Karen Harverson
South Africa exports more to the French island Reunion than it does to other developing markets such as Chile, Sri Lanka, New Zealand and Ghana.
“We have a logistical advantage over European countries in the supply of goods to Reunion which is only 2 820km away from South Africa,” says South African Foreign Trade Organisation director Martin Smith.
Last year, South Africa exported some R147-million to Reunion and this year is on target to export R170- million.
The biggest export is animal products and livestock at about 25 percent of the total exports. “We expect exports in wood products, pulp and paper, glass and glassware,and machinery and appliances to increase by more than 50 percent this year,” adds Smith.
In comparison, South African imports from Reunion were less than R1-million last year. “It doesn’t have the right mix of products to increase its exports to South Africa,” says Smith.
Instead, Reunion is encouraging foreign investment in the island to reduce its 37 percent unemployment rate.
Incentives include a 10 year tax holiday for new investors and subsidies of up to 70 percent of the cost of investment for key industries such as tourism, manufacturing and agro-industry. The state also provides up to a 50 percent subsidy on minimum wages, phasing down over 10 years, for export-oriented industries.
Other advantages include a market of 640 000 people and the island’s duty-free access to the European market. Manufacturers can stamp their finished or semi- processed products with the ‘Made in France’ label.
Reunion has the highest standard of living of all Indian Ocean islands and African countries. Its minimum monthly wage is about R3 500. Its gross domestic product (GDP) per capita is about R32 387 compared to South Africa’s R10 150 and inflation is two percent to South Africa’s 6,4 percent.
On exchange control regulations, Smith says South Africa is more lenient to applications to invest in African and Indian Ocean Islands. Reunion has no exchange control and currency is the French franc.