South African Trade and Trade and Industry Rob Davies told The BRICS Post in an exclusive interview on Thursday that South Africa’s trade ties with the BRICS members were vital, especially given the uncertainty about trade ties with the United Kingdom after the Brexit vote and an ongoing trade dispute with neighbour Zimbabwe, which unilaterally imposed restrictions on South African exports to Zimbabwe.
“Our trade ties with our BRICS partners are vital to our economy’s health as they are our largest trading partners. That is why I look forward to engaging with the other BRICS trade ministers later this year in India, as well as at the G20 Summit in China,” Davies said.
Responding to a question about Brexit, the South African Trade Minister said Pretoria expects to replicate its successful EU trade deal with the UK following its shock vote to leave the European Union.
“I have corresponded with the British ambassador and met with the British trade minister recently at the G20 meeting in Shanghai. We aim to have as good a trade agreement as we have currently with the European Union and maybe some easing of phytosanitary restrictions on our agricultural exports,” he added.
The UK was the eighth largest trading partner of South Africa. On 10 June, the EU signed an Economic Partnership Agreement (EPA) with South Africa that includes better trading terms mainly in agriculture and fisheries, such as for wine, sugar, fisheries products, flowers and canned fruits.
Meanwhile, Davies also responded to anxiety about the growing impact of China’s economic slowdown on South Africa’s economy.
Davies expressed concern about the Chinese slowdown, but said that that the South African government had strong ties with Beijing.
In particular, he pointed out that the South African Minister for International Relations Maite Nkoana-Mashabane has just returned from a visit to China, where she co-chaired the Co-ordinators’ Meeting of the Forum on China-Africa Cooperation (FOCAC). The meeting assessed progress of common commitments made at the Johannesburg Summit of the FOCAC held in December.
The rand has gained recently from strong export growth as the record R18.4 billion foreign trade surplus in May was succeeded by a R12.5 billion surplus in June.
On the subject of Special Economic Zones (SEZ), Davies highlighted the experience of China as valuable lessons for South Africa.
“The SEZ legislation has been passed in South Africa and the SEZ at Saldanha has been proclaimed. Dube Trade Port and Harrismith are on track and we are looking at two SEZs in the platinum belt so that we can turn the platinum into jewellery, autocatalysts and fuel cells. Chinese investment such as the FAW truck plant at Coega and the manganese sinter plant in the Northern Cape shows how cooperation between BRICS countries are mutually beneficial,” he said.
Davies said he would raise the issue of industrialising Africa at the BRICS and G20 summits later this year. The 54 member-nations of the African Union can further industrialise and move up the value chain with the help from the BRICS and G20 partners, he asserted.
“If you take the simple example of coffee, Africa earns $6 billion a year from the coffee beans it grows, yet it is the roasters and blenders outside the continent who capture $94 billion of the value addition to those beans. That is unsustainable and if we want to promote sustainable inclusive growth, then more value addition has to place in Africa. That applies not only to coffee beans, but a whole variety of raw materials. The BRICS countries can help Africa to industrialise and lift millions out of poverty,” Davies said.
“We can no longer rely on the commodity super cycle to lift prices and so support export values. African countries need to add value to the raw materials before they are exported and to do this we need to industrialise further and integrate so that we create a single market of one billion people,” he concluded.