SA companies take a longer-term view

THERE’S BEEN a change of pace in trade opportunities with the rest of Africa. While the 90s was regarded as a window of opportunity, there is now a long-term developmental case for most countries in the region, says Duncan Bonnett of Africa consultants Whitehouse & Associates. “Several have completely revamped their investment codes and investment environments which are now far more business-friendly. This is also thanks in part to telecommunications advances and access to the internet. “The resurgence of commodity production in many countries is having a marked impact on their imports of capital goods and other imports, while accelerated infrastructure development is also underpinning this growth,” says Bonnett. “It’s reflected in our trade with strong increases in exports over the last couple of years. In fact, exports to the rest of the continent grew by 14.7% in 2 006 over the 2 005 figures.” On the back of this, the commodities boom is likely to see the role of Africa changing and becoming a key supplier of global minerals and possibly foodstuffs over the longer term, says Bonnett. "This should see the continent as a whole move from being a food importer with reliance on foreign aid to becoming a global food producer. If you look at the food deficits Asia is facing, they will start to look at places like Africa for food commodities. This will push up prices and hopefully create viable rural communities. “Rather than subsistence farmers we will have small-scale farmers who will become part of the global economy and supply not just export crops like mangoes, coffee, tea or bananas but basic crops like rice, maize and wheat for local consumption and export.” But in the short term, the region’s import dependence continues, offering lucrative opportunities to SA business. This is evident in the significant growth over the past year, with total exports rising from R46-R53bn from 2 005 to 2 006. And according to Bonnett, because there are many more non-SA resources companies operating in the region, South Africans are now starting to take a longer-term view and putting down traction in those markets. Civil engineering companies have to an extent withdrawn from the region because of the demand locally in preparation for 2 010 and beyond. “Equipment suppliers are therefore looking at a much more structured set-up rather than piggy-backing on South Africans going in. “People realise the commodity boom is here for the next 10-20 years and are planning for the long-term.” South African companies are also starting to operate more comfortably in non-traditional markets such as those in West and North Africa. Nigeria is now firmly cemented in the top five destinations, despite the perceptions of that market, while Algeria and Morocco are both in the top fifteen destinations, each importing more than R1bn of South African goods in 2006.