In delivering the main address at the virtual Africa Day commemoration of the National Council of Provinces (NCOP) on May 25, Trade, Industry and Competition Deputy Minister Fikile Majola said it was imperative for South Africa to look beyond its borders to accomplish the task of inclusive economic growth and job creation in the wake of the Covid-19 pandemic.
It is critical to “move with speed” towards building a strong foundation for Africa’s inclusive economic growth and the African Continental Free Trade Area (AfCFTA) provides the platform to advance this core objective, he said.
The thirteenth Extra-Ordinary Summit of the African Union Heads of State and government on the AfCFTA, held on December 5, 2020, provided the legal basis for the operationalisation of preferential trade from January 1 this year – a significant step towards the realisation of a socioeconomically integrated continent, Majola noted.
The AfCFTA will create the largest free trade area in the world by number of countries participating, connecting 1.3-billion people across 55 countries with a combined gross domestic product of $3.4-trillion.
However, to make this a reality, he said, significant policy reforms and trade facilitation measures were also necessary.
Majola said one of the instructive lessons learned from the Covid-19 pandemic was that economic resilience and self-sufficiency were critical.
Because many of the African countries do not have the means to cushion themselves against the resultant economic devastations of the pandemic, he said it was important to build up industrial capabilities, trade and supply chains across African countries.
“[South Africa] accounts for [about] a quarter of intra-trade on the continent, and will benefit massively from driving the consolidation of Africa’s integrated market,” said Majola.
He added that the creation of capacity to produce personal protective equipment required to protect against and slow the spread of Covid-19, had also given South Africa the opportunity to become a supplier to the Southern African Customs Union communities, as well as the broader African continent.
Meanwhile, Majola pointed out that the importance of African trade in South Africa’s overall trade continued to grow, and that in 2019, 27% of South Africa’s world exports and 12% of world imports were intra-Africa.
“South Africa continues to record a large trade surplus with the rest of Africa, exporting mainly mineral products, machinery, chemicals and iron and steel products, which accounts for over 50% of its total exports to the rest of the continent,” he said.
South Africa’s exports into Africa grew from about R9-billion in 1994, to over R340-billion by 2019.
“Considering that in 2019 Africa imported about R8-trillion worth of goods, South Africa’s share of global exports into Africa is still relatively small. This is bound to change with the implementation of the AfCFTA,” enthused Majola.
He told the members of the NCOP that Africa’s full potential will remain unfulfilled unless efforts are made to address the challenges of poor infrastructure, small and fragmented markets, under-developed production structures and inadequate economic diversification.