South Africa’s harbors are sinking its economy

[divider style=”solid” top=”20″ bottom=”20″][dropcap]P[/dropcap]orts and harbors play a significant role in any country’s economy. Especially if we take into account Africa, there are plenty of harbors that are focal for economic development.

Roughly 25 years ago there was a period when South Africa was a leading economy in Africa and the country enjoyed financial stability. However, that situation is now changed.

Harbors for South Africa have always been very important. The Port of Durban, located in KwaZulu-Natal province in the east of South Africa, is the country’s largest seaport. Due to its beautiful views and warm climate, the city is also a world-renowned tourist destination. There are other ports that have a huge economic contribution to the country. However the coronavirus pandemic had its toll and currently, South African harbors are sinking its economy. In this article, we will have a look at this topic and mention possible reasons behind it.

A little background information

Ports like Durban and Cape Town are two major places where numerous freights come and go with a lot of cargo. It should be noted that according to statistics every port in South Africa has incredible value in terms of export and import. They are perfect for transiting various goods.

Covid-19

However, the coronavirus pandemic in 2020 was a major blow for these harbors, as export and import diminished notably. This fact has had a direct effect on the country’s national currency – rand. Forex brokers operating on the African continent emphasized that a deteriorated currency for traders was a major problem. The South African Rand throughout history always had moments of fluctuation but in 2020, the trend was more visible.

Restrictions

It should be mentioned that due to the coronavirus various restrictions were adopted. In South Africa, crew change was permitted at two ports, Durban and Cape Town. Applications for the shift must be submitted to the Department of Transportation at least 96 hours before the expected shift.

Successive sailors could travel only in two directions – either from ship to airport, or from airport to ship. In exceptional cases, it is possible to be quarantined in designated places by the Department of Health at the expense of the employer. It should be taken into account that the borders in South Africa remain closed and regular passenger air service is prohibited, but a number of airlines perform repatriation flights. Thus any restriction, when we are talking about the economy is bad for normal functioning.

What is the future for harbors?

Right now the situation does not look very promising – unless the pandemic is over. We have some positive news regarding the vaccine but it still needs time to be distributed in every country in the world. Maritime ports in South Africa have always had a major role and they are one of the most prominent ones not only in Africa but the whole world as well. But considering the current political and social situation they can’t really do much for the country.

The general economic overview of South Africa

We are talking about the role of harbours for the South African economy, but we should also mention the general economic situation. In the development of the economy, South Africa is the leading country in Africa. It accounts for about 28% of GDP, 40% of industrial and 30% of the agricultural output of the entire continent. South Africa’s economy is in a state of steady growth and in terms of GDP ranks 17th in the world.

This success is due to the existence of a rich raw material base, a wide range of land extracted resources, a vast advanced technological base and a market of fairly cheap skilled and unskilled labour. Also, the engine of the country’s economic recovery is a competent economic policy, which, coupled with the implementation of structural reforms, helped the country to accelerate the rate of economic growth while slowing the growth of inflation, strengthening the state financial system and increasing foreign economic influence.

The country has a favourable financial and investment climate, characterized by the clarity and reliability of banking and insurance services. Attracting investors is supported by law. Interest in direct investment forces the South African Government to allow prospective foreign investors to set up 100 per cent of their businesses, to allow investors to enter African and Indian Ocean markets, to provide relatively cheap electricity, and to open up free access to natural resources.

The country has created the same legal conditions for foreign and local investors without restrictions on price control, the size of the capital of enterprises, the export of profits and dividends, etc. The most popular areas of investment of the South African economy – telecommunications industry, energy, light industry, automotive. The main investors are USA, UK, Germany, Australia, Malaysia.

Since the end of the destructive policy of apartheid (under the racist regime in the early 1980s, the South African economy began to decline) and the economic reforms of the GEAR programme, the economic situation in South Africa since late 1996 has been characterized by ever-increasing GDP growth, low inflation, a stable exchange rate, and a tendency to improve budgets at all levels.

The favourable domestic markets and increased investment were factors driving the economic growth and stability of the South African economy.

South Africa’s leading industries are financial, real estate, manufacturing, wholesale and retail, hotel and restaurant, transport and communications, mining, agriculture, fisheries and forestry, construction, energy, engineering, metallurgy, telecommunications.

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