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AP Photo/Themba Hadebe
South Africa’s trade gains in Africa may have to slow down.
TWO STEPS BACK

South Africa’s budget cuts will slow its booming trade with the rest of Africa

By Lynsey Chutel

Budget cuts to South Africa’s foreign relations department may hurt the trade gains the country has made, especially with its continental neighbors. South Africa, cut off from the rest of Africa during Apartheid, has re-entered the African market with gusto, creating a trade relationship that has seen South African brands pop up all over Africa.

Last year 20% of South Africa’s trade was within the continent reaching $25.7 billion, and the country set a target of $33 billion dollars by 2019. That goal was to be achieved in part by expanding free trade areas like the Southern African Development Community and Common Market for Eastern and Southern Africa, where South Africa has used its relative economic clout to create an influential position among its neighbors. Now, with domestic economic troubles, that position is becoming precarious.

“The hard choice before us in the light of these budget cuts is to close down some of our missions, as some have suggested, and face the reality of losing momentum on the gains we have achieved as evidenced by increasing trade and investments,” minister of international relations and co-operation Maite Nkoana-Mashabane said in her budget speech this week, announcing a cut of over $10 million.

When apartheid ended in 1994, South Africa only had seven diplomatic missions on the continent, today it has 47. Consequently, South Africa’s trade on the continent increased 39 times from $762 million in 1994 Nkoana-Mashabane said in her speech.

Still, that trade relationship has historically favored South Africa.