Eastern Cape shows off trade pedigree in Africa

JULY 25, 2016

The Eastern Cape, one of only three provinces to experience economic growth higher than the national average, continues to play a significant role in South Africa’s trade, particularly with the rest of Africa.

Its trade deficit, however, increased from R1.3 billion in 2011 to R11 billion in 2015 as the value of imports grew 14.8% a year against exports’ 10%, according to the Eastern Cape Economic Review for the second half of 2015.

The review said that despite having two industrial development zones (IDZ) - Coega IDZ and the East London IDZ - and three ports (East London, Port of Ngqura and Port Elizabeth), the slow recovery in the global economy has prevented the province from reaching its exporting potential.

Trade between the Eastern Cape and Africa has been positive, with the trade surplus from Africa increasing from R1 billion in 2011 to R2.6 billion 2015.

However, this might not last in the long term if imports continue to grow faster than exports, as they have over the past five years.

The Southern African Development Community (SADC) region remained the major export destination, with exports growing 9% to R4.8 billion over the past two years.

The automotive sector has been a key driver of the province’s export performance and in 2015, more than a third of total provincial exports to Africa came from vehicles and parts. Other major exporting sectors included rubber, electrical machinery and equipment, pharmaceutical products and beverages, spirits and vinegar.

Between 2014 and 2015, Eastern Cape imports from Africa increased by 50.4% to R3.4 billion, with electrical machinery and equipment, oils and resins and chemical products being the most imported products.

South Africa as a whole continues to have a negative trade balance, but the trade deficit improved in 2015 to R50.4 billion from R82.2 billion in the previous year. However, the trade balance was better in the first half of 2015 than the second.

The South African economy as a whole grew 0.6 % quarter-on-quarter in the last quarter of 2015, easing from a 0.7% growth in the previous quarter. The Eastern Cape, South Africa’s fourth largest economy, contributed an average 7.58% to  GDP in the fourth quarter and its GDP grew 1.0% quarter-on-quarter in the fourth quarter. Year-on-year GDP growth for the Eastern Cape was 0.7% in the last quarter of 2015, down from 1.0% in the previous quarter.

North West (4.7%), Gauteng (1.1%), and Eastern Cape (1%) were the only provinces growing faster than the national 0.6% average.

Sectors in the Eastern Cape that experienced positive growth in the last quarter were construction, trade, government, electricity, community services and finance. These were somewhat offset by declines in the transport, mining, manufacturing and agriculture sectors.

The biannual economic overview review is a collaborative research project which includes the Coega Development Corporation, Eastern Cape Socio-Economic Consultative Council, Eastern Cape Development Corporation, the Department of Economic Development, Environmental Affairs and Tourism and the Neil Aggett Labour Studies Unit at Rhodes University.