Times have changed and roles are reversing in Africa! South Africa, the continent’s biggest economy, seems to be losing its top status as Africa’s preferred destination and gateway due to a number of complicated factors, an expert said this week.
Hennie Heymans, MD of DHL Express, said South Africa’s stringent customs legislation, exchange controls, and various labour and bureaucracy issues are frustrating trade partners and foreign investors who are finding it more and more difficult to deal with it.
Africa’s economic giant is becoming less attractive, the DHL boss charged, urging the Southern African giant to address these issues in order to increase its profile as Africa’s most attractive nation for investors.
The rest of Africa, particularly Nigeria and Mauritius, are however becoming more attractive as potential trading partners and an alternative entry point into the continent, he said.
They are also forecast to overtake South Africa as the largest economy on the continent in the next few years, Heymans said, adding that Nigeria is already a preferred trading partner and the continent’s largest oil producer.
“As these countries grow and develop, investors and trade partners will no longer see the need to go via South Africa, and instead just trade directly with the various African countries,” he said.
He said South Africa was fortunate to enjoy top status of preferred investment destination due to the instability of politics and social environments in countries further north of the continent.
“However, the political and social environments within Africa have evolved over the recent past, and many countries have become significantly more stable,” Heymans said.
“This has resulted in investment and trade increasing, but often bypassing South Africa. With other regions on the continent developing just as fast as South Africa, why should investors still enter the continent via us?
“Many of the potential competing countries in Africa, such as Mauritius, Nigeria or Egypt, which offer less complex regimes, are often more attractive,” the DHL boss said.
“Mauritius, for example, has a free-trade zone, the Mauritius Freeport, which is a customs-free zone for goods destined for re-export. This allows them to promote the country as a logistics centre for Southern and East Africa, and the Indian Ocean islands.
“It is therefore apparent why international trade partners are starting to consider other options when entering the African continent. This however results in missed opportunities for the South Africa economy.
“South Africa now need to review its current status and perhaps model its trade legislation on other emerging economies in Africa, such as Mauritius, which could potentially result in significantly increased trade levels,” Heymans concluded.
(Issued by DHL, final editing by Issa Sikiti da Silva)