses the lack of investment in the local economy, highlighting the financially constrained state of State-owned enterprises, and the consequent lack of government investment in significant infrastructure projects.

“While there was about R3.5-billion put aside by government to fix what was broken in the riots and looting that occurred in July, this is essentially just repair and maintenance, and not new investment,” he adds.

Bruggeman also contends that South Africa needs to open all its local ports and harbours and needs to make travelling across and delivering goods through borders easier.

This will also help South Africa to reap more economic rewards from the African Continental Free Trade Agreement, signed at the beginning of this year.

“We need to make arrangements to trade with our neighbouring countries. We also need to let other African countries export to us, but our government has stuck to importing from places such as China, India and Brazil. We want to export to neighbouring countries, but we’re not forming partnerships with them. We need to invite other companies to invest in local companies so that we can do more bilateral trading,” he concludes.