ONE The South African expert now says the country is squandering its export opportunities with far-reaching negative consequences.
Professor Waldo Krugell from North-West University’s School of Economics and Management says the country’s unorganized ports are costing South Africa fortunes.
South Africa’s major ports from Cape Town to the Eastern Cape to Durban are facing delays and traffic congestion that have seen tens of thousands of containers fail to reach their destinations on time.
The Port of Durban is not only one of the busiest ports in Africa, but one of the busiest in the world. And it doesn’t deal with the workload. This led to cargo being diverted to Maputo, Luanda and Walvis Bay, depriving South Africa of invaluable trade.
βThe impact of the logistics crises caused by Transnet and the ports has far-reaching negative consequences. The rand is also undervalued and this, combined with the Transnet dilemma, is having a compounding effect on the country’s fortunes,β says Professor Krugell.
“The depreciation of the rand is mainly related to the trading of financial assets and investment sentiment towards emerging markets and South Africa in particular, but it has implications for imports and exports of goods and services,” he adds.
According to the Big Mac Index, the rand should trade around R11.30 per dollar. More complex models estimate that it should be around R$15 per dollar.
Although recent reports and comments by President Cyril Ramaphosa suggest that Transnet is on the mend, the indisputable fact is that the state-owned enterprise, which is responsible for rail transport, port management and fuel pipelines, has experienced operational collapse due to litany. factors including poor management and the Covid-19 pandemic.
βIn rand terms, we are therefore paying more than we should for imported products. This is particularly damaging when you consider that most of our fuel is imported, as are many other industrial inputs. But fortunately it also cuts from the other side. Our exporters are R3 per dollar more viable than they would be at the fair value exchange rate.
This is an opportunity we are missing due to the logistics crisis caused by Transnet and the ports. During January, the situation at the Cape Town container terminal improved slightly. Waiting times for ships have been reduced from 9 days to 7.5 days, but the target is only one day.
It is peak export season for the fruit industry and there is still a backlog of exports. The port of Durban handles 60% of South Africa’s container traffic and problems there were reflected in December’s trade statistics. Imports decreased by 9% on a monthly basis and exports by 11.5%.
As a result of these problems, the IMF recently downgraded South Africa’s growth prospects to 1% for 2024. Worse, export industries are clamoring for a chance to help address the problems of poor management and poor maintenance, but the government unwilling to get out of the way’.
It is an unbearable situation that the government has put itself in and it is detrimental to the health of a country that is still recovering from the Covid disease.
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