Growth and trade with Africa

Monday, February 27th, 2012

In his annual budget speech Minister of Finance Pravin Gordhan said South Africa’s annual economic growth lagged those of other sub-Saharan African nations. SA’s economy is expected to grow at 2.7% whereas other nations were achieving 5.5% or more. Just recently there was a newspaper report which stated that South Africa was in danger of losing its spot as African gatekeeper to a country such as Nigeria.

South Africa, which boasts the continent’s largest economy, needed to do more business with the rest of its neighbours in order to “better position itself as Africa’s economic gateway”, he said. “To succeed in this environment, we have to seize the opportunities presented by this changing world,” Gordhan said in Cape Town on February 22.

Quite coincidentally I’d chatted to a local winemaker who had just returned from a four day sales trip to Lusaka, Zambia. “It was unbelievable,” he said. He likened it to South Africa 30 or 40 years ago in that the first few shopping malls and large developments are just beginning to take hold. Many South African corporates have obviously recognised the possibilities offered by countries such as Zambia. Shoprite, Spar, Mr Price, Sterns, Wimpy, News Café, Pick n Pay, Woolworths and even Ster Kinekor have a presence. “When I was in the malls it felt like being in Cape Town or Johannesburg!”

Just weeks ago Zambia shocked the rest of the continent and the footballing world by winning the Africa Cup of Nations tournament ahead of more favoured opposition Ivory Coast, a side packed with Premier League stars. But Zambia has more going for it than football. The country of 12.5 million inhabitants had an inflation rate of 30% in 2000. Just over a decade later it is in the low single digits with the World Bank having declared it one of the world’s fastest economically reformed countries. It has massive potential – as do Angola, Tanzania, Nigeria, Kenya, DRC, Ghana and more.

The winemaker was in Zambia to sell wine. “And it’s doing rather nicely too. I can see myself having to spend more time servicing this market because we’re growing which is fantastic.” It’s a predominantly urban market, obviously, and the taste is relatively unsophisticated with a distinct preference for sweeter wines. But is that any different to some of South Africa’s urban markets – or the popular taste three or four decades ago?

“And the people are just so fantastic too – really friendly, well spoken, accommodating and humble. Zambia was a very pleasant surprise. I look forward to my next sales trip.”