The recent sharp falls in commodity prices have highlighted that South Africa’s export basket can no longer afford to rely so heavily on commodities. However, non‐minerals manufactured exports – driven by chemicals, metal manufactures and automotive products – may not be well‐positioned to take up the slack. Despite some recovery from the crisis, non‐minerals formed a small part in overall export growth: fuel, minerals and basic metal products still accounted for almost 90 percent of South Africa’s export growth since 2007 (World Bank, 2014).

South Africa’s exporting firms are highly concentrated. The top 5 percent of South Africa’s exporters account for 90 percent of all exports, with the top 1 percent accounting for close to 80 percent (World Bank, 2014c). These firms are particularly concentrated within the minerals and metals sectors. Recent trends suggest that the most dynamic markets for South African exports lie in the Southern African Customs Union (SACU) and wider regional markets, which is precisely where smaller exporters and exporters in non‐mining sectors are focused.

# _2.2 Addressing transport is critical to South Africa’s export success_

South Africa produces less than 0.5 percent of the world’s GDP, but requires 2 percent of the world’s surface freight tonne‐kilometers to do so (Havenga, 2012). One third of South Africa’s gross value‐add is concentrated in Gauteng, which is 570km from the Port of Durban –which has the largest container terminal in the country. Furthermore, much of South Africa’s non‐containerized export activity (mineral commodities and base metals) also occurs inland. As a result, comparative advantages in resources and other areas can be quickly eroded by high transport costs.

Despite a well‐developed road, rail, port and airport network South Africa ranks poorly in the Doing Business index for “Trading across Borders” (100<sup>th</sup> out of 189 countries), reflecting the high cost of exporting (World Bank, 2015). Exporting a container from South Africa is more expensive than in OECD high‐income economies as well as key comparator countries ( Figure 2). Figure 2 reflects the inland concentration of economic activity as well as the high cost of our ports. South Africa’s exporters and importers cite the high cost and delays caused by domestic transportation as the most problematic factor for trade (World Economic Forum, 2014). These findings show that the competitiveness of South African firms are eroded before they take into account the cost of shipping goods from South African ports to destination markets (where South Africa is disadvantaged by global geography).

**Figure 2: Cost to export a 20ft container (US$), 2015**

<!-- Start of picture text --> OECD high‐income<br>Singapore 120 150 50 140 460 economy average<br>(US$1 080)<br>Chile 220 190 100 400 910<br>Mexico (Mexico City) 200 200 150 900 1 450<br>Durban 355 285 90 1 100 1 830<br>Brazil (Sao Paulo) 325 500 400 700 1 925<br>Ngqura 355 330 95 1 200 1 980<br>Port Elizabeth 355 334 95 1 200 1 984<br>Cape Town 355 323 100 1 300 2 078<br>Document preparation Port and Terminal handling Customs Inland transport and handling<br><!-- End of picture text --> _4_