African remains an important export market for South Africa’s agricultural sector given that about 88% of agricultural exports currently go to SADC.

JOHANNESBURG – The Agricultural Business Chamber of South Africa (Agbiz) said on Monday that the recently signed African Continental Free Trade Area (AfCFTA) would potentially open additional avenues for South African products to destinations that the country had not previously been exposed to. 

Wandile Sihlobo, chief economist at Agbiz, said in a note that the African continent would remain an important export market for South Africa’s agricultural sector, given that about 88 percent of South Africa’s agricultural exports currently go to the Southern African Development Community (SADC) region. 

“The recently launched AfCFTA would potentially open additional avenues for South African products to destinations where the country hasn't largely participated in the recent past,” Sihlobo said. 

“Practically, this would mean an increase in the share of South Africa's agricultural exports to the continent, rather than mainly focusing on growing other well-established markets.”

South Africa recorded a trade surplus of $660 million (R10.08 billion) in the first quarter, up 11 percent from the same period last year. 

The African continent and Europe continued to be the largest markets for South Africa’s agricultural exports, respectively accounting for 44 percent and 30 percent in value terms. 

Asia was the third-largest market, taking 18 percent of South Africa’s agricultural exports in the first three months of the year. 

The free trade area agreement (AfCFTA) was agreed to in July during the 12th extraordinary session of the African Union in the Ethiopian capital Addis Ababa. 

The agreement brings together 55 countries or a population of 1.2 billion people and a combined gross domestic product (GDP) of $3.2 trillion.

However, Sihlobo said that the African continent was beset by systemic problems such as poor quality or lack of infrastructure, non-conducive business environments that make trade across borders particularly costly. 

“With the AfCFTA providing a potential opportunity to unlock further growth in trade, this will not be possible unless and until the abovementioned issues are sufficiently addressed.”

AfCFTA’s operational phase will comprise negotiations around important customs and trade issues such as the rules of origin, tariff concessions, payments and settlements, non-tariff barriers, and trade information.

The Economic Commission for Africa has estimated that intra-African trade should increase by 52.3 percent with the elimination of import tariffs and add $70bn to the continent’s GDP by 2040.

President Cyril Ramaphosa, in his official trip to Tanzania over the weekend, reaffirmed South Africa's commitment to work together with the rest of the continent to open up markets in South Africa and other parts of the region for the goods produced in the region.

“Let us work together to make the African Continental Free Trade Area a powerful instrument for industrialisation and inclusive development,” Ramaphosa said.

BUSINESS REPORT