MEC for Economic Development, Tourism and Environmental Affairs, Sihle Zikalala.
TIKZN economist Felleng Mahlatsi.
Ina Cronje, chairperson of TIKZN.
“We seem to have stopped before we started,” Felleng Mahlatsi, economist at Trade and Investment KwaZulu-Natal (TIKZN) told delegates at this week’s Export Summit at the International Convention Centre in Durban.
She was just one of a number of high profile speakers who voiced deep concerns that South Africa as a whole, and KZN in particular, was yet to develop exports to the point where they kick started economic growth and job creation.
One of the most telling statistics that she offered was that, out of every $100 dollars traded globally, South Africa contributed around 50c – and KZN just 5c.
Another was that 5% of companies were responsible for 93% of exports in terms of value.
Small companies participating in exports had a very poor survival rate with a quarter of active small firms quickly failing or becoming static. There was also little chance of small and medium firms growing into big exporters at present.
Zamo Gwala, CEO of TIKZN, lamented the fact that South Africa remained a net importer. Noting expectations that exports would grow as the rand devalued, he said that now the currency “had devalued in a very big way”, this had not materialised.
He went on to note that the South African economy would not grow until exports began to improve, adding that the South African market was too small to absorb potential local production.
Even MEC for Economic Development, Tourism and Environmental Affairs, Sihle Zikalala, pointed out that with South Africa accounting for just 0,5% of $15,9 million worth of world trade (wth KZN contributing 10% of that), there was definitely room for improvement.
If the Africa rising narrative was to gain traction, then economic growth had to be fast tracked. “We need to up our game and focus on manufacturing and value chain addition rather than exporting commodities,” he said.
However, he was also upbeat, noting that the summit took place against a background of the South African economy having grown by 3.3% during the second quarter of 2016 and the fact that export volumes had increased during this period, according to the Reserve Bank.
He remained noticeably silent on the potential economic fallout from prolonged violence at universities and fraud charges being levelled against Finance Minister, Pravin Gordhan.
Zikalala noted that KZN was well placed to action an export based economic strategy as it was home to the country’s two biggest ports as well as an international airport and DubeTrade Port. Since 2010, cargo handling facilities had recorded 0% loss. This good performance needed to be sustained.
Turning back to the importance of exports, he said it was important for government to assist exporters and to address the biggest structural weakness in the economy – the fact that South Africa was a net importer and consumption based economy.
He said it was important to re-industrialise the South African economy and to create a favourable environment for companies to produce products locally and to export these.
“By importing we are creating leakages in our economy and jobs are being taken away,” he said, noting that the economy was currently constrained by a huge current account deficit that made it susceptible to global economic swings.
Zikalala said that the KZN government was committed to supporting manufacturers and identifying new markets and additional export opportunities. TIKZN would be sending more than 25 companies to China shortly and had opened up 21 new markets and identified 190 trade opportunities for local companies. It was also training emerging exporters.
He said that the provincial government, together with the National Department of Trade and Industry, would put its weight behind the black Industrialisation Programme.
There were opportunities to be exploited within BRICS and to counter economic dominance by western countries, he said.
“The future of Africa depends on all working together as a continent instead of competing. We must complement each other,” he concluded, emphasising the need to open the regional economy through closer co-operation when it came to industrialisation, infrastructure development and connectivity.