Businesses can prepare themselves for a drab outlook if the Rand’s value falls even further. Unfortunately, unless South Africa commits to a major restructuring of our economy, there is no way to avoid this fate.
”[South Africa’s] trade and government’s budget and current account deficits levels were worrying and if this was not corrected, the country’s currency would take a further knock as Western economies reached the end of their hard times,” US financial expert, John Mauldin, warned at a recent seminar hosted by Sanlam.
South Africa no longer leading the pack
Mauldin’s comments came just after Nigeria surpassed South Africa as the largest economy on the African continent. Although he feels a drastic restructuring of trade dynamics and financial relationships with the rest of Africa is necessary for our economic survival, Mauldin stresses that the necessary changes have to start at home.
We have to find a way to bring our trade deficit under control, basically pointing at a need to up our exports, and limit imports. November 2013 showed the first trade surplus in South Africa in almost two years, but the good news soon faded when January showed a backwards slip and a deficit of R16.93 billion.
Every drop in the bucket helps
Mauldin warned South Africans not to sit back and blame our political situation for our lack of trade relations in Africa, or for missing the boat when China started investing in neighbouring economies these past five years. “You can always start from where you are,” he urged, and what better time than the present?
Supporting local business initiatives instead of importing products and services wherever possible can only help reduce our ever-looming trade deficit. In the opposite direction, producing for export and cementing relationships with international trade partners is just as crucial.
It has never been more crucial for small and medium businesses in South Africa to up production of exportable goods. This being said, investing in the education and expertise necessary to bring our business sector up to snuff is a great place to start. Business management training and research into the optimisation of import-export opportunities is the first basic step for any successful trade partner.
In order to give our economy the make-over it needs, South African businesses are compelled to play at a new level of economic ambition.