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