Agricultural products remain Western Cape’s dominant export
By Bekezela Phakathi - Mar 27th 2017, 14:03
Agricultural products remain the Western Cape’s dominant export commodity despite the challenges facing the sector, including the prevailing drought in the region.
According to a trade and investment document released on Thursday, the top exports from the Western Cape in 2016 were refined petroleum oils, citrus fruit, wines, fresh apples, pears and quinces, as well as grapes. The top destination market for citrus fruit (R1.8bn) and grapes (R2.1bn) was the Netherlands, the EU distribution hub.
The Western Cape produces more than 50% of SA’s agricultural exports, with the EU being one of the biggest export destinations. The region also accounts for almost 75% of annual offshore wine sales, worth R5bn.
The document, compiled by researchers at Wesgro, the Western Cape’s trade and investment agency, highlights that the province experienced an annual average export growth of 17.8% between 2012 and 2016. Exports from the province totalled R121bn in 2016, an increase of 3.8% from 2015.
This growth was largely due to the depreciating rand and an increase in competitiveness from Cape exporters, the document states.
The top three export destinations for the Western Cape were Namibia (R12.27bn), the UK (R9.17bn) and the US (R8.98bn), accounting for almost a quarter of total exports. Wesgro says that the traditional export markets, such as the UK, the Netherlands, and the US are important to the Western Cape economy and are strong drivers for exports. All three saw double-digit growth from 2012 to 2016, with exports to the US growing 23% per annum.
The Western Cape is the second largest province in terms of total trade flows, reaching R313.23bn in 2016, Gauteng is the largest, with R1.28-trillion, and KwaZulu-Natal is third with R243.37bn.
The Wesgro document also notes that between 2006 to 2016 a total of 301 foreign direct investment projects were recorded in the Western Cape, representing a total capital investment of R87bn. In terms of capital expenditure, the largest sectors attracting investment were natural gas, renewable energy, communications, and real estate, which accounted for a combined 53% of all inward foreign direct investment. Companies have established a number of manufacturing facilities in the province ranging from photo-voltaic manufacturing facilities, gas to liquid plants, and wind farms.
The Western Cape is ranked as the second most-favoured provincial destination for foreign direct investment in SA in terms of projects. This is due to its natural environment (which has attracted wind energy companies), a high concentration of companies to form joint ventures, and a high level of skills. Gauteng remains the top-ranked province, both in terms of foreign direct investment attracted and contribution to national GDP because of its reliance on primary industries, such as mining of metals, as well as tertiary and secondary industries to a greater degree than other provinces, the report notes.
A new survey in the report examined the perspective and experience of companies that have recently invested in the Cape. Three-quarters of companies surveyed had a positive perception of Cape Town as a base to do business in Africa and noted the city’s sophisticated infrastructure as a drawcard.
Of the companies that intended to expand into Africa, a quarter indicated they would opt to run their African regional headquarters in Cape Town.
An estimated 51% of companies investing into Cape Town cited regional expansion and market access as their primary motive, followed by 47% who primarily wanted to capture the local domestic market.
Wesgro conducted a survey of 39 companies affiliated with the agency to gauge the perspective and experience of those who have expanded or are wanting to expand into Africa. The survey also compared Cape Town’s competitiveness with other African cities in terms of key characteristics such as infrastructure and lifestyle.
"These figures indicate a serious vote of confidence in the Cape as a trade and investment destination, and are testament to the work Wesgro has done to promote our region as a business hub for Africa," said Wesgro CEO Tim Harris.© BusinessLIVE MMXVII
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