South Africa has the most diversified economy in Africa and an open market policy with several international trade agreements. It is a member of trade organizations that have eliminated tariffs and import quotas between member countries in Africa. South Africa's logistics market and infrastructure are outdated but undergoing modernization through large investments. South Africa is well positioned to facilitate trade flows in Africa as the continent's economies grow rapidly.

1. South Africa Logistics and Trade
Review
Summarized from extended study by the Center for
Supply Chain Research at Penn State

2. Trade Policy Overview
• Most diversified economy in Africa
• Ranked 79th out of 141 countries for inward FDI
performance
 United Nations Conference on Trade and Development
• Open market policy
 Six major international trade agreements
▫ EU-TDCA, SADC, SACU-EFTA, SACU-India PTA, SACU-
MERCOSUR PTA, AGOA
• Significant Chinese FDI in South Africa and Sub-
Saharan Africa
 Potential to serve as low cost labor market in future

3. African Free Trade Zone
• Free Trade Zone created between three trade
blocs: SADC, COMESA, EAC
 Announced October, 2008
 26 countries with a combined GDP of U.S. $624bn
 Lowered tariffs, import quotas

4. SADC & SACU
• Southern African Development Community
 Angola, Botswana, the Democratic Republic of
Congo, Lesthoto, Madagascar, Malawi, Mauritias,
Mozambique, Namibia, Seychelles, South Africa,
Swaziland, Tanzania and Zimbabwe
▫ Eliminated tariffs and import quotas
• South Africa, Botswana, Lesthoto, Namibia and
Swaziland
 Oldest customs union in the world

5. SADC: Gateway to Southern Africa
• Market access to 14 countries
• Member states are
committed to the
development of trade and
transportation infrastructure
Map Showing the Southern African Development
Community

6. BRICS
• South Africa now official 5th member of summit
 Brazil, Russia, India, China & South Africa
• Indicator of future potential
 As wage rates increase in East Asian countries, labor
intensive processes may shift to emerging African
economies
▫ Six of the world’s fastest growing economies are on the
African continent

7. South Africa as an alternative to the
Suez Canal
Suez Canal South Africa
• Regional political unrest may • Less risk; political stability
complicate trade • Could serve as a cross-docking
• Risk of piracy surrounding point for large international
eastern coast of Africa shipments
• Less expensive, faster route • More expensive route
between Asia and Europe

8. South Africa as an alternative to the
Suez Canal (continued)
Suez Canal South Africa

9. Logistics Overview
• Ranked 28th of 155 countries for logistics and
supply chain performance
 Source: The World Bank
• Logistics market valued at U.S. $41 billion
• Outdated infrastructure; renewal underway

10. Transnet
• Authority and operator of all major ports,
railways, pipelines and roadways
• State owned company
• Leading the renewal of South Africa’s
infrastructure

11. Ports
• Eight deep water ports
 Each serving specialized
market/cargo type
• Controlled by Transnet
• Ngqura (Coega) Industrial
Development Zone
 One of many recent
constructions to modernize
infrastructure & promote Ports: Richards Bay, Durban, Saldanha,
Cape Town, Port Elizabeth, East
trade London, Mossel Bay, and Ngqura
(Coega)
 Located at Port Elizabeth

12. Rail
• Most developed rail system in Africa
 12,800 km core network
 7,300 km branch network
• Outdated infrastructure
 Average locomotive fleet age is thirty three years
• Renewal
 South African Government investment
▫ U.S. $4.5 billion over the past four years
▫ Additional U.S. $5.2 billion underway
 GE to update locomotive fleet with new diesel and electric
models
▫ Contract worth U.S. 7.49 billion

13. Rail (continued)
• South African Government pushing for railway
integration with other African nations
 Trade between African nations will be made easier
and less expensive
 Infrastructure expansion a priority within the
African Free Trade Zone

14. Key Takeaways
• South Africa is one of the leading emerging economies in
the world
 Newly included in BRICS summit
• Infrastructure is outdated, but undergoing
modernization
 Heavy investment both by the South African Government, and
other governments (e.g. China)
• African continent as a whole is moving forward
 Six of the top ten fastest growing economies were on the
African continent
 South Africa in a key strategic position as a gateway to other
African nations
 As nations grow, so will demand for consumer products (e.g.
Mobil 1)