taking botswana products to the world...global exports, 2016: top 40 products with potential for...
TRANSCRIPT
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MARKET SURVEY: SOUTH AFRICA 2018
TAKING BOTSWANA PRODUCTS TO THE WORLD
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MARKET SURVEY: SOUTH AFRICAPrepared for
March 2018
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Terms/Glossary
APDP – Automotive Production an Development ProgrammeBBBEE – Broad Based Black Economic EmpowermentBITC – Botswana Investment and Trade CentreBMC – Botswana Meat CommissionBPO – Business Processes Outsourcing BRT – Bus Rapid TransitB2B – Business-to-BusinessBURS –BotswanaUnifiedRevenueServicesCOMESA – Common Market for East and Southern AfricaCTICC – Cape Town International Convention CentreDC – Distribution CentresDIY – Do it yourselfdti – Department of Trade and IndustryEAC – East African CommunityEFTA – European Free Trade AgreementEPA – Economic Partnership AgreementEST – Elite Star Trading AfricaEU – European UnionFASA – Franchise Association of South AfricaFMCG – Fast Moving Consumer GoodsFSDA – Free State Development AgencyFTA – Free Trade AgreementGDP – Gross Domestic ProductGGDA – Gauteng Growth and Development AgencyICT – Information Communication TechnologiesIDZ – Industrial Development ZonesITAC – International Trade Administration CommissionJCCI – Johannesburg Chamber of Commerce and IndustryKZN – KwaZulu-NatalLDV – Light Duty VehicleLSM – Living Standards MeasureMEC – Member of the Executive CouncilMIDP – Motor Industry Development ProgrammeMOU – Memorandum of UnderstandingNAACAM – National Association of Automotive Component and Allied ManufacturesNDP – National Development PlanNPPO – National Plant Protection OrganizationNRCS –NationalRegulatoryforCompulsorySpecificationOEM – Original Equipment ManufacturePPPFA – Preferential Procurement Policy Framework ActPRA – Pest Risk AssessmentPTA – Preferential Trade Agreement
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RFQ’s – Request For QuotationsSAAFQIS – South African Agricultural, Food, Quarantine & Inspection ServicesSAARF – South African Audience Research FoundationSABS – South African Bureau of StandardsSACU – Southern African Customs Union SAD – Single Administration DocumentSADC – Southern African Development CommunitySMME – Small, Medium and Micro EnterprisesSANDF – South African National Defence ForceSANHA – South African National Halaal AuthoritySARB – South African Reserve BankSARS – South African Revenue ServicesTDCA – Trade and Development Cooperation AgreementTIKZN – Trade & Investment KwaZulu-NatalUAE – United Arab EmiratesUN – United NationsWTO – World Trade Organization
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List of Tables 07List of Figures 07Executive Summary 081.0 Analysis of International Trade 151.1 Composition of Trade 151.1.1 Imports 151.1.2 Exports 201.2 Main Trading Partners 201.2.1 Imports 201.2.2 Exports 201.3 Provincial Trade 231.4 Current Trade with Botswana 291.5 Potential Trade Overlap 342.0 Apparent consumption 393.0 Market Characteristics 393.1 Size and Nature of the Economy 393.2 Drivers of Growth 423.3 Economic Growth Forecasts 443.4 DemographicProfile 463.5 Purchasing Power and Segmentation of the Population 473.6 DemographicTrendsandInfluences 514.0 Market Access 524.1 Tariffs and Other Taxes on Imports 524.2 Preferential Trading Arrangements 524.3 Import Licensing 534.4 Prohibited Imports 534.5 Customs Procedures 534.7 Labelling and Packaging Requirements 544.8 Sanitary and Phyto-sanitary Requirements 544.9 OfficialandIndustryStandards 554.10 Logistics 585.0 MarketEntryStrategy:Gauteng 605.1 SpecificOpportunitiesforBotswana 605.2 Competition 635.4 PricingDetail 645.5 CommercialPractices 64 Table15:ProductsDesignatedforLocalProcurement 655.6 Promotion 675.6.1 BotswanaInvestmentandTradeCentre 675.6.2 BotswanaExporters 685.7 OpennessoftheMarkettoNewEntrants 686.0 MarketEntryStrategy:CapeTown 696.1 SpecificOpportunitiesforBotswana 696.2 Competition 71
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6.3 DistributionChannels 726.4 PricingDetail 746.5 CommercialPractices 756.6 Promotion 766.7 OpennessoftheMarkettoNewEntrants 777.0 Market Entry Strategy: Bloemfontein 787.1 SpecificOpportunitiesforBotswana 787.2 Competition 797.3 Distribution Channels 797.4 Pricing Detail 807.5 Commercial Practices 807.6 Promotion 807.7 Openness of the Market to New Entrants 818.0 Market Entry Strategy: Durban 828.1 SpecificOpportunitiesforBotswana 828.2 Competition 858.3 Distribution Channels 858.4 PricingDetail 868.5 CommercialPractices 868.6 Promotion 878.7 Openness of the Market to New Entrants 879.0 Market Entry Strategy: Limpopo 889.1 SpecificOpportunitiesforBotswana 899.2 Competition 899.3 Distribution Channels 909.4 Pricing Detail 919.5 Commercial Practices 929.6 Promotion 929.6.1 BotswanaInvestmentandTradeCentre 929.6.2 BotswanaExporters 929.7 Openness of the Market to New Entrants 9310.0 Market Entry Strategy: North West 9410.1 SpecificOpportunitiesforBotswana 9410.2 Competition 9610.3 DistributionChannels 9610.4 Pricing Detail 9710.5 Commercial Practices 9710.6 Promotion 9810.6.1BotswanaInvestmentandTradeCentre 9810.6.2BotswanaExporters 9810.7 Openness of the Market to New Entrants 9811.0 Market Entry Strategy: Northern Cape 10011.1 SpecificOpportunitiesforBotswana 10011.2 Competition 10111.3 Distribution Channels 10211.4 Pricing Detail 102311.5 Commercial Practices 10311.6 Promotion 10406
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List of TablesTable 1: Imports from SADC: Positioning Botswana Regionally 09Table 2: Key Buying Houses in South Africa 14Table3:SouthAfrica’sTop30ImportProductsatHS-6DigitLevel,2016 17Table4:SouthAfrica’sTopFifteenSourcesofImports,2016 21Table5:SouthAfrica’sTopFifteenExportDestinations,2016 22Table6:ImportsfromBotswanaatProvinciallevelofBotswana’sPriorityExports 23Table7:ProvincialImportsofBITC’sPriorityExportProducts,2016(ZARmn) 25Table 8: Products in Botswana’s Top 40 Export Products to South Africa where BotswanawastheKeySourceofSupplyin2016 30Table9:SouthAfrica’sTop40ImportProductsfromBotswana,2016 31Table 10: Overlap Between South Africa’s Global Imports and Botswana’s GlobalExports,2016:Top40ProductswithPotentialforIncreasedTrade 35Table 11: Human Development Index for South Africa’s Metros 49Table12:IncomeClassificationoftheSouthAfricanPopulation 51Table13:ListofCompulsorySpecifications 56Table14:ProductsDesignatedforLocalProcurement 65
List of FiguresFigure 1: Geographic Breakdown of the Origin of South Africa’s Imports 09Figure2:ValueofSouthAfrica’sTrade,2012to2016 15Figure3:CompositionofImportsatHS-2Digit 16Figure 4: Composition of Exports at HS-2 Digit 20Figure5:KeyRegionsofOriginofSouthAfrica’sImports,2016 21Figure6:KeyRegionsofDestinationofSouthAfrica’sExports,2016 22Figure7:ImportsofBotswana’sPriorityExportsatProvincialLevel,2016 23Figure 8: South Africa’s Trade with Botswana 29Figure 9: Comparative Size of the South African Economy 39Figure10:GrossValueAddedbyEconomicActivity,2016 41Figure 11: Current and Upcoming Investment in South Africa by Sector: US$, Billion 43Figure12:GDPGrowth1996to2016 45Figure13:PopulationbyProvince,mid-2016estimate 46Figure14:AgeandSexDistributionofthePopulation,mid-2016estimate 47Figure 15: Final consumption expenditure by households: Household consumer goods 47Figure16:TotalMonthlyRetailsSalesatconstantprices,seasonallyadjusted 48Figure 17: Retail Sales by Type of Retail Outlet, 2097 48Figure 18: Living Standards Measure Categories, December 2015 50
11.6.1BotswanaInvestmentandTradeCentre 10411.6.2BotswanaExporters 10411.7 Openness of the Market to New Entrants 10412.0 Actions to be considered by BITC 10513.0 Useful information sources and websites 108
Annexure 1: FRANCHISING IN SOUTH AFRICA – WHERE FIRST WORLD INFRASTRUCTURE MEETS THIRD WORLD OPPORTUNITIES 112
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Executive SummaryThisreportdetailsthefindingsofamarketstudyonsevenofSouthAfrica’snineProvincesundertakenbyAfricaHousefortheBotswanaInvestmentandTradeCentre(BITC)withthespecificobjectivesof:
1. Exploring non-traditional markets for Botswana products and services into the South African provinces;2. Enhancing existing market access for Botswana’s exports into South African provinces through understanding the market size, consumer tastes and preferences, prices, barriers to entry as well as competition matters.3. Developing recommendations to address the market access constraints in the South African provincial markets.
The study comprises an element of desk research which was followed up with market visits to Johannesburg, Pretoria, Cape Town, Durban, Bloemfontein and Kimberley and a road-trip through the North West Province and Limpopo. Two BITC representatives participated in the market visits. During the market visits, the team met with key industry stakeholders; Chambers of Commerce, Provincial Trade and Investment Agencies, logistics companies, end-users, and key retailers, buying houses, wholesalers and importers.
Thespecificsectorsoffocusforthisstudy,were:• Automotivesector–thereisastrongpushtoseeBotswanabecomeasupplierof choicetoOriginalEquipmentManufacture(OEMs)inSouthAfrica;• Leathergoods–thedevelopmentofaLeatherProductsParkinLobatseisakey programme for BITC;• TextilesandClothing–amajorexportfocusforBotswana;• Agri-industrialvalueadded,includingtraditionalfoodproducts;and• FranchisesectorinS.Aforfastfood(andother)companiesinBotswana. In2016,SouthAfrica’sexportsamountedtoUS$74.1billionandimportsamountedtoUS$74.7billionleavingSouthAfricawithatradedeficitofUS$0.6billion.SouthAfrica’simportsare heavily weighted towards inputs for the local manufacturing sector, mineral fuels and machinery and equipment. South Africa’s key source of imports is China followed by Germany andtheUnitedStatesofAmerica(USA).ThereareonlytwoAfricancountriesinthelistofthetopfifteensourcesofimportsnamelyNigeriaandAngolaandthesetwocountriesonlymakethis list as they are suppliers of crude oil to South Africa.
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Origin Import Value 2016 (US$ mn)
Percentage of total imports from SADC
Key Imports
Angola 1,271.4 25% 99% is crude oil
Botswana 411.3 8% Diamonds and wiring harnesses
DR Congo 93.7 2% Copper and copper cathodes
Lesotho 291.9 6% Circuit breakers and parts of seats
Madagascar 110.8 2% Clothing
Malawi 54.7 1% Tea and tobacco
Mauritius 157.0 3% Clothing
Mozambique 690.5 13% Natural gas and electricity
Namibia 415.5 8% Beer and live cattle
Seychelles 1.8 0% n/a
Swaziland 1,046.9 20% Coca Cola syrup,
Tanzania 24.2 0% Tea, coffee and T-shirts
Zambia 185.6 4% Copper, copper cathodes, copper wire
Zimbabwe 388.4 8% Nickle, ores concentrates and mattes
Grand Total 5,143.8
Figure 1: Geographic Breakdown of the Origin of South Africa’s Imports
Source: Based on COMTRADE data
Europe 33%
Middle East 7%
North America 7%
SADC7%
West Africa3%
Latin America4%
Asia 37%
Other 2%
Table 1: Imports from SADC: Positioning Botswana Regionally
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Overall SADC supplies 7percent of South Africa’s total imports. Table 1 below indicates South Africa’s key imports from each country in the Southern African Development Community (SADC)anditisinterestingtonotethatBotswanaisoneofthefewcountriesthatissupplyingmanufactured product into South Africa. This, along with the fact that within Botswana’s top 40 exportproductstoSouthAfricain2016BotswanawasSouthAfrica’stoprankedsupplierofthatproduct for 11 tariff codes, suggests that when Botswana has a competitive product to sell, it findsareadymarketinSouthAfrica.
Origins of South Africa’s Imports
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The statistical analysis conducted for this research has revealed a number of products where Botswana would appear to have capacity to export and South Africa is importing from other sources. The most interesting of these in terms of BITCs priority export sectors are as follows:
IssuesrelatingtologisticshavebeenidentifiedasabarriertotradebyexportersinBotswana.The reality is that according to industry sources, Botswana currently exports 10 percent of the volume that the country imports via South Africa. This translates to one return load on every ten loads into Botswana. The backhaul is therefore an issue and South African hauliers struggle to get full loads out of Botswana on a sustainable basis. However, given this pressure the cost of transport from Gaborone to Johannesburg is often a lot cheaper than the cost from Johannesburg to Gaborone as hauliers are happy to simply cover direct costs. Given the relativesizeoftheBotswanaeconomyvis-à-visSouthAfrica,itwillbedifficulttorealisticallyaddress the imbalance unless Botswana can attract cargoes from Namibia or southern Angola.
The market survey has highlighted a few suggestions on how logistics issues could be addressedincludingtheinvestigationofspecificbackhaulopportunitiesataprovincialleveland creating a warehousing and distribution hub for Botswana in Durban to take advantage of the KwaZulu Natal market and to ease the issue of empty containers having to be returned to Durban from Botswana.
South Africa comprises of nine Provinces and each is distinctly different in terms of size, population, buying power and market characteristics. Gauteng which is South Africa’s most populous province and the economic heart of the country to the sparsely populated Northern Cape to the mid-tier market of Limpopo. From the perspective of an exporter in Botswana, the provincial nuances and opportunities should be carefully considered as some of the smaller provincial markets are similar in size and attributes to the market in Botswana and would be easier to serve than an extremely large and competitive market such as Gauteng. The table below summarises the key opportunities identified for Botswana in each of the Provincesinvestigated.
HS CODE PRODUCT DESCRIPTION
HS 110313 Groats/mealofmaize(corn)
HS 20230 Meat; of bovine animals, boneless cuts, frozen
HS 250100 Salt
HS 300230 Vaccines for veterinary medicine
HS 340119 Soap & organic surface-active prods. & preps., in the form of bars/cakes/mouldedpieces/shapes(excl.fortoiletuse)
HS 391723 Tubes, pipes & hoses, rigid, of polymers of vinyl chloride
HS 620462 Women's/girls', trousers, bib & brace overalls, breeches & shorts, of cotton
HS 630260 Kitchen and toilet linen; of terry towelling or similar terry fabrics
HS 710231 Diamonds, non-industrial, unworked/simply sawn/cleaved/bruted
HS 730890 Structures & parts of structures of iron/steel
HS 750110 Nickel mattes
HS 843149 Machinery; parts of machines handling earth, minerals or ores
HS 850710 Electric accumulators; lead-acid, of a kind used for starting piston engines
HS 870410 Vehicles; dumpers, designed for off-highway use
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GAUTENG
The Automotive Sector: TheAutomotiveProductionandDevelopmentProgramme(APDP)isa production incentive that utilises custom regulation and as long as production takes place withintheSouthernAfricanCustomsUnion(SACU),theOEMcanclaimthedutycredits.Theindustrycurrentlyhasalocalisationrateof38percentwitha60percenttarget.ForBotswana,a manufacturer based in the country would assist with localisation targets and industry insiders suggest that Botswana has an excellent opportunity to attract Tier 2 suppliers to invest in the country for supply into Tier 1 supplier: Rosslyn Automotive Hub.
Franchising: There is a definite opportunity for companies in Botswana to franchise theirbusiness model in South Africa. It is also important to note that given the pressure on government to empower the previously disadvantaged in South Africa, funding models for this sector are excellent with both the National Youth Development Agency and the National Empowerment Fund involved.
Workwear: The two largest suppliers of workwear and promotional items are based in Gauteng. Both companies would be open to an approach for a company in Botswana to manufacture under their license.
Retail and Wholesale: Various opportunities havebeen identified to supply into the largeretailers such as Pick n Pay and the independent wholesalers. Products targeting the lower end of the market and products suited to private label opportunities would be well-suited. Specificproductsmentionedincludenoodles,cannedmeatsandtoiletpaper.
Western Cape
Western Cape Water Crisis: The Western Cape is experiencing a chronic shortage of plastic water storage tanks and it is difficult to transport thesewater tanks over large distances.Botswana manufacturers should investigate the opportunity of setting up a manufacturing plant in the Western Cape. The large South African corporate Steinbuild has offered to work with Botswana tank manufacturers to consider an option to set up a manufacturing plant in the Western Cape.
Shoprite:ThelargeSouthAfricanretailer,Shoprite,hastheirheadofficeinCapeTownandthecompany is interested in exploring what Botswana has to offer both from the perspective of branded products and private label packaging opportunities.
Crafts: There are a number of craft outlets in Cape Town and currently only a handful of baskets,jewelleryandostricheggsarecurrentlysuppliedbycraftersfromBotswana.Thereisan opportunity to extend the supply.
Warehousing in the Western Cape: Botswana has refrigerated warehousing facilities in Cape TownfortheexportofmeattotheEuropeanUnion(EU).Theusageofthesefacilitiescouldbe expanded for other products to better service the market in the Western Cape.
Specific product opportunities for water-purification tablets, fencing poles (especiallygalvanisedsteelfencepoles)andveterinaryapprovedpetfood.
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KWAZULU NATAL
Clothing & Textiles: There are a number of large clothing companies based in Durban that would look at outsourcing to factories in Botswana if they were competitive. There is also an opportunitytosupplysafetyclothingtotheagriculturalsector(timberandsugar).
Logistics and Trade: Botswana is currently exporting and importing most of its goods that are not supplied from South Africa through the Durban port and this existing relationship with the province to includewarehousing forBotswanaexports, further-processing (e.g.packaging)and supply into the local market.
Choppies: Choppies is establishing in this province and there is an opportunity to piggy-back on this market entry.
FREE STATE
Warehousing: Botswana could use centrally located, relatively low cost warehouses as a central distribution centre for goods to be distributed throughout South Africa.
Goats: There is demand for live goats which are currently being imported from Namibia. SouthAfricaimportsprimarilyliveanimalsforlocalslaughter.In2016importsamountedtoUS$6.7millionwithimportsfromNamibiaamountingtoUS$6.2million.
Maize Grits: are used for the brewing of beer and other beverages. Grits are currently imported from China, and the Free State is looking for regional suppliers.
Free State is experiencing a shortage of eggs and egg trays and is looking for suppliers in the region.
NORTHERN CAPE
Government Tenders: The Provincial Government is a key source of demand in the province, especially the departments of education and health, as well as the large National Defence Force base at Lohatlha. Suppliers of cleaning materials, uniforms, soaps, food for school feeding schemes and clinics have an opportunity to supply into these channels provided they areregisteredwithalocalsuppliertobenefitfromlocalprocurementregulations;
Bully Beef: and similar processed meats are in high demand, with the Army Battle School being the largest buyer in the province.
The Northern Cape hosts South Africa’s largest iron ore, manganese and diamond mines. Mining companies source most of their consumables from wholesalers in Kimberley. These include;Workwearandsafetywear,cleaningmaterials(forschoolsandclinicstheysupport),hoists,safetygearandanyotherconsumablesminessendoutRequestForQuotations(RFQs)for.
Agricultural and hardware productsincludingirrigationpipingPolyVinylChloride(PVC)pipesand similar items could be of interest, depending on price, quality and delivery;
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NORTH WEST PROVINCE
Proximity should be used as key advantage for Botswana as Mahikeng and surrounds are closer to Botswana than to Gauteng.
Cheap, bulk products are in demand from most of the larger independent wholesalers and distributors, as they service the lower end of the distribution chain. This is across the boarder forFast-MovingConsumerGoods (FMCG)products,withbrands ranging fromwell-knownSouth African products, to some that have little or no branding at all.
LIMPOPO PROVINCE
Makoro Bricks is already supplying this province and there is an opportunity for other hardware and building materials suppliers including suppliers of Copper goods, PVC piping, irrigation piping.
Opportunities also exist for bedding, furniture, low-cost cleaning materials, bulk foods, soaps and similar, as well as uniforms, clothing and other FMCG products provided that prices are competitive.
There is interest in potentially setting up water tank plant in Botswana to supply the market in Limpopo.
Buying GroupsGiven the competitive nature of the South African market and the size and buying power of national retailers such as the Builders Group and Shoprite Holdings, an opportunity has been identifiedforsuppliersfromBotswanatoengagewiththeindependentbuyinghouses/groupsmentioned in interviews with wholesalers and retailers. These Groups utilise buying power to compete with formal retail chains and are becoming increasingly important in the retail and wholesale environment especially in the smaller provincial markets contiguous to Botswana where they function to ensure that the wholesalers in small towns and rural areas can compete with national retailers and hardware groups. Given that they are independent these groups are often easier to engage provided the product is competitively priced. A summary of the key groups is provided in the table below.
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Table 2: Key Buying Houses in South Africa
Name Location No. of Members Type of Group
Africa Cash and Carry Johannesburg 0 FMCG and Hardware/DIY products
Buying Exchange Company
Johannesburg 170 Foodzone retail outlets FMCG products, perishable and non-perishable
Elite Star Trading Africa Johannesburg 440 FMCG and Hardware/DIY products
ICC Buying Group Pretoria 156 Group covers supermarket, hardware and liquor products.
Independent Buying Consortium(PTY)Ltd
Pietermaritzburg N/A FMCG products, primarily
Shield Buying & Distribution
Durban 135 Saverite supermarkets - all FMCG products
Unitrade Management Services
Johannesburg 150+ FMCG products, primarily
NWK Limited Lichtenburg 50+ Agricultural Co-operative, hardware & DIY, home and garden, pet care
Obaro Brits 24
VBK Group Reitz 52
Build-It Johannesburg 350 Voluntary Hardware and DIY Group
Essential Hardware Group
Johannesburg 280
P&L Hardware Louis Trichardt 40
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1.0 Analysis of International Trade In2016,SouthAfrica’sexportsamountedtoUS$74.1billionandimportsamountedtoUS$74.7billionleavingSouthAfricawithatradedeficitofUS$0.6billion.AlthoughSouthAfrica’strade has grown in rand terms, in dollar terms both imports and exports have declined following a peak in 2011 / 2012. Imports have declined 28 percent over the period 2012 to 2016. There are both internal and external reasons for the apparent stagnation in South Africa’s trade. On the export side, demand has been muted for key export products such as coal, minerals, iron and steel and products thereof, as well as some agricultural products. In addition, South Africa’s domestic manufacturing and export capacity has been hard hit by a combination of factors including low domestic demand, sharply rising input costs and increasingly competitive imports displacing local production.
Imports into South Africa have also suffered from the sluggish economy in South Africa, with consumers hard pressed to pay for imported goods. Allied to this has been the marked declineinthevalueoftheSouthAfricanRandoverthelastfiveyears,whichhasimpactedonthe ability of both companies and households to buy increasingly expensive imported goods,
1.1 Composition of Trade
1.1.1 ImportsThe key categories of imports are machinery, mechanical appliances, mineral fuels, electrical equipment and machinery and vehicles and parts. Overall the top 15 ranked tariff chapters accountedfor73percentofthetotalvalueofimportsin2016.
Figure 2: Value of South Africa’s Trade, 2012 to 2016
Source: Analysis based on COMTRADE figures
Import Export Linnear (Import)
2012 2013 2014 2015 2016
120,000
100,000
80,000
60,000
40,000
20,000Tra
de V
alue
: US$
mn
15
-
Source: Analysis based on COMTRADE figures
Impo
rt Va
lue:
US$
mn
5,000
10,000
15,000
20,000
25,0002012 2016
HS 84
Mach
inery,
mec
hanic
al ap
plian
ces
HS 85
Elec
trical
mach
inery
and e
quipm
ent
HS 99
Comm
oditie
s not
spec
ified b
y kind
HS 87
Vehic
les, p
arts a
nd ac
cesso
ries
HS 39
Plast
ics an
d artic
les th
ereof
HS 90
Instr
umen
ts an
d app
aratus
HS 30
Pharm
aceu
ticals
prod
ucts
HS 10
Cerea
lsHS
38 Ch
emica
l Prod
ucts
n.e.c
HS 29
Orga
nic ch
emica
ls
HS 88
Aircr
aft an
d part
s the
reof
HS 40
Rubb
er an
d artic
les th
ereof
HS 72
Iron a
nd st
eel
HS 72
Iron o
r stee
l artic
les
HS 27
Mine
ral Fu
els, o
ils an
d prod
ucts
16
Figure 3: Composition of Imports at HS-2 Digit
-
Tabl
e 3:
Sou
th A
fric
a’s
Top
30 Im
port
Pro
duct
s at
HS-
6 D
igit
Leve
l, 20
16
Rank
HS
Code
Des
crip
tion
Impo
rt V
alue
: US$
m
nG
row
th in
va
lue
2012
to
2016
Perc
enta
ge o
f to
tal i
mpo
rt
valu
e
Key
cou
ntry
of
supp
lyPe
rcen
tage
of
tota
l im
port
val
ue
from
key
so
urce
2012
2016
Gra
nd T
otal
104,
144
74,7
44-2
8%
127
0900
Oils
; pet
role
um o
ils a
nd o
ils o
btai
ned
from
bitu
-m
inou
s m
iner
als,
cru
de15
,788
6,535
-59%
8.7%
Saud
i Ara
bia
36%
299
9999
Commoditiesnotspecifiedaccordingtokind
6,391
6,087
-5%
8.1%
Ger
man
y45
%
327
1012
Petr
oleu
m o
ils a
nd o
ils fr
om b
itum
inou
s m
in-
eral
s, n
ot c
onta
inin
g bi
odie
sel,
not c
rude
, not
w
aste
oils
; pre
para
tions
n.e
.c
5,82
52,
519
-57%
3.4%
Indi
a27
%
485
1712
Tele
phon
es fo
r cel
lula
r net
wor
ks o
r for
oth
er
wire
less
net
wor
ks1,
874
1,82
9-2
%2.
4%C
hina
60%
530
0490
Med
icam
ents
; con
sist
ing
of m
ixed
or u
nmix
ed
prod
ucts
n.e
.c. i
n he
adin
g no
. 300
4, fo
r the
ra-
peut
ic o
r pro
phyl
actic
use
s, p
acka
ged
for r
etai
l sa
le
1,51
81,
145
-25%
1.5%
Indi
a28
%
687
0323
Vehi
cles
; spa
rk-ig
nitio
n in
tern
al c
ombu
stio
n re
cipr
ocat
ing
pist
on e
ngin
e, c
ylin
der c
apac
ity
exce
edin
g 15
00cc
but
not
exc
eedi
ng 3
000c
c
1,969
849
-57%
1.1%
Ger
man
y36%
787
0322
Vehi
cles
; spa
rk-ig
nitio
n in
tern
al c
ombu
stio
n re
cipr
ocat
ing
pist
on e
ngin
e, c
ylin
der c
apac
ity
exce
edin
g 10
00cc
but
not
exc
eedi
ng 1
500c
c
1,086
838
-23%
1.1%
Indi
a46%
8851762
Communicationapparatus(excludingtelephone
setsorbasestations);machinesfortherecep-
tion,
con
vers
ion
and
tran
smis
sion
or r
egen
er-
atio
n of
voi
ce, i
mag
es o
r oth
er d
ata,
incl
udin
g sw
itchi
ng a
nd ro
utin
g ap
para
tus
785
726
-7%
1.0%
Chi
na45
%
988
0240
Aer
opla
nes
and
othe
r airc
raft
; of a
n un
lade
n w
eigh
t exc
eedi
ng 1
5,00
0kg
251
675
168%
0.9%
Fran
ce61%
17
-
Rank
HS
Code
Des
crip
tion
Impo
rt V
alue
: U
S$ m
nG
row
th
in v
alue
20
12 to
20
16
Perc
enta
ge
of to
tal i
m-
port
val
ue
Key
cou
ntry
of
supp
lyPe
rcen
tage
of
tota
l im
port
va
lue
from
ke
y so
urce
2012
2016
1110
0590
Cereals;maize(corn),otherthanseed
38569
1384
%0.
8%A
rgen
tina
47%
1287
0332
Vehi
cles
; com
pres
sion
-igni
tion
inte
rnal
com
bust
ion
pistonengine(dieselorsemi-diesel),cylindercapacity
exce
edin
g 15
00cc
but
not
exc
eedi
ng 2
500c
c
765
534
-30%
0.7%
Ger
man
y50
%
13100630
Cer
eals
; ric
e, s
emi-m
illed
or w
holly
mill
ed, w
heth
er o
r no
t pol
ishe
d or
gla
zed
678
407
-40%
0.5%
Thai
land
55%
1471
0231
Dia
mon
ds; n
on-in
dust
rial,
unw
orke
d or
sim
ply
saw
n,
clea
ved
or b
rute
d, b
ut n
ot m
ount
ed o
r set
473
388
-18%
0.5%
Are
as, n
es42
%
1585
0231
Electricgeneratingsets;wind-powered,(excluding
thos
e w
ith s
park
-igni
tion
or c
ompr
essi
on-ig
nitio
n in
ter-
nalcombustionpistonengines)
1386
34946%
0.5%
Chi
na36%
1687
0333
Vehi
cles
; com
pres
sion
-igni
tion
inte
rnal
com
bust
ion
pistonengine(dieselorsemi-diesel),cylindercapacity
exce
edin
g 25
00cc
652
380
-42%
0.5%
Japa
n28
%
1733
0210
Odo
rifer
ous
subs
tanc
es a
nd m
ixtu
res;
of a
kin
d us
ed in
th
e fo
od o
r drin
k in
dust
ries
369
372
1%0.
5%Sw
azila
nd82
%
1884
4399
Prin
ting
mac
hine
ry; p
arts
and
acc
esso
ries,
n.e
.c. i
n ite
m
no. 8
443.
91516
352
-32%
0.5%
Japa
n33
%
1928
1820
Aluminiumoxide;otherthanartificialcorundum
427
347
-19%
0.5%
Aus
tral
ia80
%
2087
0324
Vehi
cles
; spa
rk-ig
nitio
n in
tern
al c
ombu
stio
n re
cipr
ocat
-in
g pi
ston
eng
ine,
cyl
inde
r cap
acity
exc
eedi
ng 3
000c
c53
934
3-36%
0.5%
Ger
man
y44
%
2190
1890
Med
ical
, sur
gica
l or d
enta
l ins
trum
ents
and
app
lianc
es;
n.e.
c. in
hea
ding
no.
901
840
732
7-2
0%0.
4%U
SA29
%
2287
0321
Vehi
cles
; spa
rk-ig
nitio
n in
tern
al c
ombu
stio
n re
cipr
o-ca
ting
pist
on e
ngin
e, c
ylin
der c
apac
ity n
ot e
xcee
ding
10
00cc
103
312
202%
0.4%
Ger
man
y32
%
18
-
Rank
HS
Code
Des
crip
tion
Impo
rt V
alue
: US$
m
nG
row
th in
va
lue
2012
to
201
6
Perc
ent-
age
of to
-ta
l im
port
va
lue
Key
cou
ntry
of
supp
lyPe
rcen
tage
of
tota
l im
port
va
lue
from
key
so
urce
2012
2016
2310
0199
Cer
eals
; whe
at a
nd m
eslin
, oth
er th
an d
urum
whe
at,
othe
r tha
n se
ed45
930
3-3
4%0.
4%Ru
ssia
n Fe
dera
-tio
n43
%
2484
3149
Mac
hine
ry; p
arts
of m
achi
nes
hand
ling
eart
h, m
iner
-al
s or
ore
s an
d n.
e.c.
in h
eadi
ng n
o. 8
431
457
295
-35%
0.4%
USA
29%
2587
0421
Vehi
cles
; com
pres
sion
-igni
tion
inte
rnal
com
bust
ion
pistonengine(dieselorsemi-diesel),fortransportof
goods,(ofagvwnotexceeding5tonnes),n.e.c.in
item
no
8704
.1
510
288
-44%
0.4%
Ger
man
y22
%
2615
1190
Vege
tabl
e oi
ls; p
alm
oil
and
its fr
actio
ns, o
ther
than
crude,whetherornotrefined,butnotchemically
modified
402
286
-29%
0.4%
Indo
nesi
a62%
2784
7150
Uni
ts o
f aut
omat
ic d
ata
proc
essi
ng m
achi
nes;
pro
-ce
ssin
g un
its o
ther
than
thos
e of
item
no.
847
1.41
or
8471
.49,
whe
ther
or n
ot c
onta
inin
g in
the
sam
e ho
us-
ing
one
or tw
o of
the
follo
win
g ty
pes
of u
nit:
stor
age
units
, inp
ut u
nits
or o
utpu
t uni
ts
295
282
-4%
0.4%
Cze
chia
31%
2838
2490
Che
mic
al p
rodu
cts,
pre
para
tions
and
resi
dual
pro
d-uc
ts o
f the
che
mic
al o
r alli
ed in
dust
ries,
n.e
.c. o
r in
clud
ed in
hea
ding
no.
382
4
345
278
-19%
0.4%
Swaz
iland
45%
2987
0829
Vehi
cles
; par
ts a
nd a
cces
sorie
s, o
f bod
ies,
oth
er th
an
safe
ty s
eat b
elts
219
276
26%
0.4%
Ger
man
y31
%
3002
0714
Mea
t and
edi
ble
offa
l; of
fow
ls o
f the
spe
cies
Gal
lus
dom
estic
us, c
uts
and
offa
l, fro
zen
304
270
-11%
0.4%
Net
herla
nds
34%
Sour
ce: A
naly
sis
by A
fric
a H
ouse
bas
ed o
n C
OM
TRA
DE
data
19
-
1.1.2 ExportsSouthAfrica’skeyexportproductsarealmostallpreciousstonesandmetals(gold,platinum,and diamonds) minerals and downstream products such as iron and steel. Key mineralexports include Coal, Iron Ore, Manganese and Chromium. In addition to this, the other majorexportsfromSouthAfricaincludedownstreampetroleumproducts,productsfromthetimbervalue-chain(pulpforthepaperindustry)andagriculturalproducesuchasdeciduous,citrus and stone fruits and maize. Overall the top 15 ranked tariff chapters accounted for 79 percentofthetotalvalueofSouthAfrica’sexportsin2016.
1.2 Main Trading Partners1.2.1 ImportsThe key source of South Africa’s Imports is Asia which accounted for 37 percent of total importvalue in2016 followedbyEuropewitha further33percentof importvalue.Asia,China, India, Japan and Thailand all fall into South Africa’s top ten suppliers in Africa. Within the EU, Germany, the United Kingdom and France fall into the top 10 suppliers. Brazil is South Africa’s 12th largest source of imports and is the only Latin American country in the top 15 suppliers. From within Africa, Nigeria and Angola make the top 15 on the basis that they are suppliers of oil to South Africa.
Figure 4: Composition of Exports at HS-2 Digit
Source: Analysis based on COMTRADE figures
20
Expo
rt Va
lue:
US$
mn
5,000
10,000
15,000
20,000
25,0002012 2016
HS 72
Iron a
nd st
eel
HS 84
Mach
inery,
mec
hanic
al ap
plian
ces
HS 38
Chem
ical p
roduc
ts n.e
.c.
HS 47
Pulp
of Wo
od
HS 29
Orga
nic Ch
emica
ls
HS 73
Iron o
r stee
l artic
les
HS 39
Plast
ics an
d artic
les th
ereof
HS 22
Beve
rages,
spirit
s and
vineg
ar
HS 76
Alum
inium
and a
rticles
there
of
HS85
Elec
trical
mach
inery
and e
quipm
ents
HS 08
Fruit
and n
uts
HS 27
Mine
ral fu
els, o
ils an
d prod
ucts
HS 26
Ores
, slag
and a
sh
HS 87
Vehic
les, p
arts a
nd ac
cesso
ries
HS 71
Prec
ious, s
emi-p
reciou
s ston
es;..
-
Rank Origin Import Value (US$ mn)
Percentage of total imports
1 China 13,537 18.1%
2 Germany 8,817 11.8%
3 USA 4,978 6.7%
4 India 3,104 4.2%
5 Saudi Arabia 2,836 3.8%
6 Japan 2,553 3.4%
7 France 2,250 3.0%
8 United Kingdom 2,160 2.9%
9 Thailand 2,155 2.9%
10 Nigeria 2,070 2.8%
11 Italy 1,840 2.5%
12 Brazil 1,402 1.9%
13 Spain 1,323 1.8%
14 Netherlands 1,286 1.7%
15 Angola 1,271 1.7%
Table 4: South Africa’s Top Fifteen Sources of Imports, 2016
Figure 5: Key Regions of Origin of South Africa’s Imports, 2016
Source: Based on COMTRADE data
Source: Based on COMTRADE data21
Europe 33%
Middle East 7%
North America 7%
SADC7%
West Africa3%
Latin America4%
Asia 37%
Other 2%
-
1.2.2 ExportsSouth Africa’s key export destination overall is the rest of Africa with six African countries in thetop15destinationsin2016.OverallChinaisSouthAfrica’skeyexportmarketfollowedby the USA and Germany. Regional markets are critical to South African companies and to manufacturers in particular. Aside from accounting for 30 percent of the total export basket, sub-Saharan Africa accounts for around 38 percent of South Africa’s value-added exports. Exports to the EU and Asia tend to be heavily weighted to raw material categories.
Figure 6: Key Regions of Destination of South Africa’s Exports, 2016
Source: Based on COMTRADE data
Europe26%
Latin America1%
Rest of Africa5%
Other 2%
Middle East 3%
North America9%
SADC 25%
Asia 29%
Source: Based on COMTRADE data
Table 5: South Africa’s Top Fifteen Export Destinations, 2016
Rank Destination Export Value (US$ mn)
Percentage of total exports
1 China 6,812 9%
2 USA 5,474 7%
3 Germany 5,260 7%
4 Namibia 3,712 5%
5 Botswana 3,531 5%
6 Japan 3,450 5%
7 India 3,158 4%
8 United Kingdom 3,151 4%
9 Belgium 2,288 3%
10 Zambia 2,263 3%
11 Mozambique 2,080 3%
12 Netherlands 1,998 3%
13 Zimbabwe 1,988 3%
14 China, Hong Kong 1,766 2%
15 Swaziland 1,328 2%
22
-
Mpumalanga0%
Gauteng83%
Limpopo0%
Western Cape9%
Eastern Cape1%
Northern Cape0%
Free State0%
KwaZulu - Natal7%
North West0%
Source: Based on COMTRADE data
Source: Based on COMTRADE data
Table 6: Imports from Botswana at Provincial level of Botswana’s Priority Exports
1.3 Provincial Trade
BITC provided a list of 34 products that are produced in Botswana which in-house research suggests have the most export potential for the country. South Africa’s imports of these 34 products has been analysed at provincial level to understand the opportunity better. South Africa’stotalimportsofthese34productsin2016amountedtoR21,7billion.Asillustratedinthefigurebelow,GautengrepresentsthelargestmarketinSouthAfricafollowedbytheWesternCapeandKwaZuluNatal.ThedominanceofGautengreflectsitspositionwithintheSouth African economy: Gauteng accounts for 1 percent of the countries land area, houses 24.1 percent of the population and accounts for 34.3 percent of Gross Domestic Product (GDP).Itshouldhoweverbenotedthattheprovincialtradestatisticsarecapturedaccordingto the postal code as it appears on the invoice. Given the large percentage of companies that havetheirheadofficeinthisProvince,thiscanskewthestatistics inGauteng’sfavour.Theactual level of imports into Gauteng is therefore likely to be lower that the statistics suggest.
As shown in the table below, virtually all Botswana’s exports are currently destined for Gauteng which indicates a large opportunity within other provinces of South Africa.
Province Value of Imports from Botswana, 2016 (ZAR mn)
Western Cape 1.97
Eastern Cape -
Northern Cape -
Free State -
KwaZulu-Natal 1.01
North West 0.32
Gauteng 1,821.53
Mpumalanga 0.01
Limpopo 0.01
Total 1,824.85
Figure 7: Imports of Botswana’s Priority Exports at Provincial Level, 2016
23
-
Products from BITC Trade Portal list that South Africa imports the most of are diamonds, nickelmattes,oresandconcentrates,women’sandgirls’cottonclothing(woven),sugarinsolid form, yellow machines, vaccines for veterinary use and structures of iron and steel. The following table provides further detail.
24
-
HS
Code
Des
crip
tion
Wes
tern
Ca
peEa
ster
n Ca
peN
orth
ern
Cape
Free
Sta
teK
waZ
u-lu
-Nat
alN
orth
W
est
Gau
teng
Mpu
-m
a-la
nga
Lim
popo
Tota
l
Tota
l1,
841.
010
1.4
1.8
64.3
1,610.9
27.5
18,1
01.7
33.1
3.6
21,7
85.3
0805
10O
rang
es, f
resh
/drie
d9.
20.
2-
-0.
3-
72.0
0.0
-81
.7
1103
13G
roat
s/m
eal o
f mai
ze
(corn)
1.4
--
40.2
0.0
0.1
10.3
0.2
-52
.1
1512
19Sunflowerseed/safflower
oil,
othe
r tha
n cr
ude,
&
frac
tions
ther
eof ,
whe
th-
er o
r not
ref.
but n
ot
chemicallymodified
8.4
0.3
0.8
0.0
61.6
6.5
103.
8-
-18
1.5
1701
99C
ane/
beet
sug
ar &
ch
emic
ally
pur
e su
cros
e,
in s
olid
form
, not
con
t. addedflavouring/colour
-in
g m
atte
r
482.
50.
9-
13.2
573.
50.
134
3.4
8.6
-1,
422.
3
1902
30Pasta(excl.of1902.11-
1902.20)
149.
71.
0-
0.0
11.7
0.2
31.1
--
193.
7
2009
90Mixturesofjuices,un-
ferm
ente
d &
not
con
t. ad
ded
spiri
t, w
heth
er o
r no
t con
t. ad
ded
suga
r/ot
her.
swee
teni
ng m
atte
r
5.7
0.0
-0.
20.
10.
024.6
-0.
030.6
260400
Nic
kel o
res
& c
once
n-tr
ates
.0.
0-
--
0.1
0.0
1,366.9
--
1,367.0
2712
10Petroleumjelly
0.0
0.0
-4.
01.
04.
43.6
--
13.1
3002
30Va
ccin
es fo
r vet
erin
ary
med
icin
e4.
4-
--
-10
.4691.3
--
706.1
Tabl
e 7:
Pro
vinc
ial I
mpo
rts
of B
ITC
’s Pr
iorit
y Ex
port
Pro
duct
s, 2
016
(ZA
R m
n)
25
-
HS
Code
Des
crip
tion
Wes
tern
Ca
peEa
ster
n Ca
peN
orth
ern
Cape
Free
St
ate
Kw
aZu-
lu-N
atal
Nor
th
Wes
tG
aute
ngM
pu-
ma-
lang
aLi
mpo
poTo
tal
3401
19So
ap &
org
anic
sur
face
-act
ive
prod
s. &
pre
ps.,
in th
e fo
rm o
f ba
rs/c
akes
/mou
lded
pie
ces/
shapes...(excl.fortoiletuse)
81.7
1.3
-0.
06.7
0.2
90.7
0.0
-18
0.7
3805
90Te
rpen
ic o
ils p
rodu
ced
by th
e di
still
atio
n/ot
her t
reat
men
t ofconiferouswoods(excl.of
3805.10&3805.20);crude
dipe
nten
e; s
ulph
ite tu
rpen
tine
& o
ther
cru
de p
ara-
cym
ene
0.9
--
-12
.3-
32.6
--
45.7
3917
23Tu
bes,
pip
es &
hos
es, r
igid
, of
poly
mer
s of
vin
yl c
hlor
ide
12.2
0.6
-0.
015
0.9
-5.
10.
00.
0168.8
4010
19Conveyorbelts/belting(excl.of
4010.11-4010.13),ofvulcanised
rubb
er
2.3
0.3
0.0
0.1
5.3
0.1
152.
00.
20.
1160.4
4403
41D
ark
Red
Mer
anti,
Lig
ht R
ed
Mer
anti
& M
eran
ti B
akau
, in
the
roug
h, w
heth
er o
r not
str
ippe
d of
bar
k/sa
pwoo
d/ro
ughl
y sq
uare
d
0.3
--
--
--
--
0.3
4410
90Pa
rtic
le b
oard
& s
im. b
oard
(e.g.,orientedstrandboard
&waferboard)ofwood/oth.
ligne
ous
mat
s., w
heth
er o
r no
t agg
lom
. with
resi
ns/o
ther
organicbindingsubs.(excl.of
4410.21-4410.39)
0.4
0.0
-0.
00.
10.
01.
90.
0-
2.4
4418
20D
oors
& th
eir f
ram
es &
thre
sh-
olds
, of w
ood,
incl
. cel
lula
r w
ood
pane
ls
12.9
13.5
-0.
169.7
0.1
43.8
2.9
0.1
142.
9
4818
50A
rtic
les
of a
ppar
el &
clo
thin
g ac
cess
orie
s, o
f pap
er p
ulp/
pa-
per/
cellu
lose
wad
ding
/web
s of
cellulosefibres
0.0
--
-0.
2-
0.6
--
0.8
26
-
HS
Code
Des
crip
tion
Wes
tern
Ca
peEa
ster
n Ca
peN
orth
ern
Cape
Free
Sta
teK
waZ
u-lu
-Nat
alN
orth
W
est
Gau
teng
Mpu
-m
a-la
nga
Lim
popo
Tota
l
610461
Wom
en's
/girl
s' tr
ouse
rs, b
ib
& b
race
ove
ralls
, bre
eche
s &
shorts(excl.swimwear),knitted
orcrocheted,ofwool/fine
anim
al h
air
4.5
0.0
-0.
90.
0-
2.8
--
8.2
620462
Wom
en's
/girl
s', t
rous
ers,
bib
&
bra
ce o
vera
lls, b
reec
hes
&
shorts(excl.swimwear;excl.
knittedorcrocheted),ofcotton
712.
51.
1-
0.5
601.5
0.0
391.
10.
20.
31,
707.
4
681189
Oth
er a
rtic
les
0.4
--
0.0
0.2
-0.
9-
-1.
5
681291
Clo
thin
g, c
loth
ing
acce
ssor
ies,
fo
otw
ear a
nd h
eadg
ear
0.0
--
-0.
0-
0.5
0.0
-0.
5
7102
21In
dust
rial d
iam
onds
, un-
wor
ked.
/sim
ply
saw
n/cl
eave
d/br
uted
0.0
--
-0.
1-
3.4
--
3.6
7102
31D
iam
onds
, non
-indu
stria
l, un
-w
orke
d./s
impl
y sa
wn/
clea
ved/
brut
ed
0.8
--
-1.
0-
11,056.6
--
11,0
58.4
7108
13Gold(incl.goldplatedwith
platinum),non-monetary,in
sem
i-man
ufac
ture
d fo
rms
0.4
0.0
--
0.0
0.0
12.4
-0.
012
.8
7209
90Fl
at-r
olle
d pr
ods.
of i
ron/
non-
al-
loysteel,ofawidthof600
mm/more,cold-rolled(cold-re
-duced),notclad/plated/coated,
n.e.
s. in
72.
09
0.0
--
0.0
0.0
-146.9
--
146.9
722860
Bar
s &
rods
of o
ther
allo
y st
eel
(excl.of72.27),n.e.s.in72.28
0.4
0.1
-1.
016.8
0.9
29.4
--
48.5
27
-
HS
Code
Des
crip
tion
Wes
tern
Ca
peEa
ster
n Ca
peN
orth
ern
Cape
Free
St
ate
Kw
aZu-
lu-N
atal
Nor
th
Wes
tG
aute
ngM
pu-
ma-
lang
aLi
mpo
poTo
tal
7228
80H
ollo
w d
rill b
ars
& ro
ds o
f al
loy/
non-
allo
y st
eel
0.6
0.0
-1.
30.
22.
250
.70.
20.
956.0
730690
Tubes,pipes&hollowprofiles
ofiron(excl.castiron)/steel,
n.e.s.(excl.of73.04,73.05&
7306.10-7306.60)
2.6
0.9
0.0
0.0
29.3
0.7
19.8
0.0
0.0
53.5
7308
90St
ruct
ures
...&
par
ts o
f str
uc-
tures...ofiron/steel(excl.of
7308.10-7308.40);plates,
rods
...an
d th
e lik
e, p
repd
. for
us
e in
str
uctu
res,
of i
ron/
stee
l
190.
469.0
0.9
0.7
51.1
1.5
354.6
20.3
2.0
690.4
7314
39G
rill,
nett
ing
& fe
ncin
g of
iron
/steelwire(excl.of7314.20&
7314.31),weldedattheinter-
sect
ion
2.1
0.9
-0.
10.6
0.0
23.8
--
27.6
7501
10N
icke
l mat
tes
0.0
--
--
-2,
229.
1-
-2,
229.
1
7905
00Zi
nc p
late
s, s
heet
s, s
trip
& fo
il11
.811
.0-
--
-12
.2-
-35
.0
8418
29H
ouse
hold
-typ
e re
frig
erat
ors
(excl.of8418.10-8418.22),
elec
./ot
her.
142.
30.
30.
00.6
1.5
0.1
69.4
0.0
0.0
214.
2
8429
11Se
lf-pr
opel
led
bulld
ozer
s &
an
gle
doze
rs, t
rack
layi
ng-
--
1.3
15.3
-72
4.5
0.5
0.1
741.6
28
-
1.4 Current Trade with Botswana
South Africa’s trade with Botswana is heavily skewed in favour of South Africa with South Africa’sexports totallingUS$3,7billion in2016against importsofUS$411million.SouthAfrica’simportsfromBotswanahaveremainedatmoreorlessthesameleveloverthelastfiveyears with a slight peak in 2013 after which levels tapered off to the current level of US$ 411 million.
In2016,Botswanaaccountedfor0.6percentofthevalueofSouthAfrica’simports.Whatisinteresting to note is that within Botswana’s top 40 export products to South Africa during that period, Botswana was South Africa’s top ranked supplier of that product for 11 tariff codes. ThissuggeststhatwhenBotswanahasacompetitiveproducttosell,itfindsareadymarketin South Africa.
Figure 8: South Africa’s Trade with Botswana
Source: Based on COMTRADE data
1,000
2010
Export Import Import Growth
2011 2012 2013 2014 2015 2016
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
2,000
Trad
e Va
lue:
US$
mn
3,000
4,000
5,000
6,000
29
-
Table 8: Products in Botswana’s Top 40 Export Products to South Africa where Botswana was South Africa’s Leading Supplier in 2016
HS Code Product Percentage Total Import Value Sourced from Botswana
Competing suppliers
HS-854430 Insulated electric conduc-tors; ignition wiring sets and other wiring sets of a kind used in vehicles, air-craft or ships
70% Thailand 12%, Romania 3%, China 2%
HS-283620 Carbonates; disodium carbonate
54% USA 21%, Kenya 8%, Bulgaria6%
HS-020230 Meat; of bovine animals, boneless cuts, frozen
66% Uruguay16%,Namibia12%, Australia 4%
HS-391729 Plastics; tubes, pipes and hoses thereof, rigid, of plastics n.e.c. in heading no. 3917
89% Namibia 1%, China 1%, Germany 1%, Italy 1%
HS-580810 Braids; in the piece 88% China5%,Unspecified3%, Greece 2%, Spain 1%
HS-410120 Raw hides and skins; whole, unsplit, of bovine or equine animals, of a weight per skin not exceeding 8kg when simply dried, 10kg when dry-salted or 16kg whenfresh, wet-salted or otherwise preserved
86% Swaziland 5%, Zimbabwe 2%,Notspecified7%
HS-071331 Vegetables, leguminous; beans of the species vigna mungo(l.)hepperorvignaradiata(l.)wilczek,shelled,whether or not skinned or split, dried
79% China 8%, Tanzania 5%, Thailand 5%
HS-780200 Lead; waste and scrap 51% Nigeria 22%, Namibia 12%, DR Congo 9%, Zambia6%
HS-681011 Cement,concreteorartifi-cial stone; building blocks or bricks, whether or not reinforced
82% Swaziland 5%, China 4%, Lesotho 2%, India 2%, Vietnam 1%
HS-720711 Iron or non-alloy steel; semi-finished productsof iron or non-alloy steel; containing by weight less than 0.25% of carbon, of rectangular (includingsquare) cross-section,width less than twice thickness
92% Belgium6%,Unspecified1%
HS-110423 Cereal grains; worked (e.g. hulled, pearled,slicedorkibbled)ofmaize(corn)
99% Namibia30
-
Tabl
e 9:
Sou
th A
fric
a’s
Top
40 Im
port
Pro
duct
s fro
m B
otsw
ana,
201
6
Rank
HS
Code
Des
crip
tion
I
mpo
rt V
alue
(US$
mn)
,
201
6Pe
rcen
tage
of
tota
l fro
m
Bots
wan
a
Key
cou
ntry
of
sup
ply
Perc
enta
ge o
f va
lue
from
key
su
pplie
r
From
All
Sour
ces
From
Bot
swan
a
Gra
nd T
otal
74,7
44.0
411.
30.6%
171
0231
Dia
mon
ds; n
on-in
dust
rial,
unw
orke
d or
sim
ply
saw
n,
clea
ved
or b
rute
d, b
ut n
ot m
ount
ed o
r set
388.
012
0.4
31%
Are
as, n
es42
%
285
4430
Insu
late
d el
ectr
ic c
ondu
ctor
s; ig
nitio
n w
iring
set
s an
d ot
her w
iring
set
s of
a k
ind
used
in v
ehic
les,
airc
raft
or
ship
s
151.
4106.0
70%
Bot
swan
a70
%
3283620
Car
bona
tes;
dis
odiu
m c
arbo
nate
66.8
35.9
54%
Bot
swan
a54
%
402
0230
Mea
t; of
bov
ine
anim
als,
bon
eles
s cu
ts, f
roze
n29
.519
.466%
Bot
swan
a66%
539
1729
Plas
tics;
tube
s, p
ipes
and
hos
es th
ereo
f, rig
id, o
f pla
s-tic
s n.
e.c.
in h
eadi
ng n
o. 3
917
16.4
14.5
89%
Bot
swan
a89
%
6630260
Kitc
hen
and
toile
t lin
en; o
f ter
ry to
wel
ling
or s
imila
r te
rry
fabr
ics,
of c
otto
n35
.88.
323
%In
dia
31%
771
0239
Diamonds;non-industrial,(otherthanunworkedorsim
-plysawn,cleavedorbruted),butnotmountedorset
126.2
5.5
4%In
dia
40%
858
0810
Bra
ids;
in th
e pi
ece
5.9
5.2
88%
Bot
swan
a88
%
925
0100
Salt(includingtablesaltanddenaturedsalt);pure
sodi
um c
hlor
ide
whe
ther
or n
ot in
aqu
eous
sol
utio
n;
sea
wat
er
16.5
4.7
29%
Nam
ibia
55%
1041
0120
Raw
hid
es a
nd s
kins
; who
le, u
nspl
it, o
f bov
ine
or
equi
ne a
nim
als,
of a
wei
ght p
er s
kin
not e
xcee
ding
8kgwhensimplydried,10kgwhendry-saltedor16kg
whe
n fre
sh, w
et-s
alte
d or
oth
erw
ise
pres
erve
d
5.2
4.5
86%
Bot
swan
a86%
1107
1331
Vege
tabl
es, l
egum
inou
s; b
eans
of t
he s
peci
es v
igna
mungo(l.)hepperorvignaradiata(l.)wilczek,shelled,
whe
ther
or n
ot s
kinn
ed o
r spl
it, d
ried
4.8
3.8
79%
Bot
swan
a79
%
1227
0112
Coa
l; bi
tum
inou
s, w
heth
er o
r not
pul
veris
ed, b
ut n
ot
aggl
omer
ated
64.4
3.5
5%M
ozam
biqu
e43
%
31
-
Rank
HS
Code
Des
crip
tion
I
mpo
rt V
alue
(US$
mn)
,
201
6Pe
rcen
tage
of
tota
l fro
m
Bots
wan
a
Key
cou
ntry
of
sup
ply
Perc
enta
ge o
f va
lue
from
key
su
pplie
r
13620342
Trou
sers
, bib
and
bra
ce o
vera
lls, b
reec
hes
and
shor
ts;
men'sorboys',ofcotton(notknittedorcrocheted)
186.8
3.0
2%C
hina
37%
1448
1940
Pape
r and
pap
erbo
ard;
sac
ks a
nd b
ags,
incl
udin
g co
nes,
of p
aper
, pap
erbo
ard,
cel
lulo
se w
addi
ng o
r fibres,havingabasewidthlessthan40cm
11.2
2.7
24%
Chi
na42
%
1584
3149
Mac
hine
ry; p
arts
of m
achi
nes
hand
ling
eart
h, m
iner
als
or o
res
and
n.e.
c. in
hea
ding
no.
843
129
5.5
2.6
1%U
SA29
%
1674
0400
Cop
per;
was
te a
nd s
crap
14.7
2.5
17%
Nam
ibia
29%
1739
1890
Floor,wallorceilingcoverings;ofplastics(excluding
polymersofvinylchloride),whetherornotself-adhe
-si
ve, i
n ro
lls o
r in
the
form
of t
iles
5.2
2.0
39%
Chi
na42
%
1802
0220
Meat;ofbovineanimals,cutswithbonein(excluding
carcassesandhalf-carcasses),frozen
9.6
1.8
19%
Nam
ibia
77%
1978
0200
Lead
; was
te a
nd s
crap
3.3
1.7
51%
Bot
swan
a51
%
2039
2321
Ethylenepolymers;sacksandbags(includingcones),
for t
he c
onve
yanc
e or
pac
king
of g
oods
24.6
1.7
7%C
hina
34%
2173
2599
Iron
or s
teel
; cas
t art
icle
s, e
xclu
ding
grin
ding
bal
ls a
nd
sim
ilar a
rtic
les
for m
ills,
oth
er th
an o
f non
-mal
leab
le
cast
iron
15.5
1.7
11%
Chi
na40
%
22721699
Iron
or n
on-a
lloy
stee
l; an
gles
, sha
pes
and
sect
ions
, n.e.c.inheadingno.7216
5.4
1.6
30%
Chi
na57
%
2384
2959
Mec
hani
cal s
hove
ls, e
xcav
ator
s an
d sh
ovel
load
ers;
n.
e.c.
in it
em n
o. 8
429.
5079
.31.6
2%U
nite
d K
ing-
dom
38%
2484
1221
Engi
nes;
hyd
raul
ic p
ower
eng
ines
and
mot
ors,
line
ar
acting(cylinders)
30.9
1.6
5%U
SA25
%
25681011
Cement,concreteorartificialstone;buildingblocksor
bric
ks, w
heth
er o
r not
rein
forc
ed1.
81.
582
%B
otsw
ana
82%
2673
0890
Iron
or s
teel
; str
uctu
res
and
part
s th
ereo
f, n.
e.c.
in
head
ing
7308
43.4
1.4
3%G
erm
any
27%
32
-
Rank
HS
Code
Des
crip
tion
I
mpo
rt V
alue
(U
S$m
n),
2
016
Perc
enta
ge
of to
tal f
rom
Bo
tsw
ana
Key
cou
ntry
of
sup
ply
Perc
enta
ge
of v
alue
from
ke
y su
pplie
r
2772
0711
Ironornon-alloysteel;semi-finishedproductsofironornon-al-
loy
stee
l; co
ntai
ning
by
wei
ght l
ess
than
0.2
5% o
f car
bon,
of
rectangular(includingsquare)cross-section,widthlessthantwice
thic
knes
s
1.5
1.4
92%
Bot
swan
a92
%
2830
0230
Vacc
ines
; for
vet
erin
ary
med
icin
e48
.01.
43%
USA
37%
2970
1090
Glass;carboys,bottles,flasks,jars,pots,phialsandother
containersofglass,(notampoules),usedfortheconveyanceor
pack
ing
of g
oods
24.8
1.3
5%C
hina
20%
3099
9999
Commoditiesnotspecifiedaccordingtokind
6,087.5
1.3
0%G
erm
any
45%
3187
0410
Vehi
cles
; dum
pers
, des
igne
d fo
r off-
high
way
use
, for
tran
spor
t of
good
s11
4.1
1.3
1%U
nite
d K
ing-
dom
30%
3211
0423
Cerealgrains;worked(e.g.hulled,pearled,slicedorkibbled)of
maize(corn)
1.3
1.3
99%
Bot
swan
a99
%
3385
0710
Elec
tric
acc
umul
ator
s; le
ad-a
cid,
of a
kin
d us
ed fo
r sta
rtin
g pi
ston
eng
ines
, inc
ludi
ng s
epar
ator
s, w
heth
er o
r not
rect
angu
lar
(includingsquare)
30.4
1.2
4%G
erm
any
18%
3423
0210
Bran,sharpsandotherresidues;ofmaize(corn),whetherornot
in th
e fo
rm o
f pel
lets
, der
ived
from
the
sift
ing,
mill
ing
or o
ther
w
orki
ngs
ther
eof
10.2
1.2
12%
Leso
tho
51%
3587
0590
Vehi
cles
; bre
ak-d
own
lorr
ies,
road
-sw
eepe
rs, s
pray
ing
lorr
ies,
m
obile
wor
ksho
ps, m
obile
radi
olog
ical
uni
ts, a
nd o
ther
spe
cial
pu
rpos
e ve
hicl
es n
.e.c
. in
head
ing
no. 8
705
25.9
1.1
4%U
SA27
%
3694
0320
Furniture;metal,otherthanforofficeuse
36.1
1.0
3%C
hina
61%
3773
0840
Iron
or s
teel
; str
uctu
res
and
part
s th
ereo
f, pr
ops
and
sim
ilar
equi
pmen
t for
sca
ffold
ing,
shu
tter
ing
or p
it-pr
oppi
ng17.6
1.0
6%A
ustr
ia20
%
38760200
Alu
min
ium
; was
te a
nd s
crap
3.3
1.0
30%
Nam
ibia
45%
3944
1520
Woo
d; p
alle
ts, b
ox p
alle
ts a
nd o
ther
load
boa
rds;
pal
let c
olla
rs3.
11.
031
%A
reas
, nes
32%
4023
0110
Flou
rs, m
eals
and
pel
lets
; of m
eat o
r mea
t offa
l, gr
eave
s24
.20.
83%
Bra
zil
21%
Afr
ica
Hou
se A
naly
sis
usin
g C
OM
TRA
DE
data
33
-
1.5 Potential Trade Overlap
The following table illustrates South Africa’s imports of key products that are currently being exported by Botswana globally. The basket of products excludes those where Botswana has noexport capacity, aswell as those areaswhereBotswanamaybe amajor exporter, butSouth Africa is not importing. Using this methodology, the total overlap or level of additional potentialtradebetweenthetwocountriesstoodatUS$931.5millionin2016.
With current imports from Botswana at US$ 411 million, this leaves a great deal of room for growth. It is interesting to note that 8 of the products from the BITC list of priority exports are reflectedinthetop40productsidentifiedinthetablebelow.The8productsareasfollows:
HS Code Commodity Description
HS 710231 Diamonds, non-industrial, unworked/simply sawn/cleaved/bruted
HS 750110 Nickel mattes
HS 300230 Vaccines for veterinary medicine
HS 391723 Tubes, pipes & hoses, rigid, of polymers of vinyl chloride
HS 730890 Structures...&partsofstructures...ofiron/steel(excl.of7308.10-7308.40);plates,rods...and the like, prepd. for use in structures, of iron/steel
HS620462 Women's/girls',trousers,bib&braceoveralls,breeches&shorts(excl.swim-wear;excl.knittedorcrocheted),ofcotton
HS 340119 Soap & organic surface-active prods. & preps., in the form of bars/cakes/mould-edpieces/shapes...(excl.fortoiletuse)
HS 110313 Groats/mealofmaize(corn)
1 This is calculate on the lower value of South Africa’s imports of the item and Botswana’s export. Therefore, if South Africa imports US$50 million of a product and Botswana’s global exports are US$75 million, the potential for trade is US$50 million as in theory, Botswana could satisfy total demand.IttakesintoaccountthecurrentlevelofexportsfromBotswanatoSouthAfricaandthisfigureisexcludedfromtheoverallpotential.+
34
-
HS Code Commodity De-scription
South Afri-ca's Global Imports, 2016 (US$ mn)
Imports from Bot-swana, 2016 (US$mn)
Key sup-plier 2016
Botswana Global Ex-ports (US$ mn)
Additional Potential trade US$ mn
710231 Diamonds; non-in-dustrial, unworked or simply sawn, cleaved or bruted, but not mounted or set
388.0 120.4 Areas, nes 6,018.5 267.54
750110 Nickel; nickel mattes 151.6 - Zimbabwe 235.2 151.64
710239 Diamonds; non-in-dustrial,(otherthanunworked or simply sawn, cleaved or bruted),butnotmounted or set
126.2 5.5 India 400.7 120.76
854430 Insulated electric conductors; ignition wiring sets and other wiring sets of a kind used in vehicles, aircraft or ships
151.4 106.0 Botswana 113.5 45.35
283620 Carbonates; disodi-um carbonate
66.8 35.9 Botswana 39.7 30.93
300230 Vaccines; for veteri-nary medicine
48.0 1.4 USA 13.0 13.01
250100 Salt; pure sodium chloride whether or not in aqueous solution; sea water
16.5 4.7 Namibia 25.5 11.72
999999 Commodities not specifiedaccordingto kind
6,087.5 1.3 Germany 11.0 11.01
391739 Plastics; tubes, pipes and hoses
10.8 0.1 Germany 13.1 10.79
870323 Vehicles; spark-ig-nition internal com-bustion reciprocat-ing piston engine, cylinder capacity exceeding 1500cc but not exceeding 3000cc
848.5 0.2 Germany 10.3 10.25
020230 Meat; of bovine animals, boneless cuts, frozen
29.5 19.4 Botswana 51.3 10.04
630260 Kitchen and toilet linen; of terry towel-ling or similar terry fabrics, of cotton
35.8 8.3 India 8.8 8.83
Table 10: Overlap Between South Africa’s Global Imports and Botswana’s Global Exports, 2016: Top 40 Products with Potential for Increased Trade
35
-
HS Code Commodity De-scription
South Afri-ca's Global Imports, 2016 (US$ mn)
Imports from Bot-swana, 2016 (US$mn)
Key sup-plier 2016
Botswana Global Ex-ports (US$ mn)
Additional Potential trade US$ mn
843149 Machinery; parts of machines handling earth, minerals or ores
295.5 2.6 USA 7.6 7.60
270112 Coal; bituminous, whether or not pulverised, but not agglomerated
64.4 3.5 Mozam-bique
6.8 6.79
391723 Plastics; tubes, pipes and hoses thereof, rigid, of polymers of vinyl chloride
11.5 0.0 Spain 5.8 5.81
730890 Iron or steel; structures and parts thereof, n.e.c. in heading 7308
43.4 1.4 Germany 5.6 5.60
850710 Electric accumula-tors; lead-acid, of a kind used for start-ing piston engines
30.4 1.2 Germany 5.1 5.08
870410 Vehicles; dump-ers, designed for off-highway use, for transport of goods
114.1 1.3 United Kingdom
4.8 4.79
620462 Trousers, bib and brace overalls, breeches and shorts; women's or girls', of cotton(notknittedorcrocheted)
115.8 0.0 China 4.7 4.70
271012 Petroleum oils and oils from bituminous minerals
2,518.7 0.0 India 4.6 4.61
870321 Vehicles; spark-ig-nition internal com-bustion reciprocat-ing piston engine, cylinder capacity not exceeding 1000cc
311.8 0.0 Germany 4.1 4.11
481940 Paper and paper-board; sacks and bags, including cones, of paper, pa-perboard, cellulose waddingorfibres,having a base width less than 40cm
11.2 2.7 China 4.1 4.09
36
-
HS Code Commodity De-scription
South Afri-ca's Global Imports, 2016 (US$ mn)
Imports from Bot-swana, 2016 (US$mn)
Key sup-plier 2016
Botswana Global Ex-ports (US$ mn)
Additional Potential trade US$ mn
841221 Engines; hydraulic power engines and motors, linear acting
30.9 1.6 USA 4.1 4.08
722230 Steel, stainless; bars and rods, n.e.c. in heading no. 7222
5.7 0.0 India 3.9 3.87
854420 Insulated electric conductors; co-ax-ial cable and other co-axial electric conductors
20.9 0.0 China 3.6 3.63
340119 Soap and organic surface-active prod-ucts; in the form of bars, cakes, mould-ed shapes
12.2 0.0 China 3.2 3.24
880220 Aeroplanes and other aircraft; of an unladen weight not exceeding 2000kg
13.3 0.2 USA 3.1 3.06
842959 Mechanical shov-els, excavators and shovel loaders;
79.3 1.6 United Kingdom
2.9 2.92
130219 Vegetable saps and extracts;
4.8 - China 2.6 2.59
620342 Trousers, bib and brace overalls, breeches and shorts; men's or boys', of cotton(notknittedorcrocheted)
186.8 3.0 China 2.6 2.56
732690 Iron or steel; articles inheading7326
152.3 0.5 China 2.5 2.54
740400 Copper; waste and scrap
14.7 2.5 Namibia 2.5 2.46
870899 Vehicle parts and accessories; n.e.c. in heading no. 8708
256.0 0.3 Germany 2.4 2.36
110313 Cereal groats and meal;ofmaize(corn)
3.5 0.4 Lesotho 2.3 2.31
300490 Medicaments; consisting of mixed or unmixed products n.e.c. in heading no. 3004, for therapeu-tic or prophylactic uses, packaged for retail sale
1,144.6 0.1 India 2.3 2.29
37
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HS Code Commodity De-scription
South Afri-ca's Global Imports, 2016 (US$ mn)
Imports from Bot-swana, 2016 (US$mn)
Key sup-plier 2016
Botswana Global Ex-ports (US$ mn)
Additional Potential trade US$ mn
870421 Vehicles; compres-sion-ignition internal combustion piston engine(dieselorsemi-diesel),fortransport of goods, (ofagvwnotex-ceeding5tonnes),n.e.c. in item no 8704.1
287.8 0.0 Germany 2.3 2.29
845929 Machine-tools; for drilling by removing metal, other than numerically con-trolled
4.2 0.1 China 2.3 2.29
870590 Vehicles; break-down lorries, road-sweepers, spraying lorries, mobile workshops, mobile radiological units, and other spe-cial purpose vehicles n.e.c. in heading no. 8705
25.9 1.1 USA 2.0 2.03
392329 Plastics; sacks and bags(includingcones),forthecon-veyance or packing of goods, of plastics other than ethylene polymers
23.4 0.4 China 2.0 2.02
730840 Iron or steel; structures and parts thereof, props and similar equipment for scaffolding, shut-tering or pit-prop-ping
17.6 1.0 Austria 2.0 1.97
Source: Africa House Analysis based on UN Comtrade data
38
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Source: World Bank Development Index
2.0 Apparent consumption
Given the range of products on offer and the size of the South African market it is not possible toprovidefiguresonconsumption.SouthAfricahasastrongmanufacturingsectorandacrossthe board, in most sectors, South Africa is able to meet a high proportion of local demand through locally manufactured and sourced products. The exception are sectors where South Africa struggles to be competitive against a strong international supplier and where retailers, wholesalers or end-users can obtain the product at a much cheaper price internationally. A good example of this is footwear and clothing where Asian suppliers have made such inroads intothelocalmarketthattheyaccountforthemajorityofthemarket.Inthefootwearsector,imports account for over 80 percent of shoes purchased in South Africa.
3.0 Market Characteristics
3.1 Size and Nature of the Economy
South Africa is the second largest economy on the African continent after Nigeria with a GDP ofUS$294.8billionin2016.Toputthisincontext,thesizeoftheSouthAfricaneconomyiscomparabletoThailand,theUnitedArabEmirates(UAE),IsraelandMalaysia,itis19timestheBotswana economy and comprises 19.4 percent of sub-Saharan Africa’s GDP.
GovernmenteconomicpolicyisguidedbytheNationalDevelopmentPlan(NDP).TheNDPis a development strategy with the central objectives of eradicating poverty and sharplyreducinginequalityby2030.TheNDPspecifiesaseriesoftargetsthatneedtobemetoverthenexttwodecadestoachievetheseobjectives,includingthecreationof11millionjobsand average annual real GDP growth of 5.7 percent. Steps to achieving this include improving policy co-ordination and implementation, providing better infrastructure and lowering costs of doing business, and strengthening the functioning of the labour market. The NDP also
39
Figure 9: Comparative Size of the South African Economy
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200
-4.0
-3.0
-2.0-1.0
-1.0
2.0
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4.0
5.0
400600
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2,000
GDP(currentUS$) GDPgrowth(annual%)
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outlines an action plan to achieve these targets. In line with NDP targets the Department of Trade and Industry has recently established an agency known as InvestSA which acts as a one-stop-shop for foreign investment into South Africa.
In an effort to fast-track economic transformation in the country the government has legislated a system of Broad-Based Black Economic Empowerment (BBBEE). Thelegislation addresses BBBEE through skills development, employment equity, socio economic development, preferential procurement, enterprise development, especially small and medium enterprises, promoting the entry of black entrepreneurs into the mainstream of economic activity, and the advancement of co-operatives.
The South African economy is heavily invested in the services sectors with services accountingforover70percentofgrossvalueaddedin2016.Theagriculturalsectorcontributes 2 percent to value-added but the sector needs to be looked at in the broader context of being an important employment provider and a generator of export revenues. The sector was very hard hit during 2014 and 2015 as the Southern Africa regionfacedtheworstdroughtintwodecades.Thisisreflectedinthefiguresforvalueadded by the agricultural sector which registered the seventh consecutive quarterly declineinrealoutputofthesectorinthethirdquarterof2016.Goodsummerrainsinthe north of the country bode well for a recovery in 2017.
The mining sector remains an important sector in the South African economy accountingfor8percentofgrossvalueaddedin2016.Theimportanceofthesectorlies in its contribution to exports. The importance of the mining sector has however been in decline in constant price terms for a number of years. Recent increases in mining production have been from iron ore, diamonds and copper as opposed to the traditional drivers of platinum, gold and coal. The South African mining industry will continue to be restrained by, among other factors, escalating production costs, labour disputes, and production stoppages due to safety concerns, low commodity prices and weak demand.
The manufacturing sector accounts for 13 percent of gross value-added. The sector as awholehasbeenindeclinereflectingacontractionatanannualisedrateof3,2percentinthethirdquarterof2016.Thiscontractionhasbeendrivenbylowerproductionofboth durable and non-durable manufactured products in response to lower consumer demand and is broad-based, with production volumes declining in eight of the ten manufacturing sub-sectors. Pronounced declines were registered in the sub-sectors supplying petroleum and chemical products, basic iron and steel, and motor vehicles. The utilisation of production capacity in the manufacturing sector is 82 percent.
40
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Figure 10: Gross Value Added by Economic Activity, 2016
Source: South African Reserve Bank Quarterly Bulletin 2017
2%
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20152012
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DP
41
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3.2 Drivers of Growth
South Africa’s economy is relatively mature by African standards and does have a different growth-driverprofile,toanextentasaresult.WhilstmanyAfricancountriesarebeingdrivenforward by the twin drivers of fast-growing young populations coupled with rapid urbanisation and income growth, South Africa’s ‘demographic dividend’ is less clear.
South Africa’s urban population currently stands at around 35 million people and this is only expected to grow by another 3.5million in the next decade. Already, 64 percent of thepopulationlivesinurbanareasandassuch,thecountrywillnotbenefitfrommassmigrationto the urban areas over the next decade as is the case in most countries.
South Africa also has a relatively well developed retail and wholesale sector, with large formal retailers covering the bulk of the country and accounting for an estimated 80 percent of the total sales of around ZAR 500 billion annually.
However, South Africa has experienced a decade marked by a radical slow down in growth at several levels, including key traditional drivers of the economy. These include:• Mininganddownstreammineralsbeneficiation;• Agriculturaloutputandcompetitiveness;• Investmentininfrastructuresuchasroads,rail,housing,schools,watersupplyand sanitation facilities, hospitals and clinics and power transmission and distribution networks; and• Telecommunicationsinfrastructure.
Indeed, in many smaller cities and towns across the country, including many of the on