While half of South Africa’s food exports go to other African countries, the real growth potential lies in Asia, according to agricultural economist Wandile Sihlobo.
There was not much scope for increasing agricultural exports to Africa, Sihlobo said in his blog. North Africa was more focused on Europe and, while the realistic potential lay in East and West Africa, these regions might not yield near-term trade benefits.
“There are at least three reasons. First, East and West Africa have a range of non-tariff barriers, which could hinder boosting trade regardless of lower tariffs through AfCFTA (African Continental Free Trade Area)”.
“Second, high levels of corruption, which increase the costs of doing business, have proven to be a significant concern. Third, fragmented value chains owing to poor connectivity and infrastructure are a major contributor to transport costs.
“This narrow scope of expanding agricultural exports in the African continent typically leads to frustration among business leaders, who continue to see improvement in domestic production but are limited in avenues for sales,” Sihlobo said.
Therefore, South Africa would probably aim to maintain its African markets rather than hoping for further expansion.
“The near-term growth areas in our assessment are the Middle East and Asian countries. The growing population and better income levels in these regions are among the key indicators.
“When South African leaders are in Asia, visiting countries such as Vietnam, China, Malaysia, and India, it is important to consider the implications. Equally, when our leaders are in the Middle East the conversation should focus on export diversification,” Sihlobo said.
