Hello fine Readers, it’s your favourite feline, Stryker the Cat, back with some topical tire industry content! Did you know that South Africa and Botswana have a memorandum of understanding to promote trade and investment between the two countries? This is to create opportunities for industrialisation and the manufacturing sectors.
A Closer Look at the Botswana / SA Tire Trade Industry
Tire World Exports puts the market in the spotlight and explores how the tire trade between SA and Botswana has fared in light of the MOU.
- South Africa’s main intra-Africa export products are petroleum oils (excluding crude), goods and passenger motor vehicles, coal and chromium ores and concentrates. The top 10 intra-Africa export products account for 26% of South Africa’s total exports to other African countries.
- In terms of South Africa’s total trade (exports + imports) with the rest of the continent, Namibia (13%), Botswana (12%), Nigeria (12%) and Mozambique (12%) are South Africa’s main African trading partners.
- The main destination markets for South African exports are Botswana, Namibia, Mozambique and Zambia.
Most of the goods imported into South Africa from other SADC member states enter duty-free. The only exceptions are wheat flour, sugar, second-hand clothes and tires. Tire imports have a 20% duty.
Botswana has been pushing to penetrate the SA market and commissioned a market study on seven of South Africa’s nine provinces in an effort to explore non-traditional markets for its 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.
As far as tires are concerned, South African exports to Botswana has been steeply on the decline since 2013. That year, Botswana purchased a total of US$71.9 million’s worth of tires from South Africa. In 2018, they imported tires to the value of only about US$20 million. This would appear to be due to a decline in the country’s demand for tires, rather than market share being snapped up by South Africa’s competitors. Botswana increased its demand for Chinese-manufactured tires over the past three years, but only moderately.
In 2018, it spent about US$3.5 million on tires from the rising superpower. This is an increase from its 2016 level, but a drastic decline from its 2010 high of nearly US$6 million. South Africa still holds a significant share of Botswana’s tire market, even though the total value of its exports to the neighbouring country has decreased. This would appear to indicate that South African manufacturers still have a decent market in Botswana, although they are catering to a smaller market than previously, which has led to a more competitive environment.