'Island' mentality a hurdle to faster growth
There is a lack of passion in SA about international trade development as possibly the fastest avenue to medium-term growth and job creation. The government’s much-awaited National Exporter Development Programme seems stalled in bureaucracy and will not address the tailored needs of businesses in the Western Cape or nationally.
After 15 years of internal growth, where we all bought and sold from and to each other, fuelled mainly by local demand, the order book "well" is dry and recession, coupled with fear of the unknown, is paralysing our companies while the rest of the world joins the feeding frenzy for Africa’s 5% growth.
The sooner we change the language from "exports" to "international trade", the better. The emphasis on developing Cape Town as a destination for trade opportunities must encompass the broader view of international trade, in which we exploit our location in terms of access for companies and international partners to the Southern African Development Community’s 200-million consumers. If we are to be attractive and compete, we need to embrace the power of partnerships that promote a blend of joint ventures, technology exchange, royalty agreements, franchising opportunities, licensing agreements, joint use of production and office facilities, marketing each other’s products and services and coaching and mentoring our businesses on how to accomplish this. These partnerships need to be formed here, in target markets and with other international companies to increase our hold on sustainable business across borders. At present, practical implementation is lacking and uncoordinated at best, and resources are diluted and misplaced.
Promoting our local training institutions’ offerings, our marketing skills, our distribution channels (as a transshipment point between Central American and South America and Southeast Asia and the Far East) are just some of Cape Town’s unique selling points, which all add to the greater marketing mix. We cannot compete on "me too" commodity products and services but, in terms of location, our access to Africa’s markets provides speed and convenience, ease of communication, after-sales service, with quality and technology not yet promoted effectively to our African partner countries.
Most important, market information and market intelligence are the critical starting points and companies are all too often encouraged to join subsidised trade missions or exhibitions and are set up to fail through lack of planning and awareness and the funds to go the distance.
First, assessing companies in terms of their readiness for the market and the opportunities is generally badly managed by trade and development agencies. It is critical to talk of the "pull" and not the "push" approach to trade development. Typically, SA’s companies enter the markets on a trade mission hoping to sell what they provide rather than first understanding what the market needs.
Cultural affinities between Africa, Asia and South America are helping to increase trade between the continents and developing countries have in the past 10-15 years become centres of consumption. We need to see our greater African "partnerships in trade" as a springboard to the Brics countries (Brazil, Russia, India and China) and beyond. Operating only from our South African "island" diminishes our strategic opportunity in the long term. We need to accelerate the awareness of Cape companies to this scenario and help them plan and access the markets effectively.
As a London newspaper put it recently: "There is a new Africa emerging, powered by capitalism, embracing globalisation and finally shaking off the shackles of colonialism and the Cold War…. Poverty is far from banished — it’s a grinding way of life for millions but their numbers are falling. The global top 10 includes Ghana, which grew more than 14% in 2011 and whose democracy sets such a great example; Mozambique, rising like a phoenix from the devastation of a long civil war; and Nigeria, the continent’s potential superpower. Bundle all African countries together and they have grown faster for much of the past decade than East Asia."
Unfortunately, this message is failing to filter through to South African business, where too many remain locked into stale narratives of Africa as a land of suffering in need of SA’s salvation. Our arrogance is to our long-term detriment. We need to get intimate with the neighbours with newly open minds.
• Hurst is group MD of Added-Asset & Associates.
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