Filomena Scalise

Johannesburg - South Africa needs to grow its export base to boost economic growth and job creation, a World Bank official said on Tuesday.

“Increasing exports, particularly in manufacturing, may be crucial for low-skilled job creation needed to substantially reduce high overall and youth unemployment,” said World Bank director in South Africa Asad Alam.

He was speaking at the release of a World Bank report titled “The Economic Update on South Africa: Focus on Export Competitiveness”.

It examined the performance of 20,000 South African export companies, excluding those in the minerals sector, over a 12 year period from 2001.

The study compared the export companies to their emerging market peers, and discussed ways to help South Africa improve its export potential.

It found that South Africa's total exports grew by only 0.6 percent a year since 2005 at a time when its BRICS partners - Brazil, Russia, India and China - were making immense gains into global markets, the report stated.

Growth in South Africa's exports of non-mineral products and services also fell behind that of its BRICS peers, while the volumes of minerals exported remained virtually flat.

The report showed that the bulk of the country's exports mainly came from a few big firms which shipped products to countries around the world.

About 1000 companies generated 93 percent of all South Africa's exports.

The rest of South African export firms exported small amounts.

Alam said: “In addition, these mega companies are losing momentum as they are creating fewer new products and not expanding into new markets.”

The report suggested three ways to help promote competitiveness and spur export growth.

These were boosting competition to increase efficiency and productivity, resolving infrastructure bottlenecks, and cutting logistic costs and regional integration in goods and services within Africa.

Co-author of the report Catriona Purfield said: “Greater competition at home would stimulate export companies to innovate and to become more productive, drive down the costs of inputs, and enhance incentives for more firms to enter the export market.”

She said progress on all three fronts would help propel South Africa towards faster growing exports and help the country realise its goal for higher employment growth as outlined in the National Development Plan. - Sapa