South Africa exports goods and services to about 53 African countries. Last year this amounted to R53,1billion.
Steven Matthews, CEO of FNB International Banking, says the 2006 exports represent a 16% increase on the value of exports in 2005 (R45billion).
‘Zambia was the top African destination for our exports last year, up from third place the previous year. Zimbabwe is the second most important export destination, followed by Mozambique, Angola and Nigeria. Most of the exports to these countries are fairly flat but exports to Angola have increased by 37%, particularly in areas such as retail and construction,” says Matthews.
Zambia purchased South African exports worth nearly R8billion and much of this was in the form of manufactured goods.
A lot of vehicles manufactured in South Africa are exported to African countries along with electrical machinery and other goods.
‘In just five African countries — Namibia, Botswana, Zambia, Mozambique and Zimbabwe — there are about 50 major listed South African companies actively pursuing opportunities.
‘These companies represent financial institutions (25%), manufacturing (21%) and wholesale and retail (21%),” says Matthews.
Nor, he says, is all this trade a one-way street.
Historically, imports from the rest of Africa were extremely low. In 2005, however, total imports from Africa amounted to R13,3billion and this increased by nearly 100% last year to R26,5billion.
The top five sources of imports to South Africa are Nigeria: R9billion, consisting mainly of oil; Zimbabwe: R4,4billion worth of a range of products including nickel, cotton, wooden items, tobacco, iron and steel; Angola: R2,4billion; Libya, which used to be 46th in terms of African countries exporting to South Africa but has now moved into the top five: R2,4billion; and Zambia: R1,8billion.
‘Imports from the rest of Africa are mainly commodities and there is not much in the way of value-added products. This highlights a major opportunity, for the continent and South Africa, for local companies to become more active in manufacturing throughout Africa — and some South African companies have already begun operations,” says Matthews.
Rudolph van Schalkwyk, head of structured trade and commodity finance at Nedbank Capital, says not all African countries produce enough to meet their basic food requirements and many countries import some of their basic food needs. In addition, there is considerable demand for consumer goods in these markets.
On the export side, he says, the bank becomes involved in funding metals and minerals as well as crude oil and gas transactions.
‘We advance some funds in the form of pre-export finance to the exporter before they carry out the physical shipment of goods. This gives them sufficient cash flow for corporate purposes or to invest in expanding their production,” says Van Schalkwyk.
He says Africa’s trade has been increasing dramatically in recent years and the continent is exporting more than ever and receiving higher prices for its commodities. On the other side of the coin, Africa’s higher export earnings have enabled the continent to import more goods from around the world.
‘There is a lot of growth in African trade. For example, a few years ago Angola exported a million barrels of oil a day. Now it is exporting more than two million barrels a day and the price has moved from $25 a barrel three years ago to as high as $80 a barrel. Angola’s export proceeds from oil have risen from about $25million a day to $160million a day,” says Van Schalkwyk.
A similar pattern is evident in countries such as Nigeria, Equatorial Guinea, Gabon, Cameroon and other countries producing crude oil and gas, as well as nations engaged in mining metals and minerals.
In addition, agricultural commodity prices have staged a comeback and the prices for sugar, maize and coffee are a lot higher than a few years ago.
‘There has been a global rise in commodity prices that has been good for Africa. And there is a lot of investment taking place in Africa to develop new projects,” says Van Schalkwyk.