South Africa’s export performance underscores the need for an informed, research-driven trade policy that fosters global competitiveness and economic resilience
South Africa’s 7th administration is now largely settled, and the new multi-party Cabinet is expected to get down to work. A “basic minimum programme of priorities” was set out in the Government of National Unity’s Statement of Intent. These priorities include the need to accelerate economic growth and increase and accelerate fixed capital investment, industrialisation and job creation, amongst other objectives. There is no mention of exports or the role of international trade. This early omission is of considerable concern.
As a small, open economy, South Africa cannot rely on domestic consumption alone to generate growth. Countries that export successfully, typically benefit from faster GDP growth, stronger industries, and greater resilience to global economic shocks.
Despite a stated interest in boosting export growth and diversification in prior national policy frameworks, the country has adopted a more inward-looking approach over the last decade and a half. This has included the halting of tariff reductions and the increased use of import-related interventions, including anti-dumping duties, safeguard measures and local content requirements. More recently, industrial, trade and competition policies have been guided by the Reimagined Industrial Strategy that emphasises localisation, implementation of Master Plans, and a more assertive stance towards dealing with concentration by the Competition Commission. Except for some references to the African Continental Free Trade Area (AfCFTA), the strongly domestic orientation of this strategy has overshadowed policies focusing on boosting exports.
This inward-orientation, coupled with infrastructural constraints, has hampered the country’s ability to tap into global markets, particularly in manufacturing, where greater export opportunities lie. South Africa’s export performance has consequently been poor, marked by stagnating volumes, declining diversity, and a heavy reliance on commodities. To reverse the trend, policymakers must adopt an outward-looking strategy informed by solid research and evidence.
The available evidence suggests that the net impact of South Africa’s trade and industrial policy interventions on export performance has been disappointing across multiple metrics (for the full analysis, see Trade Policy Research Priorities for South Africa).
- Since 2000, export growth has slowed significantly, and by 2022, export volumes were only 5.7% higher than in 2008.
- South Africa’s export performance has been meaningfully weaker than other middle-income countries. In strong contrast to South Africa, most of these countries’ exports increased as a percentage of GDP between 2000 and 2022.
- South Africa has experienced a decline in the number of products exported, together with a rising concentration of exports in its top destinations.
- The number of products with a revealed comparative advantage has fallen from 253 to 140 between 2000 and 2023.
- Commodity exports remain the main feature of South Africa’s export bundle, with the share of primary and resource-based manufacturing in exports remaining at around 70%.
- Firm export data reveals falling exporter numbers, driven by low levels of entry and declining survival rates of new exporters.
These export trends threaten the country’s wider development objectives. Renewed efforts are needed to raise the competitiveness of South African firms globally and to shift the country back onto an export-led growth path.
Shifting back onto this path requires knowledge – knowledge we currently lack. We do not have a deep enough understanding of why South African exports have underperformed and what can be done to reverse this trend. We don’t know where the new market opportunities for exporting are. With regard to existing trade and industrial policies, we have limited empirical evidence on their contribution and impact on export performance. We don’t know enough about what policies have worked, what policies have not worked, and what policies could work. Looking into the future, trade policy has to work in an environment of continuous change. We require a common, informed and sensible position ahead of regional, bilateral and multilateral discussions (including the African Continental Free Trade Area and the G20) on the green transition, digital transformation, and rising geopolitical fragmentation and protectionism, which pose major challenges and opportunities for export growth.
The GNU’s Statement of Intent commits the parties to “evidence-based policy and decision-making”. South Africa needs growth, growth needs exports, and exporters need a conducive policy environment with well-informed government programmes and decision-making.
It is therefore encouraging to see greater enthusiasm from within the dtic for driving exports.
In a July media statement, the Minister clearly articulated the dtic’s commitment: “As you would appreciate, in the short-term, the domestic market is too small and growing too slowly to sustain manufacturing-led growth. In order to reduce our dependence on our small domestic market, the dtic will implement new export measures, coupled with expanding the current measures and improving their effectiveness. In partnership with government, business, labour and civil society, we will work together to expand our export footprint.”
Two weeks later, Deputy Minister Whitfield, communicated the same sentiment: “South Africa must also create an export-oriented economy. A dedicated focus on manufacturing growth will also lead to export growth. The creation of an export-oriented economy can be realised through a dedicated focus on implementing measures to boost the competitiveness of local industries in global markets, streamlining export processes, lowering trade barriers, offering financial and technical assistance to exporters, and cultivating beneficial trade alliances with other nations”.
Transforming these commitments into credible outcomes requires not only partnerships between government, business, labour and civil society, as argued by Minister Tau, but also much stronger links with academic and research institutions if the dtic’s trade policies and decisions are to be truly evidence-based.
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