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Exporting to Africa – the new market

Background

The restructuring in the mining sector created a vast amount of opportunities for suppliers and service providers in the market. The expertise and technology that sprouted in response to these opportunities are certainly valuable export commodities and South Africa lies at the tip of a continent with vast untapped markets.

South Africa is well positioned to tap into these markets and enjoys several competitive advantages such as proximity to the African markets, a strong infrastructure, well-developed transport systems and the trade agreements among SADC and SACU members.

Current Exports to Africa

South African exports to African countries have increased rapidly. Exports to countries such as Benin, Côte d’Ivore, Ghana, Nigeria and Togo increased by a massive 160% to R4,4 billion since 2001. As African countries increasingly become integrated into the global economy, their demand for equipment for mining, earthmoving, construction and computer technology will increase drastically.

How to start exporting to Africa

The first requirement for exporting is finding international buyers. There are various ways to go about this. Creativity and collaboration with others are key factors to ensure success.

International trade fairs are a good starting point. As a participant or a visitor, use the opportunities to meet prospective buyers, while also collecting business intelligence regarding the export market and the competitors already operating in the market. Competitors do not need to remain competitors only – speak to those in the same market, look for ways to collaborate and share information and resources. When deciding to participate in an international fair, it may be a good idea to use an expert to handle the logistics. The Sub-Saharan Africa Trade exhibition, which will be held in Johannesburg in January, may be a good place to start.

The Internet provides an almost limitless supply of information. Use caution when selecting potential trading partners via the Internet. The company’s own website can also be a valuable tool in targeting international buyers. Ensure that the website is small and downloads quickly, as bandwidth is severely limited in some parts of Africa.

Trade Publications is another great source of information about potential buyers. Trade Edge Publications is a great example, as the publications reach many potential business partners in Africa through its inclusion in the dti road shows and information packs.

Further avenues for finding buyers include the Chambers of Commerce, Export Councils, the dti, TISA and other associations such as Global Technology Network (GTN) and the Foundation for the Development of Africa (FDA). Bi-national Chambers of Commerce, industry trade associations, business sections of foreign embassies and international marketing consultants are also useful in this regard.

Assistance

The government assists exporters through the Export and Marketing Investment Assistance (EMIA) scheme. The scheme is designed to partially compensate (the costs are reimbursed not paid in advance) exporters for certain costs incurred in developing export markets for South African products and in recruiting new foreign direct investment into South Africa. Small, medium and micro-sized enterprises (SMME's) and previously disadvantaged businesses (PDI's) are awarded additional benefits. EMIA provides assistance to exporters through individual exhibitions and National Pavilions; facilitating matchmaking, equity, joint ventures and technical transfers; primary market research (PMR); supporting patent registration, quality marks and product marks; Mission and Foreign Direct Investment Research assistance; exporter readiness assessment, training and development.

The assistance covers certain expenses such as travel; daily subsistence; transporting samples for specific events; developing marketing materials for specific events; product registration; cost of setting up and managing an exhibition and brochures.

Applicants are assessed along criteria that include the company’s previous production or export performance and the company’s potential performance; the type of product and industry and membership of an export council.

Have buyers, must…

Exporters must register with the dti by completing the UHB 006 official form. This registration results in an export registration number, which allows the exporter eligibility to apply for EMIA assistance.

The DA163 form must also be completed, in order to obtain a customs code number from the Department of Customs and Excise. This number must be on all paperwork given to the customs authorities and is the company’s reference number for export control purposes.

Exporters should consider investing in the knowledge and know-how of an expert. Exporting is subject to numerous regulations and attention must be given to an array of factors including the legality of the documentation, taxes and duties, logistics in the transport of goods and so forth. At the very least, get assistance from an export council, the dti or a trade association.

The company should have a long-term exporting plan, with specific goals and desired results to be achieved. Exporting should be regarded as the creation of a new market for development. The export market may become the company’s primary market, so afford foreign customers the same service as local customers. Consider the difference in language and culture and the possible changes to the product that may be required.

Another important consideration is the availability of spare parts and service for the equipment exported. If the exported equipment requires specialised services or parts, the company should also be able to supply those.

When selecting distributors in foreign countries, exercise caution. These distributors should act on your behalf, but should also be able to operate independently. Check their track records, reputation and credibility through the foreign embassies, banks or export councils.

Conclusion

Exporting presents great opportunities for those companies willing to recognise that establishing the business processes to successfully export takes time, research and a willingness to innovate and collaborate.

Building relationships with foreign clients require extra effort, because the physical distance, language and culture differences between the company and the customers presents unique challenges.

The dollar is likely to continue to weaken and the euro is likely to continue to strengthen. The countries on the African continent continue to build their economies and open up possibilities for South African firms to export into those countries.

The Trade and Industry Minister Alec Erwin recently said, at the National African Federated Chambers of Commerce (Nafcoc) meeting, that the rand would not longer be a weak currency and exporters and importers should adapt to this.

South African exporters must aggressively look for new markets, distinguish themselves from competitors, not based on price only, and must creatively and actively use the assistance available through the various government departments and associations.