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Stuff from Johannesburg

Trade surplus decrease by R7.2 billion, as loadshedding causes concerns for trade prospects

South Africa’s trade surplus decreased to R7.2bn in August 2022 compared to the surplus of R24.8bn for the previous month. The surplus was lower than market expectations of R23.7bn and the second lowest surplus since May 2020.

The smaller surplus was the result of a decrease in exports of 1% month-on-month and a sizable increase of 10.4% in imports compared to the previous month.

The decline in exports came mainly on the back of substantial lower exports of precious metals and stones of R5.4bn (-15%); base metals of R2.0bn (-11%) and chemical products of R1.5bn (-13%).

The export values of South Africa’s mining products continue to be impacted by the country’s inability to mine and ship these products to export markets during a time of high (although somewhat softer) global commodity prices. Vegetable product exports increased by R1.0bn (+8%), benefitting from high soft commodity prices.

The narrowing trade surplus continues to be driven by the upward trend in imports since June 2020. Compared to the previous month, imports of mineral products increased by R5.1bn (+14%); machinery and electronics by R4.8bn (+16%) and Original Equipment components by R1.1bn (+13%).

Asia was once again the only region that South Africa recorded a marked deficit with (R36.bn). The deficit with this region has been ever-increasing recently, with imports from China rising considerably and exports to that country moderating.

Whilst China remains the top import and export partner of South Africa, Chinese imports now make up 21.6% of total South African imports. The US was the country’s second largest import partner (7.2% of the share) and Germany the third (6.9% share).

Half of South Africa’s imports now originate from a mere five import partners. The country’s export partner base is far more diversified, with the top five export partners contributing approximately 32% to total exports.

Various local developments weigh down on the outlook for trade going forward. Inflationary pressures led the Reserve Bank to increase its repo rate by 75 basis-points, employment data indicated that formal employment declined, and business confidence remains under pressure.

However, it is the record-breaking incidences of load-shedding experienced during September that will have the greatest impact on trade prospects for the coming months. Not only was the load-shedding continuous (and still in place at the writing of this piece), but it also happened at generally higher stages. Manufacturers and miners struggle to maintain production in these conditions, hurting not only these industries, but the economy in general.

By Bobby Madhav, FNB Head of Trade & Structured Trade and Commodity Finance

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The Oriental Plaza: A Phoenix in Fordsburg

If Johannesburg is a city of forced displacements, the Oriental Plaza is its most resilient response. While the Rand Club was built for the elite and Ponte for the “jet-set,” the Oriental Plaza was born from the trauma of the Group Areas Act—a piece of Apartheid legislation designed to geographically separate the races. Yet, in true Johannesburg fashion, what was intended as a tool of containment and financial ruin for the Indian community transformed into one of the most vibrant, independent commercial powerhouses in the country.

The story of the Plaza begins with the destruction of Pageview, affectionately known as Fietas. In the mid-20th century, Fietas was a legendary multicultural hub, centered around the bustling 14th Street. It was the city’s premier destination for textiles, clothing, and spices, where shoppers of all races would rub shoulders in a “jazzy, soulful” atmosphere. However, because Fietas was located so close to the white-only city center, the Apartheid government declared it a “white area” in 1962. The community fought back for decades, but by the 1970s, the bulldozers arrived. Homes were leveled, and the thriving traders of 14th Street were forcibly relocated to a purpose-built, modernist complex a kilometer away in Fordsburg: the Oriental Plaza.

The government’s intent was cynical: by moving the traders into a controlled environment with high state-mandated rents and strict rules on what could be sold, they hoped to break the back of Indian commercial dominance. The early years were devastating; many businesses folded, and the “Grand Bazaar” felt like a sterile warehouse compared to the street-level energy of Fietas. However, the traders refused to vanish. They eventually won the right to purchase their own shops, making the Oriental Plaza unique among South African malls because it is owned by the shopkeepers themselves rather than a corporate landlord. This ownership model changed everything. Without the burden of massive monthly mall rentals, the 360+ independent stores can offer prices that national retailers cannot touch, turning the Plaza into a “bargain-hunter’s paradise” that draws millions of visitors a year.