The booming economy in South Africa has resulted in greater demand for products and workers from other African countries and added to the revenues already being enjoyed as a result of the high price of commodities.
Ian Marsberg, senior economist at Absa, says in 1998 13,6% of South Africa’s merchandise exports went to the rest of Africa and this rose to 14,1% in 2005.
More importantly for the rest of the continent, South Africa’s imports from elsewhere in Africa have increased from 2,4% to 3,8% over the same period. ‘We are trading more with the rest of Africa,” Marsberg says.
In terms of direct investment into Africa, this country is actively investing in mining projects, manufacturing and the services sector.
The services sector, including information technology, utilities, hospitality and banking, is attracting the lion’s share of South African investment. ‘There has been a pickup in South Africa’s foreign direct investment into the rest of Africa,” Marsberg says.
He says there has also been considerable activity on the part of South African retailers, with major players such as Shoprite spreading their wings across the continent. ‘South African business is clearly interested in what is happening in the rest of Africa and it sees opportunities on the continent,” Marsberg says.
He says development aid is being used to spearhead initiatives under which South African supermarkets are to source their goods from Southern Africa rather than the rest of the world. The programmes aim to have 30% of supermarket purchases imported from Southern Africa by 2010.
There are also spin-off benefits as a consequence of South African companies becoming active throughout the continent. ‘Their business ventures draw in local resources and give rise to a skills transfer that helps foster an environment suitable for future development,” Marsberg says.
South Africa also plays a relatively large role in collecting customs revenues on behalf of Southern African countries that fall under the Southern African Customs Union. ‘South Africa collects the revenue and it is shared according to a formula among the members of the Southern African Customs Union.
‘In 1996/1997 about R4,4-billion was paid to these countries and by 2005/06 it had already risen to R14,1-billion. According to government estimates about R30-billion will be going to them in 2009/10,” Marsberg says.
He says the distributed revenues can then be used for development and as a boost to their economies.
About softer issues, Marsberg says South Africa is also a destination for skilled African labour.
These employment opportunities mean that workers are able to send money to their families elsewhere in Africa and South Africa had the benefit of additional skilled resources in a market that is often constrained by its lack.
There are concerns that the flow of skilled labour into South Africa results in a smaller pool of skills being available in their home economies.
But skilled workers usually prefer to find local employment opportunities if they are available and the move to South Africa tends to indicate that suitable employment is not available in their home economies. ‘South Africa, through the education, training and development that it provides to foreign students, is also helping to increase the pool of qualified talent on the continent,” Marsberg says.
He says another contribution South Africa makes to the continent that also has benefits for this country is its diplomatic efforts to help foster a peaceful environment throughout Africa.
‘South Africa is doing a lot in the region to ensure greater stability.Very often President Thabo Mbeki’s efforts on the diplomatic front are under-appreciated at home.
‘People often fail to realise that a more peaceful climate in Africa is good for business and helps foster trade and development in this country,” Marsberg says.