South Africa continues to be a serious participant on the African continent, regardless of the dilution of its conventional dominance as new traders pour in from the Center East, Asia and longstanding markets.
The nation is in search of higher traction via its strategic positioning within the African Progress and Continental Free Commerce Space (AfCFTA). It’s nicely positioned to be a serious beneficiary of the initiative, being the most important outward investor amongst African nations and the largest exporter of manufactured merchandise to different African nations in merchandise comparable to automobiles, equipment, processed meals merchandise and electrical gear.
Increasing regional commerce
About 25% of South Africa’s whole exports go to African nations, most of it to members of the Southern African Improvement Neighborhood (SADC).
Commerce with SADC members makes up greater than 80% of South Africa’s intra-African commerce, dominated by its companions within the Southern African Customs Union – Botswana, Lesotho, Namibia and Eswatini. Zimbabwe and Mozambique are additionally huge commerce and funding locations.
Nigeria, Kenya and Ghana are its major non-SADC buying and selling companions.
South Africa runs a big commerce surplus with the area, with exports far outstripping its imports.
Its major commerce is generally with developed nations. In an inventory of South Africa’s prime 10 buying and selling companions in 2024, solely Mozambique and Namibia make the listing. On the prime are China, the US Germany, Japan, India and the UK.
However, the nation is concentrated on rising its regional commerce because the world faces excessive ranges of commerce volatility and political uncertainty.
The federal government views the AfCFTA as a key pillar of its commerce and industrial coverage, which is able to increase market entry for items and companies into areas past SADC. New tariff preferences will make South African meals and beverage exports extra aggressive in West and East Africa.
The AfCFTA, key in supporting regional worth chains
It’s also in search of methods to strengthen regional worth chains in sectors such because the automotive trade, agro-processing, vital minerals and logistics, amongst others.
Commerce, Trade and Competitors Minister Parks Tau not too long ago reaffirmed the significance of the auto trade to South Africa’s economic system.
In 2024, the sector contributed 5.2% to GDP, accounted for 22.6% of whole manufacturing output, and exported automobiles and parts to 155 markets worldwide. The sector sustains practically 500,000 direct jobs and helps round a million throughout the worth chain, making it vital to the target of job creation and inclusive progress.
Tau stated South Africa’s car exports to the continent have been price about R2.6bn (R48.1bn) in 2024, a rise of 12.4% yr on yr.
“The AfCFTA is a recreation changer. It permits duty-free entry past the SADC, it helps regional worth chains and encourages infrastructure funding.
“It additionally opens doorways for collaboration in battery manufacturing and mineral beneficiation throughout Africa,” says Tau.
South Africa helps to drive the African Auto Pact, which goals to harmonise insurance policies and guidelines of origin to draw funding. Nevertheless, it’s nonetheless adjusting to the lack of commerce preferences with the US beneath the African Progress and Alternative Act, which expired in September, across the identical time that South Africa was hit with heavy tariffs on its exports to the Individuals.
Car exports made up about 17% of South Africa’s whole exports to the US in 2024, so it’s doubtlessly a giant blow. This has lent urgency to its drive to increase to new markets, notably in Africa, leveraging tariff preferences beneath the free commerce initiative.
South Africa was among the many first nations to ratify the AfCFTA and was one of many first to participate within the Guided Commerce Initiative, a pilot programme launched in 2022 check the operational readiness of customs methods, tariff schedules and documentation beneath the brand new guidelines and to establish and repair potential issues.
It performed its first GTI cargo in 2023, exporting items to Ghana beneath AfCFTA tariff preferences. The merchandise included meals and industrial items (processed juices, metal merchandise, and home goods).
New competitors challenges South Africa’s dominance
However South Africa is dealing with mounting competitors from conventional and new traders on the continent, notably from North Africa, the Center East and China. That is affecting its historic dominance over the previous few many years, pushed primarily by the funding of lots of its homegrown world firms comparable to Customary Financial institution, Rand Service provider Financial institution, MTN and others.
A few of its huge traders in different African markets comparable to grocery store retail group Shoprite have pulled again from different nations within the wake of foreign money and political threat and the excessive value of doing enterprise to concentrate on increasing progress in South Africa itself.
South African firms face stiff competitors on pricing, financing phrases, and state-backed help that they can’t at all times match.
The not too long ago launched 2025 The place to Put money into Africa report compiled by banking group RMB exhibits South Africa ranked fourth for the second-year operating, after the small island economies of Seychelles and Mauritius in addition to Egypt. It was simply forward of Morocco in an evaluation of 31 nations.
Africa’s main funding hub
Its GDP is among the many lowest on the continent, hovering at round 1% for a number of years, however it stays an important funding hub because of its strong monetary sector, diversified economic system and comparatively good infrastructure. It’s nonetheless a key port of name for worldwide traders coming to the continent.
In accordance with the UNCTAD World Funding Report 2025, South Africa was the second largest recipient of overseas direct funding in Africa for 2024, receiving $5.2bn in FDI, behind Egypt ($9.8bn).
Its worldwide heft as the one particular person African nation within the G20 and its main position within the BRICS+ grouping have saved it on the radar for traders, in addition to its many modern initiatives driving renewable vitality and advancing the inexperienced mining worth chain, for instance.
South Africa additionally goals to extend its attain and relevance by way of overseas coverage because it vigorously pursues multilateralism and focuses on constructing unity, inclusive financial growth and shared prosperity for the African continent, one thing it has delivered to the desk throughout its presidency of the G20 in 2025.
