The effects of power outages and the inflationary effect of substantial increases in electricity prices are expected to continue to negatively influence the South African economy with the business confidence index having declined to 84.6 in June 2015 from 86.9 in May, falling to its lowest level since January 1999, said the South African Chamber of Commerce and Industry (SACCI).
With a slowing economy locally, many businesses are looking abroad to grow demand for their products and services.
South Africa is rich in mineral resources and is the world’s biggest exporter of chromium and platinum and the second largest exporter of manganese with a total of 47% of South Africa’s exports being derived from resources from the ground.
International Trade Center (ITC) reports that for sub-Saharan Africa (SSA) to tap into trade-growth opportunities, it needs to diversify in several ways: it needs to become less dependent on the stagnating markets of its traditional trading partners in the developed world. At the same time it needs to lower its dependence on the export of commodities vulnerable to price shocks.
In 2007, the US economy was double that of Brazil, Russia, India, China and South Africa combined. Last year, BRICS’ collective economic output nearly equaled the USA’s and with the BRICS population making up 40% of the worlds population. The BRICS countries traded $291 billion amoung them in 2014 alone.
In addition, Africa adds a population of over 1bn holding the 3rd and 6th positions of the world’s 20 fastest growing economies.
With the increasingly globalized economy, South African manufacturers and traders must look to foreign markets, in particular in developing markets, to sustain and grow their businesses.
Minister Davies said that last year R2.8bn worth of export sales was facilitated by the Department of Trade and Industry by means of trade shows, outward selling missions and investment and trade initiatives. This year the department aimed to facilitate R3.5bn worth of exports through participation in 32 trade missions and 29 national pavilions.
These initiatives and rebates in the form of grants are geared toward supporting the marketing efforts in foreign markets for both manufacturing concerns and trading houses that promote South African goods and services.
China for example has been moving toward a consumer-based economy and thus has been importing goods not available in China from other countries. The challenge is with the Chinese stock market bust that started some three weeks ago has put retailers under pressure and if this is not resolved many who are currently exporting to China may suffer. This lends to opportunity as those who are not exposed to the current situation are able to strategically place themselves as exporters in a more conservative approach knowing that with such a large consumer base, the market will likely recover. The utilization of such support from the DTI can place you very strategically.
With R3.5bn worth of exports being supported – can you afford to be left out?