PROBLEMS FACING TRADE IN SOUTH AFRICA

• Smuggling: Some people sneak in goods from other countries and at the same time export SOUTH AFRICA’s products to such countries through the black market. Such trade is detrimental to the economic growth of the country because such traders avoid paying taxes.

• Nature of SOUTH AFRICA’s imports and the unfavourable balance of trade: Most of the imports are heavy industrial materials and finished products. These products are expensive as compared to SOUTH AFRICA’s exports thus results in a large deficit balance of payment.
• Value of SOUTH AFRICA’s Exports: SOUTH AFRICA’s exports are mainly based on processed raw materials. Minerals and processed agricultural materials from SOUTH AFRICA are generally bulky and of low value. Thus the total production and export cost is not commensurate with the profit accrued from such sales.
• Poor trade Pattern: SOUTH AFRICA patterns of trade still follow the line of flow established by her former colonizer Britain being mainly a supplier of raw materials; the developing countries provide the manufactured goods that SOUTH AFRICA requires so they form better trading partners.
• Inadequate transport and communication facilities. The transport and communication network not well developed between SOUTH AFRICA and other African countries. This affects the flow of goods to and from these countries.
• Trade barriers. The imposition of quotas regulates the supply from each country to avoid any economic glut, which has negative effects on SOUTH AFRICA which depends heavily on particular commodities for export. Coffee, a major export from SOUTH AFRICA, has for example, suffered with the introduction of quotas by International Coffee Organization.
• Overreliance on agricultural products. Given the fact that SOUTH AFRICA’s trade items are mainly agricultural, they are vulnerable to climatic changes, pests, and diseases. Fact that most of the other African countries also produce agricultural goods and other primary products the demand for SOUTH AFRICA’s goods among the neighboring states is reduced.
• High charges. Traders are charged high fees in form of trading license in order for them to carry out their businesses. High fees make the traders to earn little profits from the sale of their goods.
• Poverty among the people. Majority of SOUTH AFRICANS are poor making them offer a very small internal market. Some cannot afford the very basic needs in their homes.
• Insecurity. Sometimes traders are attacked by thugs who steal their goods or take away the money earned. Some businessmen are even killed in the attacks.

• Scarcity of goods. There are times in the remote areas of SOUTH AFRICA that the goods needed by people are not available in the markets or shops. Then scarcity makes such goods expensive.
• Inadequate capital. Most traders engage in small retail businesses because they lack adequate finances to expand their activities.

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