South Africa’s first exports under AfCFTA set sail

South African businesses exporting locally produced goods under the African Continental Free Trade Area (AfCFTA) for the first time have described the start of preferential trade as a single market on the continent as a “momentous milestone” that is tearing down barriers.

President Cyril Ramaphosa, some members of his cabinet, trade ministers from eSwatini, Kenya, Namibia and Botswana as well as other Africa government officials and business leaders and officials attended the launch of the first export shipments of South African made goods under the free trade pact on Wednesday. 

Products such as safety shoes, pharmaceutical goods, fresh produce, grinding balls for the mining sector, cement, smart electricity meters, aluminium products and recycled copper were loaded on two vessels at the Port of Durban as they prepared to sail to Ghana and Kenya this week.

The AfCFTA creates the world’s largest free trade area by number of countries, and has the potential to be a catalyst for the transformation and growth of African economies and businesses. It aims to eliminate trade barriers, including tariffs, to boost intra-African trade, while growing value-added production and trade across all sectors of the economy, providing exporters with new opportunities to access markets.

It seeks to accelerate development of regional and local value chains, offering investors access to a population of more than 1.3 billion people, of which more than 60% are under the age of 25, according to the World Economic Forum, and with a fast-growing continental GDP.

Speaking at Durban Port’s Pier 1 alongside the container ship Navios Verde while goods were being loaded for export, Ramaphosa said the start of preferential trade would create “great opportunities for growth and development”.

“Not only will it benefit our country’s producers, but it will also see a huge increase in traffic through our ports, our airports and our land-based border posts. The products made in Gauteng, Limpopo, North West, Free State, Mpumalanga and the Northern Cape will flow through these ports to markets beyond our borders,” he said.

According to African Union data, intra-Africa exports stand at about 16% of Africa’s total exports, compared with Asia’s 55%, North America’s 49% and the European Union’s 63%.

“The reason for this is clear: we are principally exporters of raw materials, selling rocks and black liquid to the world, instead of harnessing our oil and the minerals to industrialise our continent,” Ramaphosa said.

He said trade ministers had been finalising the rules of origin of what constitutes an “African product” over the past few years and had approved 92% of products that countries trade with each other.

“The products that we trade among ourselves must truly be ‘Made in Africa’. The modalities for trade in goods have moved faster than for services.  We need to put more effort into building African champions in finance, retail and telecommunications, and in expanding tourism between African countries.”

Industrial development is core to Africa’s integration as it builds productive capacities, adds greater value to products and diversifies trade beyond traditional commodities, Ramaphosa said, adding that there was potential for greater cross-border collaboration. He highlighted how South African vehicle companies already source leather car seats from a factory in Lesotho and wiring harnesses from two plants in Botswana.

“They source copper wire from Zambia, rubber from Cote d’Ivoire, Nigeria, Malawi, Ghana and Cameroon and steering wheel components from Tunisia.  These are installed in cars that are then exported from South Africa to other parts of the world,” he said.

“These inputs alone accounted for more than $200 million worth of products traded among African countries and the scope to do more is available to us.”

The initial aim under AfCTA is to grow intra-African trade to at least 20% by 2030.

Ramaphosa added that to facilitate these goals the government is implementing the Freight Logistics Roadmap to improve efficiency and competitiveness of rail lines and ports.

“We are working closely with industry to fix Transnet’s rail and port operations in the immediate term and to ensure greater investment in this infrastructure into the future,” he said.

Business leaders, many who have been exporting goods across Africa for decades, described the movement of the first exports under AfCTFA as a “historic” and “momentous milestone” that would serve to boost local supply chains and industrialisation. Defy, Hulamin, Conlog, Beier Industries, Natal Portland Cement and Aspen Pharma were among the companies shipping goods under the agreement this week.

Harry Kassel, the chief executive of Reclamation Group which exports recycled copper, aluminium and steel products, said the business would benefit from the removal of trade tariffs in some African countries.

“It is a groundbreaking game changer for Africa that will promote the economic growth and industrialisation of South Africa and its African trade partners. It is our own version of the European Union,” he said.

He said the company was exporting a shipment of recycled copper under AfCFTA but declined to divulge the volume and destination for competitive reasons.

Defy regional executive for sub-Saharan Africa Rajan Gungiah celebrated the first shipment of fridges under the continental trade pact.

“We have a new hybrid solar [fridge] innovation produced in KwaZulu-Natal. It’s a world first innovation and we are delighted to share it with the rest of the world and into the African region. This is a historic moment for us. We partner with 35 counties and this AfCFTA agreement allows us to achieve business growth in the economic region,” he said.

Conlog chief executive Logan Moodley said the company was shipping smart electricity meters to Ghana’s state-owned power utility for the first time under the preferential trade agreement.

“This is an exciting opportunity and a momentous moment  for Conlog and South Africa. It is a massive milestone,” he said.

He said the country exports to several African markets including Nigeria and those in the Southern African Development Community and East Africa.

The minister of commerce, industry and trade in eSwantini, Manqoba Khumalo, said the country was preparing to export its first shipment of sugar under the AfCFTA in February.

“We look forward to the value addition and new opportunities for the private sector, both big and small businesses,” she said.

Namibia’s minister of trade and Industrialisation, Lucia Lipumbu, congratulated South Africa for being the first Southern African Customs Union member state to export under the new trade rules.

“Namibia stands in strong support of this imitative, recognising the huge potential to enhance economic growth and promote industrialization. Namibia commits to taking the first steps in the coming months to export meat and fish from the Port of Walvis Bay,” she said.

 

Kenya’s trade minister, Rebecca Miano, lauded South Africa for demonstrating its readiness to trade under AfCFTA.

“It is also an indication that South Africa is ready to receive imports from the AfCFTA countries whose tariff offers have been finalised and adopted by the AU assembly. We are beginning to see the changing direction of the level of intra African-trade which has been very low,” she said.

Kenya started trading under the agreement in 2022, sending its first consignment of tea followed by car batteries and other products to African markets.

Wednesday’s launch took place on the sidelines of the AfCFTA meeting of trade ministers in Durban, where government officials from 40 African countries considered the input of technical experts on a range of trade and investment issues under AfCTA. 

This included a raft of recent reports on the final protocols to implement the trade agreement that aims to progressively unite the African Union’s 55 member states in a single economic market.