19 June 2020 – South Africa needs to grow its export base if it is to see much-needed economic growth. According to Francois Fouche of Trade Research Advisory, a spin-off company of the North-West University, exports are the catalyst for change in South Africa. “South Africa’s only solution is an export-led recovery,” he said.
“The local economy is too small to solve the problem in the next two years. We are better placed to use our weak currency and grow our exports as quickly as possible, faster than our GDP growth, and in that way pull our growth figures up,” he said. “We are already an exporting nation. We have world-class producers and are established players in the global market. It can be done, but we are going to have to remove the obstacles that hinder efficient export movement. We don’t need to be focused on issues of demand or supply, but just on creating the right environment for exports to f low.”
Fouche, like many other economists, maintains there are some quick wins in increased exports, but if South Africa stands any chance of taking advantage of these opportunities in the global economy, it will have to address the cost of crossing borders and the time it takes to do so. In recent weeks exporters have increasingly voiced concerns over major shipping delays. “We are competing on a global scale. We have to get to those world shelves first. We cannot afford delivery problems or logistics issues,” said Fouche.
“We need to move faster than other countries. I am not worried about South Africa not having the expertise or the ability, but rather that we are not allowing for innovation to solve the problem.” Fouche said arguments that demand was low around the world due to reduced consumer spending were a moot point. South Africa’s weak currency was an exporter’s dream, he added. “Exports must grow faster than imports. It is the only way to turn the economy around. This is not a new solution being brought to the table. It is a known fact.”
This was clear when April figures were released showing how hard the economy had been hit. The slump in exports sent South Africa’s trade deficit to a record high. According to figures released by the South African Revenue Service (Sars) for January to April, the country’s total trade balance for all sectors was minus R326.97 million, with exports down 3.5% compared to the corresponding period last year. Much of this was led by the drop in exports in the mineral sector. According to the Minerals Council of South Africa, export of products such as coal and iron ore dropped by 39% while base metals saw an even higher decrease of around 60%.The agricultural sector, on the other hand, increased its trade surplus by 16% in the first quarter of the year, with minimal disruption experienced. Source (Freight News)