OPINION: Exports critical to promote growth in KZN
DURBAN - Over the past 25 years, export-led economic growth has been critical in increasing the real gross domestic product (GDP) growth, job creation and an upsurge in per capita income flows in emerging countries in Asia and Africa.
Durban and KwaZulu-Natal (KZN) are uniquely positioned to exploit export-led growth. It’s a well-diversified regional economy and South Africa’s second-largest provincial economy, contributing a fifth of South Africa’s GDP with the second-highest level of industrialisation in the country.
Additionally, KZN has the third-highest export propensity and is strategically positioned as home to two of Africa’s busiest and most important ports in the southern hemisphere: Durban and Richards Bay. KZN has the requisite infrastructure requirements in the port, such as the Durban Container Terminal, which is the largest in the southern hemisphere and handles 65 percent of South Africa’s container traffic, as well as transport and logistics linkages through the King Shaka International Aerotropolis, 302km of railway line in the port area, as well as the N3 and N2 highways.
In addition, relative to other countries in the world, our regional ports offer port and terminal handling costs that are lower than average. This is a significant benefit, even though more needs to be done ito modernise and improve provincial port and transport infrastructure, refining policies and reducing red tape as well as improving port efficiencies. These would be benefit large corporates as well as start-ups and small, micro and medium enterprises, which can profit from reduced operational costs as well as minimised barriers to markets.
South Africa’s export-led growth is the result of the extraction of natural resources, which are widely agreed to be unsustainable for inclusive and sustainable long-term balanced growth in the long term. In 2018, South Africa exported the following major commodities: petroleum (22.89 percent), manganese ore (15.09 percent), chrome ore (14.18 percent), vehicles (13.97 percent), maize (13.5 percent), indicating an explicit reliance on the export of natural resources.
Manufacturing is the largest sector in KZN with a 16 percent share of the provincial GDP supported by various industrial hubs strategically located throughout the province.
Exports can have positive knock-on effects on our regional economy as they can result in growth in our manufacturing and industrial sectors, which can promote growth along the value chain and job creation.
South Africa needs to replicate the successes achieved by other emerging economies in the past 25 years, such as China, India, Malaysia, Philippines and Indonesia, and shift export focus from a dependence on natural resources to manufactured goods.
Palesa Phili is the chief executive of the Durban Chamber of Commerce and Industry.