Exports from the Western Cape to key overseas markets surged 22% to R167bn in 2021 despite the operational challenges at the Cape Town harbour which left many industry players frustrated and fearing huge losses.
Exports amounted to about R137bn in 2020 at the height of the Covid-19 restrictions, which saw some governments closing almost their entire economies over periods of time.
The Western Cape is one of SA’s economic powerhouses, contributing about 15% to SA’s GDP.
But the Western Cape’s key economic sectors, such as agriculture, have been reeling due to ageing, out-of-service infrastructure and congestion at the Cape Town port — a critical channel for the movement of goods and a major economic gateway for the province.
According to Wesgro, the Western Cape’s trade and investment promotion agency, the US was the province’s largest export market for the first time in 2021, with exports totalling close to R17bn, an increase of 57.5% on 2020’s value of R10.8bn, and a significant 88.5% higher than the R9bn recorded in 2019. The Netherlands was the next biggest market, with the province shipping about R14.4bn worth of goods, while exports to the UK amounted to R12.5bn up 1.49% from 2020.
Export growth has mainly been driven by agriculture exports including wine and fruit, which was supported by a relatively weaker local currency and fewer Covid-19 restrictions.
Flat-rolled products of iron or non-alloy steel ranks as the largest exported product to the US, increasing by R1.6bn since 2019 to R2.5bn in 2021. This was followed by articles of jewellery (R2.2bn), citrus fruit (fresh or dried) at R1.8bn, and yachts and other vessels for pleasure or sports (R1bn). A 24.5% increase in citrus exports and a 41.6% increase in wine exports were also notable increases to the US.
For the past decade, the US — the world’s largest economy — has also been the largest investor in the Western Cape, pumping in R7.3bn between 2020 and 2021.
In February 2021, the US consulate-general in Cape Town and the provincial government jointly launched a trade and investment promotion partnership, with the aim of promoting and increasing bilateral trade and investment through various engagements, events, and high-level interactions.
Western Cape finance and economic opportunities MEC David Maynier said: “While we continue to feel the side effects of the global Covid-19 pandemic we are now seeing signs of recovery and we are seeing signs of a rebound.”
He said the notable growth of bilateral trade and investment between the Western Cape and the US is a testament to the ongoing success of the trade and investment promotion partnership.
“Through our regular engagements we have seen the impact of this partnership in the securing of investments in the health sector, tech sector and the increase in agricultural exports to the US as well as a significant growth in tourism from the US to the Western Cape,” the MEC said.
Will Stevens, the acting US consul-general said the trade and investment promotion partnership encompassed the breadth and depth of the economic and commercial relationship between the US and the Western Cape.
“Already the top foreign direct investor in the province, the first year of the partnership has helped make the US the province’s top export market and the top source market for tourists to SA. This trade, investment and tourism creates jobs and spurs mutual prosperity,” Stevens said.
Wesgro CEO Wrenelle Stander said the Western Cape’s diverse economy, strong skills base and well-connected infrastructure made it easier to trade and do business in the region.
“Such partnerships have played a crucial role in mitigating the devastating economic impact of the Covid-19 pandemic and proved to be a central tool in enhancing resilience. US being ranked as the Western Cape’s largest export market in 2021 underscores how important this market is in underpinning the economic recovery of our province,” Stander said.
The Western Cape government said it was working closely with Transnet, which manages all eight SA commercial ports, to help to resolve the challenges faced by the port of Cape Town, to ensure efficient exports from the province in the future.
Credit: Originally published in Business Day, Mar 4, 2022 »