Exports are a key indicator of the health of any economy. They are not, as US President Donald Trump seems to think, an indicator of whether a nation is “winning” or “losing”, but they do matter. The value and quality of SA’s exports affects many economic indicators, from fiscal policy to interest rates. Without exports we cannot afford to import the goods and services we do not produce, and we cannot control inflation.
Most importantly, exports represent an opportunity for growth. We can lift the limits imposed by our own slow growth by linking to fast-growing economies. For this reason the export of goods — and especially of services — can play an important role in addressing our employment crisis.
Traditionally SA has been a mineral exporter, and that has shaped many aspects of our economy and society. During the Covid-19 period we were fortunate that the prices of these commodities boomed, providing us with a fiscal and monetary lifeline. Following a post-Covid decline we are once again in positive territory.
The price of gold has rocketed and platinum — our largest export — has increased by 50% this year. However, our commodity exports are being held back by a crucial constraint — the performance of Transnet. Without improvements in the state-owned ports and rail operator’s performance we will miss out on every upturn in the commodity cycle.
However, as every economic observer knows, commodities are problematic because their price is so volatile; manufactured exports and the export of services are superior in this respect. Over the past 30 years SA has made progress in diversifying its exports, especially through the export of cars and automotive components. Vehicle exports have been nurtured by a positive trade environment and a sophisticated subsidy programme.
Manufactured exports in peril
This is now in peril, with vehicle exports having dropped 80% this year as a result of the US tariff shock. If trade, industry & competition minister Parks Tau and his negotiators can succeed in their current negotiations (and if international relations minister Ronald Lamola can chart a path between the US and Brics), these exports may yet survive. If not, the hit on our economy will be huge.
Agricultural exports have also grown substantially in recent years, and SA is now an important exporter of fruit, nuts and other farm products. We could be a far larger exporter of chicken and meat, too, if we could organise our agricultural department to manage the certification of animal health more successfully.
Service exports have also grown in importance and relevance. Services sidestep the problem of logistics, as well as tariff wars, and could therefore offer an alternative to commodities. The global business service sector is a great example. According to Business Process Enabling SA, 80,000 new jobs have been created in the past four years by attracting international operators to locate in SA.
More can be done. Other important service exports include tourism and film services, both of which have tremendous growth potential. Tourism will benefit from the electronic travel authorisation system recently announced by the home affairs minister Leon Schreiber. Film production services could also expand with an improved policy environment.
If we are to grow our exports, we must:
- intensify the existing efforts to fix Transnet;
- craft a foreign and trade policy that navigates stormy seas and prioritises our ability to export;
- tackle the issues in the department of agriculture that limit chicken and meat export; and
- nurture service exports, especially global business services, tourism and film services.
Trade is having a moment, even if it is a strange one. We must use this moment to put exports at the top of our agenda.
• Bethlehem is an economic development specialist and partner at Genesis Analytics. She has worked in the forestry, renewable energy, housing and property sectors as well as in local and national government. She writes in her personal capacity.
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