Ramaphosa and Ruto urged to cut red tape strangling trade

The South African business community used this week’s South Africa-Kenya Business Forum to urge leaders of both countries to eliminate red tape and tariffs that stand in the way of trade across the continent.

Stavros Nicolaou, Aspen Pharmacare Group senior executive and board member of Business Unity South Africa, told Business Times participants in the business sector focused on the urgent need to remove barriers to trade between the two countries.

“In the context of the African Continental Free Trade Agreement [AfCFTA], we’re supposed to have a tariff-free regime, if you export from one country on the continent to another. Our comments were largely aimed at that.

“This forum will meet again in two years’ time in Kenya. It was the joint and common view of both presidents that we should work towards reducing red tape and reviewing progress made in two years’ time on trade.”

At the forum, President Cyril Ramaphosa hosted President William Ruto and announced that South Africa planned to suspend import duties on tea and coffee products from Kenya, which were imposed in retaliation for Kenyan tarrifs on South African steel.

Kenya exports flowers, precious stones, machinery, spices and vegetables. We must strive to deepen our trade and investment relationship in a way that diversifies our economic growth and innovation while narrowing the deficit.

—  Stavros Nicolaou, Aspen Pharmacare Group senior executive

Nicolaou said meetings on the sidelines of the forum settled on four priorities — the reduction of red tape, AfCFTA, accelerating industrialisation and setting up pool procurement in specific sectors. “Delays in import and export permits are examples of what falls under regulatory red tape,” he said.

The forum broke into meetings that discussed maximising co-operation in key sectors, including agro-processing, manufacturing, financial services, tech and innovation and pharmaceuticals.

Speaking at the forum, Nicolaou said countries were repositioning themselves around industrial capacity, energy security, critical minerals, technologies and regional market access. “Our total merchandise trade amounted to $617m (R10bn) in 2024 — exports $567m and imports $50m. Colleagues would be aware that the South African export basket is composed of both raw materials, intermediate and finished products in the automotive, steel, petroleum and machinery sectors.

“Kenya exports flowers, precious stones, machinery, spices and vegetables. We must strive to deepen our trade and investment relationship in a way that diversifies our economic growth and innovation while narrowing the deficit.”

Ramaphosa said: “We are prioritising ports and corridors and working out how best to harmonise customs for the era of digital trade, in line with the AfCFTA. On the digital side, our officials are updating our ICT agreements to keep pace with technology — covering industrial innovation, technology transfer, digital trade and artificial intelligence.”

Sim Tshabalala, Standard Bank Group CEO, said the deepening of trade parity between the two economies would be mutually beneficial, as South Africa provided around 10% of Kenya’s foreign direct investment stock, while Kenya provided less than 1% of South Africa’s.

Ola Oyetayo, CEO and co-founder of Verto, told Business Times that it was easier for a business in South Africa to pay a business in London than pay a business elsewhere on the continent. Africa’s 54 countries and 46 currencies present a challenge for harmonising policies.

“There’s no lack of will and policies that aim to reduce the current friction payments within Africa and outside of Africa. The challenge we are facing is implementation. One of the reasons is the regulatory silos that we have.”

He said that while agreements like Pan African Payments and Settlement System (PAPSS) were positive, too many regulators existed with different systems to make the most of the intended synergies for more cross-border transactions within the region.