Africa stands on the cusp of a once-in-a-generation trade opportunity with the world’s second-largest economy, which has removed tariffs on imports from 53 African countries, and the challenge now is for the continent to up its game and take it.
This is the view of Hennie Heymans, CEO of DHL Express Sub-Saharan Africa. The move by China, which runs a significant trade deficit with many African countries, including South Africa, is a clear statement of intent to deepen economic ties and rebalance a relationship that has been defined by asymmetry.
However, Heymans cautioned that policy alone does not create growth. Execution does.
“South Africa is exporting predominantly raw and semi-processed commodities such as platinum, chromium ore and gold. China, by contrast, is exporting finished, higher-value products, including vehicles, electronics, and industrial components. This commodity-for-manufactured-goods dynamic is not new, but it remains firmly intact,” Heymans told Business Times.
“The question is whether this latest policy shift can begin to change that.”
China is by far South Africa’s largest trade partner, a relationship that has been deepened by the Brics+ bloc. Chinese car brands have become a regular feature on South Africa’s roads, while electronics and textiles dominate the local market.
The latest data shows that in March alone South Africa exported R20.8bn worth of goods to China, up 19% year on year.
The blossoming trade relationship between Beijing and Pretoria has not stopped South Africa from taking steps to ensure the billions of rand of unregulated products it imports from China are safe and authentic.
Trade, industry & competition minister (DTIC) Parks Tau in March issued a directive to implement a pre-export verification of conformity programme (PVOC) on unregulated Chinese imports — with the directive set to be effective in the next six months.
The directive is aimed at protecting local industries and consumers.
Among the products targeted for tighter quality controls are skin-lightening creams, sanitary towels, napkins, hair relaxers, hair conditioners, non-stick pans, plastic utensils, aluminium cookware and cooking pots.
The PVOC will also include office chairs, office desks, wardrobes, cupboards, children’s cots, bicycles, basic home fitness equipment, sports protective gear, plastic toys, fuel generators, photovoltaic panels, gas stoves, plumbing components, firefighting equipment and building and construction materials.
PVOC programmes are generally instituted to protect consumers from dangerous, substandard or counterfeit products and to shield the domestic industry from unfair competition from noncompliant goods.
If African businesses are to scale exports into markets like China, they need regional supply chains that are efficient, predictable and competitive
— Hennie Heymans, CEO, DHL Express Sub-Saharan Africa
Heymans said the Africa intra-trade agenda has to be pursued aggressively that come with China’s move to do away with tariffs for imports for opportunities to be to exploited.
“If African businesses are to scale exports into markets like China, they need regional supply chains that are efficient, predictable and competitive. That requires investment not only in ports and airports but also in border processes, customs systems and transport corridors that link markets together,” he said.
“This matters because a continent that is not well connected internally will struggle to compete externally. Stronger regional trade will make African economies more competitive globally. It will not weaken their ability to engage with partners like China.”
Only a small share of South Africa’s trade is intra-African, with just 24% of the continent’s largest and most industrialised economy’s flows going to the region.
Heymans urged small businesses to invest in understanding their markets, build the right partnerships and put the necessary supply chains in place early to benefit from the move by China.
“For African small and medium enterprises, this policy shift is particularly significant. Zero tariffs improve the economics of exporting, but they do not make exporting simple. Competing globally today is not only about price. It is about speed, reliability, and customer experience,” he said.
DHL Express, established in Africa in 1978, maintains a presence in every country on the continent.
The DHL Group last year announced plans to spend about €300m (R5.7bn) on its Sub-Saharan Africa operations over the next five years in its three business units — DHL Express, DHL Global Forwarding and DHL Supply Chain.