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In a challenging trade environment proactivity and innovation are essential
In a challenging trade environment,
proactivity and innovation are essential
As was the case with most countries, South Africa’s trade took a relatively significant knock during the height of the Covid-19 pandemic and the consequent lockdown responses by government. Initially, imports bore much of the brunt of the lockdowns and border closures, but exports soon followed suit.
By Bobby Madhav, FNB Head of Trade & Structured Trade and Commodity Finance
While border controls and trade restrictions gradually eased during the course of 2021, it was hoped that the imports and exports would quickly recover from the muted activity that characterised most of 2020. Unfortunately, this wasn’t to be the case, due for the most part to the massive logistics bottlenecks that were created by the pandemic restrictions, many of which have still not been entirely cleared. Fortunately, these challenges were offset to a certain degree in 2021 by the strong commodities showing in South Africa, with many agri products achieving healthy surpluses and global demand for other South Africa’s commodities keeping prices largely elevated.
In many ways, this global demand and resulting strong pricing was instrumental in buffering the South African economy against the full impact of the pandemic. And it meant that the anticipated recovery was able to start gaining momentum fairly rapidly as Covid-19 fears dissipated early in 2022. As a result, by the middle of this year, we saw exports worth over R100 billion flowing from the country.
It's likely, however, that this figure would have been even higher were it not for geopolitical tensions simmering over with the advent of the Russia-Ukraine conflict. While neither country is a very significant trade partner to South Africa, the effects of the global downturn in trade of all commodities as a result of the war has undoubtedly filtered through to this country.
In addition, the conflict created a net shortage of goods that were previously exported to, and imported from, Russia. Historically, the biggest volumes of imports from the Russian Federation have been copper, fertilizer, minerals and oils and to a lesser extent, cereals.
Export volumes to Russia have long been led by citrus and other fruits and vegetables, manganese and ore, as well as machinery. While these import and export volumes have never been at levels that mean these commodities are now at significant long-term trade risk, they are significant enough to require the country to find new markets in order to pick up the slack.
The current global challenges are also a massive incentive for SA to start capitalising more on the many trade opportunities on the African continent.
A challenging scenario of traders
This is always a challenging scenario for traders. For one, establishing new international markets is never an easy undertaking, and it can involve lengthy marketing and negotiation processes. Then, there is the risk of losing any pricing advantage that was previously enjoyed with trade partners in the countries that are no longer available. This is particularly true of the current scenario where there is likely to be a lot of competition from importers and exporters in other countries that are faced with the same need to access new markets.
From a Ukraine perspective, while trade volumes are even smaller than South Africa previously enjoyed with Russia, the potential for Ukraine to become a much more significant trade partner with our country, once the conflict has been resolved, is immense. Ukraine’s wheat production will undoubtedly return to the very significant levels it was previously at, in order to help stimulate the country’s post-war economic recovery.
Add to that the obvious determination of the Ukrainian people to establish their country as a meaningful participant in the global economy, and it’s likely that, barring a worst-case outcome of the war, Ukraine will be actively looking for global trade partners in the future. And that will create an environment that is conducive to shared economic benefit for all parties involved in such trade partnerships. Of course, there is no benefit to South Africa’s trade sector of waiting in the wings for the Russia-Ukraine conflict to end in order to
capitalise on any opportunities that will arise when that happens. It is imperative that we actively seek out new markets now, not only to address the loss, or decline, of trade activity due to the war and the global trade repercussions it has created, but also to mitigate the stellar increases in the costs of transport and logistics, which cannot simply be passed on to consumers indefinitely.
The good news is that these new opportunities are increasingly opening up to trade participants in South Africa.
For one, the challenges facing trade in most countries mean that there is the potential to enter into partnerships with overseas countries and regions that have not historically been significant trade partners with South Africa.
Then, the current global challenges are also a massive incentive for South Africa to start capitalizing more on the many trade opportunities right here on the African continent. This has been made a far easier and more compelling proposition thanks to the African Continental Free Trade Area (AfTCA) agreement that has removed many of the barriers that have historically discouraged South Africa’s trade parties from actively exploring trade opportunities with their African neighbours.
Ultimately, while it’s likely that the challenges facing both importers and exporters in South Africa appear will continue, and possible even increase, in the coming months and years, there are also many new opportunities to be had. But taking advantage of them demands a proactive mindset and the willingness, and ability, to think outside the box.
The South African Civil Aviation Authority Keeping You Safe in the Sky
The Republic of South Africa, as a signatory State to the global International Civil Aviation Organization (ICAO), is committed to working with the international community to ensure safe and secure skies in accordance with ICAO prescripts. The safety and security of the civil aviation industry is the mandate and the passion of the South African Civil Aviation Authority (SACAA). The delivery of this mandate is rated in terms of compliance to the ICAO critical elements on safety and security and the number of accidents prevalent in this sector, by complying with the Standards and Recommended Practices (SARPs) of the ICAO, while considering the local context.
SOUTH AFRICA’S COMPLIANCE TO GLOBAL STANDARDS SURPASSES GLOBAL AVERAGE
It is commendable that South Africa still reflects a zero fatal accident rate in the scheduled airline sector, as it has for over 30 years.
South Africa was last audited on-site by ICAO through the Universal Safety Oversight Audit Programme - Continuous Monitoring Approach (USOAP CMA) Methodology in 2017. The country achieved an effective implementation against the critical elements on safety of 87.41%. By the end of 2019/20 the SACAA had closed 91,35% of the SACAA specific findings. Following a validation of 12 of the closed findings, ICAO confirmed that eleven of the twelve findings were satisfactorily closed bringing South Africa’s effective implementation. South Africa’s compliance far surpasses the global average levels in both aviation safety and security. The last time that South Africa was audited in terms of aviation security was in 2011 where the State was rated at 81,30% against a world average of 66,34%. Aviation safety and security standards cannot be improved without a collaborative approach with the industry. These results therefore illustrate the high standards maintained by the Regulator in collaboration with the industry.
CLEAN GOVERNANCE AND ETHICS
The SACAA continues to uphold governance principles in that for the eighth (8th) time in the last nine (9) financial years, the Regulator has received clean audits from the Auditor-General. Furthermore, the organisation has reported a 100% achievement in its Annual Performance Plan targets as agreed with the Minister of Transport seven times (7) times in the past ten (10) years.
Having high ethical standards is non-negotiable at the SACAA, and the Board-approved Ethics and Fraud and Corruption annual plans are implemented diligently in building a corrupt-free SACAA and in inculcating a culture of high moral standards amongst the SACAA employees.
INVOLVEMENT OF INDUSTRY
As the SACAA, we strive to maintain high ethical standards while we engage all stakeholders professionally. Engagements with stakeholders take place on a continuous basis, such as through forums, virtual as well as hybrid conferences, workshops, and meetings. This includes the involvement of the industry in the development and amendment of any new legislation.
IMPLEMENTATION OF A STRATEGIC ANSWER TO GENERAL AVIATION SAFETY
To achieve the target of reducing fatal accidents by 50% in the general aviation space in the next five years, is an output of one of the SACAA’s strategic outcomes. The entity is implementing a five-year General Aviation Safety Strategy, involving multi-stakeholders.
HEALTH PROTOCOLS AND OVERSIGHT IMPROVEMENT THROUGHOUT THE GLOBAL PANDEMIC
Since the start of the global COVID-19 pandemic, the SACAA continued to ensure compliance with health protocols and new standards as directed by the Minister of Transport, by monitoring implementation and compliance with the Directions, doing physical inspections and assisting with training. Furthermore, the SACAA is busy with the revision of the Civil Aviation Pandemic Preparedness Plan with a view to incorporate lessons learned from the outbreak of Covid-19. This will heighten the preparedness of the South African civil aviation industry for future outbreaks.
TECHNOLOGICAL ADVANCEMENT USED TO IMPROVE CLIENT SERVICES
Service excellence is of the utmost importance to the SACAA. The Director of Civil Aviation has declared the 2022/23 financial year as the ‘Year of the Client’ and projects such as the SACAA’s modernisation project aims to automate the SACAA’s most frequently used clientfacing business processes and integrate these with existing systems within the SACAA. The industry will witness improvements in the SACAA’s new website which will be launched in the first quarter of the current financial year, an E-Services Portal and automated applications meant to give clients an end-to-end online transaction experience will be launched later in the financial year; thereby enhancing the reliability and integrity of information and give clients a friendly and efficient experience.
INDUSTRY TRANSFORMATION
The lack of transformation in the aviation industry is a challenge, but transformation is gradually picking up speed with the emergence of a more confident group of young individuals from previously disadvantaged backgrounds and marginalised groups who take advantage of opportunities offered by various entities, such as the bursary schemes and apprenticeship programmes.
One of the SACAA’s long term projects is the implementation of an Outreach Programme aimed at demystifying aviation and building awareness about aviation predominantly to previously disadvantaged communities. The SACAA, as part of the Joint Aviation Awareness Programme, also includes awareness events, such as school visits, airport tours and aviation youth shows
