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S. Africa: Agriculture sector well-positioned to benefit from AfCFTA

Friday, 21 May 2021 14:46
S. Africa: Agriculture sector well-positioned to benefit from AfCFTA

(Ecofin Agency) - South Africa’s agriculture sector is well-positioned to benefit from the various opportunities offered by the African Continental Free Trade Area (AfCFTA), which came into effect on Jan. 1st, 2021.

Unlike some other countries on the continent, S. Africa is currently well integrated into the intra-African agricultural trade landscape through direct exports, imports, and re-exports.

According to data from the International Trade Center (ITC), the rainbow nation alone accounts for more than 80% of the continent's intra-African poultry trade. The country also weighs heavily in maize trade, for which the rainbow nation is the largest African producer, accounting for nearly one-third of intra-African trade.

In 2020, S. Africa exported R167 billion worth of agricultural products with 38% of the products being sold on the African market. While southern Africa is the region that concentrates most of this trade with Botswana, Namibia, Mozambique, Zimbabwe, and Lesotho (24% of total export value), AfCFTA offers a unique diversification opportunity. 

With tariff liberalization expected to cover 90% of goods traded between countries in the long run, South Africa plans to capture market share in other destinations by leveraging its agribusiness industry.

“For example, for Zambia, a least developed country where a 25% customs tariff is applicable on orange imports into the country, the tariff will be reduced by 2.5% per annum, starting in 2021. A South African orange exporter to Zambia will experience a steadily declining tariff, reaching 0% in 2030,” said Tshepo Morokong, Agricultural Economist at the Western Cape Department of Agriculture.

“It will be up to the private sector to utilize this opportunity through building partnerships and increase investment in regional value chains to facilitate value creation on the continent,” he added. According to him, the next step for governments is to complement the private sector’s efforts through investment in network infrastructure while addressing non-tariff barriers such as border-post inefficiencies, high transactional costs, corruption, and administrative burdens.

South Africa’s main agricultural exports include nuts, edible fruits, beverages, and grains.

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