South African companies not leveraging SADC concessions

Many South Africa companies
are missing out on export
opportunities into Zambia
and other members of the Southern
African Development Community
(SADC) because they are not
taking advantage of concessions
which effectively reduce their
costs by 25% or more, says Adrian
Friend of Lusaka-based Celtic
Freight.
A combination of the strong rand
and inertia on the part of South
African companies is seeing the
loss of export opportunities, he
warns. There is nothing one can do
about the rand, but the advantages
of SADC and VAT-free exports are
seldom exploited.
SADC provides for duty-free
imports from countries within
the region, and the South African
Revenue Service zero-rates VAT on
exports, he says.
Overall, this gives South African
companies at least a 25% cost
advantage over Chinese, Indian and
other exporters – and the logistics
costs from South Africa to Zambia
are lower than those from China,
he says. South Africa should be
cleaning up the market. Warning
about companies losing out, he
says Zambians are even importing
construction materials from Dubai
rather than South Africa.
Zambian importers also do not
have to take full container loads
from South Africa, as they can be
consolidated or exported as part
loads. With this in mind Celtic
has its own fleet of 1.5-metre and
3-metre containers, which can be
packed and sealed in South Africa,
and delivered on site in Zambia.
Celtic works with its clients to
help them register with SADC
and advises how to claim the VAT
credits. “It is all there in the Act,
and is perfectly legal,” he says.
The SADC process takes three
to four weeks to be registered, and
applies to goods that are 100%
manufactured in South Africa. After
being registered, Celtic will do the
SADC certificate for exporters –
it’s all very simple and easy. The
VAT act is simple – as long as the
goods are exported via a legitimate
forwarder, and documentation
processes followed, VAT can
be zero-rated. It is amazing the
number of companies that view
a request not to pay VAT as
suspicious, or the Zambian client