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IOL News
2 days ago
- Business
- IOL News
South Africa's economic resilience: Overcoming global trade challenges and unlocking new opportunities
Dr Brett Lyndall Singh believes that, despite the challenges posed by global trade dynamics, South Africa's resilience, commitment to diversification, and leadership on the African continent make it a prime destination for investment. Image: Supplied South Africa stands at a crucial crossroads in its economic journey. As the largest economy on the African continent, it plays a pivotal role in driving growth and stability across the region. Despite the challenges posed by shifting global trade dynamics, particularly the recent imposition of tariffs by the United States, South Africa continues to demonstrate remarkable resilience. The country's proactive approach to diversifying its markets and expanding its trade relationships positions it to not only overcome these challenges but also unlock new opportunities for growth and investment. South Africa's role as a key player in Africa's economy With a GDP of over USD 410 billion, South Africa remains the economic powerhouse of Africa. The country contributes nearly a quarter of Africa's total GDP, underscoring its crucial role in driving economic growth on the continent. Its diverse economy, which spans key sectors such as mining, manufacturing, agriculture, and services, allows South Africa to serve as a hub for trade and investment within the Southern African Development Community (SADC) and the Southern African Customs Union (SACU). South Africa's economic success is intricately linked to the prosperity of its neighbouring countries. A slowdown in South Africa's growth would undoubtedly have a ripple effect, undermining the economic stability of the region. For this reason, South Africa has a unique responsibility to lead efforts aimed at driving sustainable growth, not only for itself but for the entire continent. Its continued success is critical for Africa's broader economic transformation. Video Player is loading. 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Advertisement Next Stay Close ✕ The impact of US tariffs on South Africa and the continent The global trading environment has become increasingly challenging, especially with the imposition of tariffs by the United States on many of South Africa's key exports. In 2024, trade between South Africa and the US was valued at over USD 20 billion, making the US one of South Africa's largest trading partners. However, the recent increase in tariffs has affected South Africa's exports to the US, causing significant disruption to this important economic relationship. This shift does not only affect South Africa. Many African nations that depend on South Africa's goods and investments are also feeling the impact. A decline in South Africa's trade with the US threatens to undermine intra-Africa trade, which is vital for the region's economic integration and growth. Nevertheless, South Africa is showing resilience by diversifying its trade relationships and seeking new partnerships to ensure continued economic stability. Diversifying markets: The promise of the Africa Continental Free Trade Area (AfCFTA) In response to the challenges posed by external disruptions, Africa is taking bold steps to strengthen intra-continental trade. The African Continental Free Trade Area (AfCFTA), launched in 2021, offers an unprecedented opportunity to remove trade barriers and create a single market for goods and services. The initiative aims to increase intra-Africa trade by 52% by 2030,driving economic growth across the continent. For South Africa, the AfCFTA represents a strategic opportunity to reduce dependence on traditional trading partners like the US and further diversify export markets. By strengthening trade ties within Africa, South Africa can mitigate the impact of global trade disruptions and contribute to greater regional economic integration. As a key industrial hub, South Africa is well-positioned to serve as a supplier of goods and services to its African neighbours, creating new economic opportunities for both South Africa and the continent as a whole. Expanding trade partnerships: China, India, and Europe While strengthening regional trade is crucial, South Africa must also look beyond the African continent to ensure its economic stability. Diversifying trade with emerging global economies such as China, India, and Europe is key to reducing reliance on any single market. China: As South Africa's largest trading partner, China plays a vital role in sectors like mining, agriculture, and automotive. Strengthening this partnership will allow South Africa to tap into China's rapidly growing economy and meet its increasing demand for resources. India: India's economy is expanding rapidly, creating new opportunities for South Africa's exports, particularly in the minerals and agricultural sectors. By deepening its trade relationship with India, South Africa can access new markets and build stronger economic ties. Europe: The European Union is another key trading partner for South Africa, and its commitment to strengthening ties with Africa offers new avenues for growth. South Africa can leverage its position as Africa's industrial hub to enhance its relationship with European markets and deepen trade ties. The importance of diplomatic engagement In navigating these complex trade dynamics, South Africa's diplomatic engagement remains essential. Despite the challenges presented by the US tariffs, the US remains a key trading partner for South Africa. Continued dialogue with the US is necessary to mitigate the impact of these disruptions and to maintain a strong, mutually beneficial relationship. At the same time, South Africa's leadership on the African continent positions it as a strong advocate for policies that benefit not just South Africa but the entire region. As the first African nation to hold the G20 Presidency in 2025, South Africa has a unique opportunity to champion Africa's economic interests on the global stage, particularly in trade negotiations and the push for fairer, more equitable global economic policies. Key interventions for South Africa's economic future To unlock new opportunities and strengthen its economic prospects, South Africa must adopt amulti-faceted approach to growth: 1. Diversify export markets: Strengthen relationships with emerging global economies such as China, India, and Europe, while continuing to build trade partnerships within Africa through the AfCFTA. 2. Champion diplomatic engagement: Continue dialogue with global partners, particularly the US, to mitigate the effects of tariffs and ensure that trade relations remain balanced and mutually beneficial. 3. Invest in infrastructure: Enhance transport and logistical infrastructure to support greater regional trade, particularly within the AfCFTA framework. Better connectivity will facilitate smoother trade flows and help reduce costs for exporters. 4. Promote sustainable development: Focus on inclusive growth, particularly through investment in the social and solidarity economy (SSE), which will address Africa's developmental challenges and ensure long-term, sustainable economic progress. 5. Leverage G20 leadership: Use South Africa's G20 Presidency to advocate for global trade policies that support Africa's economic interests. Emphasise fairness, equality, and sustainability in international trade negotiations. South Africa's resilience: A beacon for investment in Africa South Africa's ability to withstand global trade disruptions and continue driving economic growth across Africa is a testament to its resilience and adaptability. As the continent's industrial powerhouse, South Africa offers investors a stable and attractive environment in which to invest, not only within South Africa itself but also as a gateway to the wider African market. South Africa remains a strategic partner for investors looking to participate in the continent's long-term growth. By diversifying trade relationships, enhancing intra-African trade through the AfCFTA, and continuing its leadership on the global stage, South Africa is positioning itself as a key player in Africa's economic future. Despite the challenges posed by global trade dynamics, South Africa's resilience, commitment to diversification, and leadership on the African continent make it a prime destination for investment. As Africa's economic transformation continues, South Africa offers a unique opportunity for those looking to tap into the continent's growth potential. *Dr Brett Lyndall Singh is a medical doctor, Chief Executive of AOM Group and a scholar at the Tsinghua University Vanke School of Public Health in Beijing, China. He is a Brand South Africa Play Your Part Ambassador and member of the G20 Young Entrepreneurs Alliance. **The views expressed do not necessarily reflect the views of IOL or Independent Media.


Time of India
10-07-2025
- Business
- Time of India
Seeking ties, not competition with Africa: PM Modi in Namibia
PM Modi in Namibia NEW DELHI: India and Namibia discussed enhancing ties in defence, maritime security, digital technology and UPI, energy and critical minerals as PM Modi held a bilateral meeting with President Netumbo Nandi-Ndaitwah in Windhoek during the final leg of his five-nation tour. Addressing Namibia's Parliament, PM Modi also laid out India's vision for Africa - freedom to future - and said India sought to cooperate, not compete, and not take but to build and grow together. "Let us create a future defined not by power, but by partnership, not by dominance, but by dialogue, not by exclusion, but by equity," he said. "We believe that Africa must not be just a source of raw materials. Africa must lead in value creation and sustainable growth. Let our children not only inherit the freedom we fought for, but the future we will build together," the PM said. Some of the remarks by Modi are seen as a subtle dig at China, which has a vast presence in the continent, at a time many African countries are looking to diversify their partnerships. According to an Indian statement, Modi thanked Namibia for its strong support and solidarity extended to the people of India in the wake of the Pahalgam attack. They agreed to strengthen the global fight against terrorism. They also committed to work together to amplify the voice of the Global South. PM Modi thanked Nandi-Ndaitwah for Namibia's support in the cheetah conservation project in India and invited Namibia to join International Big Cat Alliance. "They (cheetahs) are happy and have adapted well in their new home. They have grown in numbers as well. Clearly, they are enjoying their time," the PM said, while welcoming the fact that Namibia has adopted India's UPI payment system. PM Modi also said India would be scaling up development cooperation efforts through capacity building programmes for Namibian experts and exploring partnerships in setting up manufacturing facilities in Namibia. He called for expediting preferential trade agreement that India is negotiating with Southern African Customs Union. Two MoUs were also signed.

Business Insider
26-06-2025
- Business
- Business Insider
Top 10 African countries leading in intra-African trade (by Value)
South Africa, in particular, maintained its lead as Africa's top intra-African trading nation, with $42.1 billion in trade, nearly one-fifth of all intra-African trade in 2024, according to Afreximbank report. Business Insider Africa presents the top 10 African countries leading in intra-African trade (by Value). The list is courtesy of Afreximbank. South Africa maintained its lead as Africa's top intra-African trading nation, with $42.1 billion in trade. After a tough 2023, trade between African countries is finally picking up again. In 2024, intra-African trade grew by 12.4%, reaching $220.3 billion. It represents a strong comeback from the 5.9% drop recorded the year before, and a hopeful sign that Africa's push toward regional integration is gaining ground, even in uncertain global times. At the heart of this rebound are countries like South Africa, Nigeria, and Morocco, whose improved economic performance helped drive up trade across the continent. South Africa, in particular, maintained its lead as Africa's top intra-African trading nation, with $42.1 billion in trade, nearly one-fifth of all intra-African trade in 2024, according to Afreximbank report. Though this was slightly down from the previous year, it still reflects the country's vital role, especially within regional blocs like the Southern African Customs Union (SACU) and SADC. West Africa also made strong gains, thanks to standout performances from Côte d'Ivoire, Nigeria, and Mali. Côte d'Ivoire alone accounted for 4.8% of all intra-African trade, powered by growing exports of refined oil and manufactured goods. Meanwhile, East Africa remained the third-largest contributor to intra-African trade, while North and Central Africa played smaller but meaningful roles. Despite some regional disparities, the overall picture is encouraging. Africa is trading more with itself, an important goal under the African Continental Free Trade Area (AfCFTA). Below are the top 10 African countries leading in intra-African trade (by Value): Rank Country Export Import Total 1 South Africa $31.12 billion $11.02 billion $42.14 bilion 2 Nigeria $15.72 billion $2.71 billion $18.43 billion 3 Congo, Dem. Rep. of the $7.19 billion $4.18 billion $11.37 billion 4 Mali $2.67 billion $6.64 billion $9.31 billion 5 Egypt $7.58 billion $1.43 billion $9.01 billion 6 Côte d'Ivoire $4.36 billion $4.10 billion $8.46 billion 7 Zimbabwe $2.89 billion $5.31 billion $8.2 billion 8 Angola $7.29 billion $0.61 billion $7.9 billion 9 Uganda $2.24 billion $5.36 billion $7.6 billion 10 Namibia $3.15 billion $3.93 billion $7.08 billion


Zawya
05-05-2025
- Business
- Zawya
The vital role of trade agreements in driving South Africa's economic growth
Trade agreements are one of the essential pillars supporting South Africa's economic strategy, shaping market access, investment flows, and international competitiveness. While global discourse on trade has recently focused on negotiations involving the United States, Canada, Mexico, and China, to mention a few, South Africa needs to look closer to home and examine its own trade agreements to capitalise on emerging opportunities and mitigate potential risks. With the African Continental Free Trade Area (AfCFTA), the Southern African Customs Union (SACU), and the Africa Growth and Opportunity Act (AGOA) shaping the country's trade landscape, understanding these agreements and how to leverage them are the keys to navigating an increasingly complex global economy. The importance of trade agreements Trade agreements streamline the exchange of goods and services between countries, reducing tariffs and barriers that otherwise hinder economic growth. Historically based on barter systems, modern agreements involve structured and equitable exchanges. South Africa's participation in agreements such as AGOA and SACU allows businesses to access international markets under preferential conditions, driving growth, enhancing economic development, and supporting job creation. AGOA, for example, gives South African exporters duty-free access to the US market for certain goods, particularly benefiting sectors like agriculture, automotive manufacturing and mining. However, AGOA's non-reciprocal nature means South Africa is vulnerable to US policy shifts. Recent diplomatic tensions - highlighted by the US decision to expel South Africa's ambassador - illustrate how quickly trade dynamics can change, potentially affecting market access. Losing AGOA preferences would subject exports to higher US tariffs, significantly hindering South Africa's competitiveness against countries with lower costs and more efficient supply chains. Challenges in navigating trade agreements Trade agreements also pose several other challenges, particularly regarding compliance with international regulations. For South African businesses, especially SMEs, navigating complex legal and administrative requirements can be resource-intensive. Meeting high standards for exports, for example the stringent sanitary and phytosanitary measures in agriculture, requires significant investment in quality control and documentation. Another significant issue is the infrastructural and logistical barriers hampering trade efficiency. South Africa's ports and border posts, notably Beitbridge Border Post, remain congested and inefficient, negatively impacting trade with neighbouring countries. Delays in customs processes and high transportation costs also limit the competitiveness of South African exports, disproportionately affecting smaller businesses looking to enter export markets. Expanding trade beyond traditional partners Against this backdrop, it is imperative for South Africa to actively strengthen trade relationships within Africa. The AfCFTA offers a historic opportunity to create a unified African market, reducing intra-African trade barriers and promoting economic integration. Recently, South Africa began preferential trade under AfCFTA, enabling duty-free or reduced-duty exports to 12 African countries. However, inadequate infrastructure, regulatory disparities, and non-tariff barriers still hinder growth. To leverage AfCFTA fully, South Africa – and indeed all other African countries - must invest in logistics and border efficiency. Modernising customs procedures, reducing red tape and enhancing transportation networks will facilitate smoother trade flows. Addressing regulatory bottlenecks will also help SMEs participate more fully in regional trade, promoting economic inclusivity. Beyond Africa, engagement with BRICS nations offers additional trade opportunities. While China remains a major partner, other BRICS markets hold untapped potential for South African exporters, particularly in minerals, manufacturing and agriculture. However, non-tariff barriers, such as Brazil's stringent medical equipment import regulations, must be addressed to fully realise these opportunities. Policy considerations and future trade strategies For South Africa to remain competitive globally, a strategic policy approach is essential. Recent EU investments totalling €4.7bn in green energy and vaccine production reflect growing opportunities to diversify trade and attract foreign investment. But it is imperative that we build on this positive momentum. There are some areas where government is doing that – for instance its recent decision to invest R1 billion into local electric vehicle (EV) production, thereby demonstrating alignment with global sustainability trends and hopefully enhancing South Africa's competitive position over time. However, there is still much work to be done and, unfortunately, the recent budget demonstrated that there is not much money to fund that work. In fact, little has been said or done of late to signal serious government intent of any sort to boost economic growth through trade facilitation. Still hope for a future built on strategic trade growth Despite the challenges, though, South Africa still has a unique opportunity to reposition itself as a leader in African trade and beyond. By embracing digital customs processes, strengthening regional trade networks and leveraging public-private partnerships alongside private sector investment, the country can create a more agile and resilient trade environment – one that evolves from merely reacting to global trade shifts to proactively leveraging the power of trade agreements to help shape its own economic destiny and that of the African continent.


The Citizen
29-04-2025
- Business
- The Citizen
Global trade war's potential blow to Southern African Customs Union revenue
The trade war will cause a decline in Southern African Customs Union revenue and place additional strain on regional economies. The global trade war is also expected to affect the Southern African Customs Union, especially if the member countries lose their export benefits under the African Growth and Opportunity Act (Agoa). Lesotho and eSwatini are especially vulnerable to these adverse effects, with economists shaving 4% of projected world trade in goods. Lyle Begbie, economist at Oxford Economics Africa, warns that the implementation of US import tariffs and the effective end of Agoa will significantly affect several regional economies. 'These tariffs will likely reduce global trade volumes, which in turn could shrink the pool of shared customs revenues. As a result, we anticipate that the projected Southern African Customs Union (Sacu) revenues for the 2027 fiscal year will be revised downward. ' The US administration announced substantial global tariffs, including 145% on China and 10% on most of the rest of the world, with several Southern African economies particularly hard hit. 'Consequently, our new forecast assumes that long-run US non-fuel goods imports will fall by over 20% compared to our March baseline, affecting almost every country in the world.' ALSO READ: IMF warns all countries will be caught in crossfire of trade war Effect of global trade war on world trade Begbie says the direct hit to trade in the rest of the world will be magnified in three ways: Lower exports to the US will filter down the supply chain, prompting weaker intermediate imports elsewhere. Reduced export revenues will weaken domestic demand, further dampening imports. Heightened uncertainty will also prompt spending on investment and big-ticket consumer goods to be delayed or postponed, further lowering imports. 'Overall, we have lowered our forecast of world goods trade as a share of gross domestic product (GDP) substantially. In 2026, it is now expected to be about 4% lower than we assumed in March and 10% lower than we anticipated in October. Therefore, we have structurally lowered global trade volumes throughout the forecast period.' Begbie says Sacu enables the sharing of customs and excise revenue between members, with the Sacu revenue-sharing formula adjusted for projected revenue with a two-year lag. 'Given the disproportionate size of South Africa's economy within Sacu and as the main importer, the pool of revenue available for distribution is driven by South Africa's imports. 'However, given recent global events and South Africa's weaker economy, we have lowered our forecasted real imports this year by about 2% compared to the previous baseline. This downward revision of real imports will place pressure on Sacu revenues, starting in the 2027/28 fiscal year.' ALSO READ: Reserve Bank warns global trade tensions can cut GDP by 0.7% Trade war will cause decline in global import prices In addition, he says that lower import prices will reduce South Africa's import bill. 'Our outlook for global oil, non-fuel commodity and food prices has been significantly revised downward due to rising global economic uncertainty. We now expect oil prices to average $67.6pb this year compared to our previous forecast of $76.4pb. 'Negative consumer and producer inflation in China and the country's potential need to redirect exports away from the US may also drive down prices of manufactured goods. This broad decline in global import prices will place pressure on Sacu revenues.' South Africa's 2025 budget review noted a strong upward revision of Sacu revenues in the 2027/28 FY to R91.2 billion, from the previous forecast R84.0 billion. As a result, the pool of shared customs revenues would surpass the record figure of R89.9 billion set in 2024/25 FY. However, Begbie says, the expected weaker real imports from South Africa, along with lower import prices, will likely result in a downward revision of Sacu revenues in 2027/28. 'Consequently, we suspect that it will take some time for Sacu revenues to surpass the record figure reached in the 2024/25 financial year.' ALSO READ: Trump gunning for Lesotho: SA sees opportunity for 'closer collaboration' Smaller countries' growth most affected He points out that, except for South Africa, Sacu revenues play an essential role in the public finances of its members and particularly for Lesotho and Eswatini, the smallest economies in the union. In both countries, Sacu transfers often make up nearly half of the country's total fiscal revenue, creating a structural dependence on this funding source. Therefore, Begbie warns, a downward adjustment to anticipated Sacu revenues will worsen the outlook for these countries' fiscal and external balances and also weigh on short-term economic growth. However, he points out, the impact of US tariffs extends beyond Sacu revenue losses. For Botswana, Lesotho and Namibia, higher import tariffs on diamond jewellery exports to the US, representing about 54% of the $84 billion global diamond jewellery industry, will place added pressure on an industry that is already struggling with the rise of lab-grown diamonds. 'Lesotho is particularly vulnerable. US tariffs on its exports would severely affect the economy due to its heavy reliance on textile exports to the US market. These exports make up around 25% of Lesotho's total exports, 35% of its manufacturing output and nearly 10% of GDP, given the country's high trade openness. The US is also the primary destination for Lesotho's knitted clothing.' Begbie says there was hope previously that the improved outlook for Sacu revenues beyond the current fiscal year would help to cushion the blow of the effective end of Agoa. However, it now appears that US tariffs will harm regional economies through multiple channels instead.