“We hear a lot of comments by our ministers and officials but the reality on the ground is a little different to what they are saying," Megan MacDonald, Head of debt primary markets at Standard Bank told CNBC Africa on Thursday.
With recent statistics out, South Africa is the worst when it comes to regional trading.
“When one looks at trade figures for the last 20 years, so the period between 2001 to 2011, you can see that China- Africa trade relations grew by about 15 times during that period, whereas South Africa-Africa trade grew by under 4 times”, said McDonald.
McDonald adds that this statistics raises concern on whether South Africa is taking advantage of some of the commodity flows and opportunities that other countries have seen in the last 10 years.
As a whole, African exports have grown tremendously, totalling about 500 billion US dollars, with the Southern African Development Community (SADC) region contributing 45% to that figure, states Mcdonald.
She maintains that South Africa is a dominant player when one looks at the African Trade Industry; however, South Africa- African Trade relations remain weak.
Mcdonald explains that the cause of this is the lack of infrastructural development on the continent, such as, the limited availability of railways as well as the port processing times, which results in transport challenges for regional trading.
Another issue is that of the overlap of regulations and customs requirements between the SADC region and the Common Market for Eastern and Southern Africa (COMESA).
“Room for arbitrage, therefore, exists amongst these regions which then pose another challenge for importers and exporters to process the trade flow,” says McDonald.
COMESA, on the other hand, has been the most successful in Africa in terms of developing intra African regional trade, mostly due to the Protocol signed in 2010 on the establishment of the East African Community (EAC) Common Market.
The EAC Common Market Protocol was entered into by all five partner states, Burundi, Kenya, Rwanda, Tanzania and Uganda, and allows the free movement of goods, labour, services and capital amongst the countries. This initiative has boosted trade and investments in the COMEAS region significantly.
“So South Africa definitely still has a long way to go”, states McDonald.
The first priority for South Africa should, therefore, be to resolve the overlap which currently exists between the two regions, and ensure that the bodies in charge of regional trade are regulated.