Finance minister Tito Mboweni said SA will use the World Economic Forum (WEF) meetings this week to focus on the African Continental Free Trade Agreement (AfCFTA), which it stands to gain the most from.
“SA stands to benefit far more from the African trade [accord AfCFTA] because of our large industrial base through the production and export of manufactured goods. Against the background of the trade wars, Africans are organising themselves,” Mboweni said at a briefing in Johannesburg on Monday, ahead of the WEF Africa meetings.
Mboweni called for a quick resolution to global trade tensions but stressed that the focus at WEF will be on leveraging trade agreements between African countries as fears of a global recession mount.
In the past three years foreign direct investment has increased on the continent despite a global decline, said WEF head of Africa Elsie Kanza. “There has been an increase of 100% between 2017 and 2018, with most of the deals happening here in SA,” she said.
The US and China imposed more tariffs on each other last week, renewing concerns over the impact on the global economy.
“The trade war between the US and China is not helpful and is affecting the markets generally, whether it’s the commodity markets or the currency markets,” Mboweni said.
“The issue of trade tensions is a very important one for us ... the message must get through especially to those in Washington that the trade war is not helpful to us or to the global economy. The quicker these issues are dealt with the better,” he said.
As protectionist measures come to the fore, it makes sense to explore opportunities on the continent, BNP Paribas economist Jeff Schultz said.
“The problem is that implementation has always fallen short,” he said. “The African continental free trade agreement is a step in the right direction but the proof is in the pudding about how it will be implemented. If it can be done, SA stands to benefit greatly from it,” Schultz said.
The rand and other emerging-market currencies have been buffeted by trade war-related developments in 2019, though the local currency has also faced pressure from Eskom’s growing debt and a deteriorating local economic picture.
The forum begins just a day after Stats SA will release the country’s growth figures for the second quarter of the year. The data is expected to confirm that SA has avoided a recession, with economists polled by Bloomberg expecting a 2.5% rebound in GDP, after a steep contraction of 3.2% in the first quarter.
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