10 March 2011
South Africa is helping neighbouring African countries to develop transport corridors in order to boost regional integration and create a larger marketplace for Africans, Trade and Industry Minister Rob Davies told the 5th Africa Economic Forum in Cape Town this week.
Davies said poor transport links between African countries had long stifled trade on the continent, adding that South Africa’s assistance in developing transport corridors aimed to remedy this.
This includes the rolling out of the North South Corridor, which will link central Africa to the port of Durban, via Zambia, and the Trans-Cunene Corridor, which will link the Democratic Republic of Congo (DRC) with South Africa through Angola and Namibia.
Davies said the completion of the Trans-Cunene Corridor would effectively give South Africa a road and rail link to Angola, one of Africa’s fastest growing economies, as the corridor would link with the existing Trans-Kalahari Corridor between Botswana and Namibia.
Common standards and strategies
Added to this, African states, he said, also needed to work together to set common standards and develop common strategies through a body such as the Council of African Ministers of Industry, which is made up of trade and industry ministers from Africa.
South Africa currently exports three to four times the value of goods that it imports from neighbouring Southern African Development Community (SADC) countries.
Davies said the massive trade imbalance was as a result of inadequate transport infrastructure and supply capacity in neighbouring countries, as well as their inability to produce goods that could sell in the South African market.
He said it was essential that Africa focused on creating a local market on the continent, pointing out that the expansion of the domestic market had been central to recent economic growth in emerging countries.
Expanding domestic markets
McKinsey’s “Lions on the Move” report, which was released last year, identified expanding domestic markets as a one of two key drivers in Africa’s recent growth spurt, the other factor being the minerals boom.
Davies said the development of a grand trade agreement between the SADC, the East African Community (EAC) and the Common Market for East African States (Comesa) would open up a market of 26 countries consisting of 500- to 700-million people.
He said negotiations were set to kick off around the middle of the year, adding that the agreement was expected to focus initially on trading goods.
Davies said Asia had recently overtaken the European Union as a key trade destination for South Africa, and that China had become South Africa’s number export destination and import source in 2008.
He said 36% of South Africa’s exports were to Asia, 27% to the European Union, and 18% to sub-Saharan Africa.
Manufacturing in terms of South Africa’s trade composition had been increasing in recent years and now made up about 60% of the country’s trade, but South Africa’s trade to developing countries and Asia was still dominated by primary products, he said.
South Africa and Africa had to develop more equitable economic growth and add more value to the minerals it mined, he added.