Some argue that South Africa should expand trade with the African continent to reduce exposure to higher-risk regions, but Wandile Sihlobo, chief economist at Agbiz, believes the continent offers limited opportunities for the local agricultural sector in the short term.
By Michelle van der Spuy
Africa is already an important market for South Africa, Sihlobo says, accounting for about half of our total agricultural exports of $13,7 billion in 2024. However, 90% of those exports went to Southern African countries, in particular those in the Southern African Customs Union (SACU) and the Southern African Development Community (SADC) Free Trade Area.
Agricultural exports to SACU and SADC countries are a diverse mix that includes maize, processed food products, apples and pears, sugar, animal feed, bottled water, fruit juice and wine.
“We will likely remain heavily dominant in these regions for some time, but the growth is limited,” Sihlobo says. He argues that South African exporters’ approach should be one of maintenance rather than hoping for significant expansion in this area.
The question is, how much more can South Africa export beyond this region? The logical assumption is to look at North, West and East Africa, but there are barriers to such expansion.
Strong Competition in the Maghreb
In Africa north of the Sahara, particularly the Maghreb – Algeria, Libya, Mauritania, Morocco and Tunisia – trade is oriented towards Europe. The region’s proximity to the European Union (EU) means it conducts far more trade with the EU than with Sub-Saharan Africa.
When it comes to exporting high-value horticultural products, South Africa faces strong competition in this region. “Establishing a market presence in North Africa may prove challenging due to direct competition with well-established EU supply chains and competitive local produce,” Sihlobo says.
Barriers to Boosting Trade With East and West Africa
In Sihlobo’s view, East and West Africa present more realistic opportunities for trade growth. Leveraging the African Continental Free Trade Area’s tariff-free movement of goods could help boost agricultural exports, “but, at least in the near term, trade with these regions may not yield many benefits for South Africa”.
He cites three reasons: East and West African countries have a range of non-tariff barriers that could hinder trade expansion; high levels of corruption, which increase the cost of doing business; and fragmented value chains due to poor connectivity and infrastructure, which drive up transport costs, especially as goods are moved inland.
“The major economies in the east and west of the continent, Nigeria and Kenya, remain tiny markets for South Africa’s agricultural exports, each accounting for a mere 2% a year.”
Nigeria imports roughly $6 billion worth of agricultural products annually, including wheat, maize, dairy products and sugar, mainly from Brazil, the United States, China, Russia, Canada, New Zealand and Germany.
Kenya, a relatively small market, imports just more than $2 billion worth of agricultural goods, mainly from Indonesia, Malaysia, Argentina, Russia, Pakistan, Uganda, Tanzania, India and Egypt. Key imports are palm oil, wheat, rice, sugar, maize, dairy products and sorghum.
Farmers Should Look Beyond Africa for Trade Growth
The composition of Nigeria and Kenya’s agricultural imports suggests limited opportunities for South Africa to export high-value products such as horticultural produce, meat and wine, Sihlobo says. They import mainly staple foods, which could benefit grain farmers. Still, non-tariff barriers remain a challenge, even for grains – for example, Kenya bans the import and cultivation of genetically modified maize, which South Africa produces.”
He believes South Africa should instead focus on Asia, the Middle East and other BRICS countries for expanding its agricultural export markets.
