South Africa has always been perceived as the gateway into Africa, a vast and untapped region rich in natural resources. However, according to Hennie Heymans, MD of DHL Express South Africa, due to various challenges which trading partners encounter when dealing with the country, fellow African countries such as Nigeria and Mauritius could soon overtake South Africa as the premier gateway into the continent.

Heymans says that due to South Africa’s stringent customs legislation, as well as various labour and red tape issues, the country is becoming less attractive to investors and trading partners. “The rest of Africa, particularly Nigeria and Mauritius, are however becoming more attractive as potential trading partners and an alternative entry point into the continent.”

He explains that as these countries grow and develop,  investors and trade partners will no longer see the need to go via South Africa, and instead just trade directly with the various African countries instead.

“South Africa is at the moment the largest economy on the African continent, but according to economic predictions, these days are numbered. Nigeria, already a preferred trading partner and the continent’s largest oil producer, is forecast to overtake South Africa as the largest economy on the continent in the next few years.”

Heymans explains that South Africa currently enjoys the position of gateway into Africa due to the  unstable political and social environments in countries further north of the continent, which investors still choose to target with products and services, due to the increased spending power of the one billion strong population.

“However, the political and social environments within Africa have evolved over the recent past, and many countries have become significantly more stable. This has resulted in investment and trade increasing, but often bypassing South Africa. With other regions on the continent developing just as fast as South Africa, why should investors still enter the continent via us?”

He says that foreign investors and trading partners are sometimes discouraged from dealing with South Africa due to complex exchange controls, tax and other complicated regulation. “A few of the challenges that need to be overcome in order to increase South Africa’s profile as an attractive trading partner include ongoing labour issues, tricky legislation and unnecessary red tape.

Heymans explains that many of the potential competing countries in Africa, such as Mauritius, Nigeria or Egypt, which offer less complex regimes, are often more attractive. “Mauritius, for example, has a free-trade zone, the Mauritius Freeport, which is a customs-free zone for goods destined for re-export. This allows them to promote the country as a logistics centre for Southern and East Africa, and the Indian Ocean islands.”

“It is therefore apparent why international trade partners are starting to consider other options when entering the African continent. This however results in missed opportunities for the South Africa economy.

“South Africa now need to review its current status and perhaps model its trade legislation on other emerging economies in Africa, such as Mauritius, which could potentially result in significantly increased trade levels,” concludes Heymans.