Botswana pushes to penetrate unexploited SA market

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Mpho Tebele

Gaborone- Botswana has commissioned a market study on seven of South Africa’s nine provinces in an effort to explore non-traditional markets for her products and services into the South African provinces.

The study which was undertaken by Africa House for the Botswana Investment and Trade Centre (BITC) was also aimed at enhancing existing market access for Botswana’s exports into South African provinces through understanding the market size, consumer tastes and preferences, prices, barriers to entry as well as competition matters. 

BITC is an organisation established by an act of Parliament, to become an integrated Investment and Trade Promotion Authority (ITPA) with an encompassing mandate of investment promotion and attraction, export promotion, and development, including management of the national brand

Another objective of the study was to develop recommendations to address the market access constraints in the South African provincial markets.

 The specific sectors of focus for this study, were among others, automotive, textile and clothing. The study found that “there is a strong push to see Botswana become a supplier of choice to Original Equipment Manufacturer (OEMs) in South Africa;

On leather goods the study found that the development of a leather products ark in Lobatse is a key programme for BITC.

In 2016, South Africa’s exports amounted to US$ 74.1 billion and imports amounted to US$

74.7 billion leaving South Africa with a trade deficit of US$ 0.6 billion.

The study found that issues relating to logistics have been identified as a barrier to trade by exporters in Botswana.

“The reality is that according to industry sources, Botswana currently exports 10 percent of

the volume that the country imports via South Africa. This translates to one return load on

every 10 loads into Botswana,” the study says.

  The backhaul is therefore an issue and South African hauliers struggle to get full loads out of Botswana on a sustainable basis.

“However, given this pressure  the cost of transport from Gaborone to Johannesburg is often a lot cheaper than the cost from Johannesburg to Gaborone as hauliers are happy to simply cover direct costs,” the study says.

It says given the relative size of the Botswana economy vis-à-vis South Africa, it will be difficult to realistically address the imbalance unless Botswana can attract cargoes from Namibia or southern Angola.

The market survey has highlighted a few suggestions on how logistics issues could be

Addressed, including the investigation of specific backhaul opportunities at a provincial level

and creating a warehousing and distribution hub for Botswana in Durban to take advantage

of the KwaZulu Natal market and to ease the issue of empty containers having to be returned

to Durban from Botswana.

The study says South Africa comprises of nine provinces and each is distinctly different in terms of size, population, buying power and market characteristics. Gauteng, is South Africa’s most populous province and the economic heart of the country compared to the sparsely populated Northern Cape to the mid-tier market of Limpopo.

 The study says from the perspective of an exporter in Botswana, the provincial nuances and opportunities should be carefully considered as some of the smaller provincial markets are similar in size and attributes to the market in Botswana and would be easier to serve than an extremely large and competitive market such as Gauteng.

In Gauteng Province, the report states that for Botswana, a manufacturer based in the country would assist with localisation targets and industry insiders suggest that Botswana has an excellent opportunity to attract Tier 2 suppliers to invest in the country for supply into Tier 1 supplier.

 In the Western Cape, the report states that the province  is experiencing a chronic shortage of plastic water storage tanks and it is difficult to transport these water tanks over large distances.

“Botswana manufacturers should investigate the opportunity of setting up a manufacturing plant in the Western Cape. The large South African corporate, Steinbuild, has offered to work

with Botswana tank manufacturers to consider an option to set up a manufacturing plant in

the Western Cape,” the report says.

In Kwazulu Natal Province, the report states that there are a number of large clothing companies based in Durban that would look at outsourcing to factories in Botswana if they were competitive. There is also an opportunity to supply safety clothing to the agricultural sector (timber and sugar).

For Free State province, the report states that Botswana could use centrally located, relatively low cost warehouses as a central distribution centre for goods to be distributed throughout South Africa.

 For the Northern Cape Province, the study states that the Provincial Government is a key source of demand in the province, especially the departments of education and health, as well as the large National Defence Force base at Lohatlha. 

“Suppliers of cleaning materials, uniforms, soaps, food for school feeding schemes and clinics have an opportunity to supply into these channels provided they are registered with a local supplier to benefit from local procurement regulations,” the study says.

Regarding North West Province, the study states that proximity should be used as key advantage for Botswana as Mahikeng and surrounds are closer to Botswana than to Gauteng.

“Cheap, bulk products are in demand from most of the larger independent wholesalers and distributors, as they service the lower end of the distribution chain. This is across the boarder

for Fast-Moving Consumer Goods (FMCG) products, with brands ranging from well-known

South African products, to some that have little or no branding at all,” the study says.

With regard to Limpopo Privince, the study found that Makoro Bricks (company from Botswana) is already supplying this province and there is an opportunity for other hardware and building materials suppliers including suppliers of Copper goods, PVC piping, irrigation

piping.

Opportunities also exist for bedding, furniture, low-cost cleaning materials, bulk foods, soaps

and similar, as well as uniforms, clothing and other FMCG products provided that prices are

competitive.

 

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