Compiled by Eamonn Ryan from the presentation transcript
At the 2024 GCCA Africa Cold Chain Conference held on August 23 in Cape Town, there was a panel discussion following the presentation by Donald MacKay, CEO of XA Global Trade Advisors, on market expansion and trading opportunities facilitated by the African Free Trade Agreement (AfCFTA). This is Part 4 of an eight-part article. This is Part 3 of a five-part article.
The panel consisted of MacKay; Professor Lawrence Edwards, director of policy research in services and manufacturing at the University of Cape Town; and Martin Cameron, the managing director of Trade Research Advisory at North-West University.
One of MacKay’s critical insights was the importance of aligning with rapidly growing markets outside of South Africa and its immediate trade partners. He noted that many African countries are not trading effectively with one another, primarily due to a lack of processed goods and manufacturing capacity.
“Most African trade is centred on minerals, which limits intra-continental exchange,” MacKay explained. He emphasised that for South African companies to leverage their capabilities, they need to look beyond their traditional markets and cultivate relationships with nations that exhibit robust growth potential.
MacKay’s presentation underscored the complexities of South Africa’s trade landscape and the pressing need for diversification and strategic planning. As AfCFTA aims to enhance intra-African trade, understanding these dynamics will be crucial for South African businesses seeking to capitalise on new opportunities while navigating the challenges of a politically and economically diverse continent.
MacKay raised an important point about the timelines associated with building infrastructure in Africa. He cautioned that while policies and tariffs can change rapidly on paper, the reality of constructing roads, railways, and ports takes significantly longer. “Even if we commit to resolving physical constraints today, the actual development will be a long-term endeavour,” he stated, emphasising that the potential benefits of AfCFTA may be overstated in terms of immediate impact.
Questions on trade dynamics
As the conversation shifted, an audience member posed a question regarding the complexities of country-of-origin regulations under AfCFTA. This inquiry highlighted concerns about the implications of importing goods from outside Africa, particularly from countries like China. The audience member pointed out that if goods enter South Africa and then are sent to another African country, they may incur duties if they do not meet the required origin standards.
MacKay responded by clarifying the rules of origin: products can qualify as African origin if they undergo sufficient transformation within the continent. For instance, textiles imported from China could gain African origin status if they are converted into finished clothing in South Africa. However, if a shipment contains a mix of goods, the origin will be assessed on a per-product basis, complicating the process for exporters.