In light of the results of the Brexit referendum, Wesgro will be working with Western Cape businesses to mitigate any negative effects on our trade and investment relationships with Britain and Europe.
The UK is ranked in the top two markets for the Western Cape across trade, investment and tourism. Today’s result has introduced significant uncertainty for those Western Cape businesses that export to the UK, or service British clients in the tourism sector.
The UK was the second most important export market for the Western Cape last year with exports valued at R9bn and a positive trade surplus of R877m. Overall exports to the European Union were valued at R33bn in 2015, with the United Kingdom accounting for 36% of these purchases. In particular, the UK is a major market for Western Cape agribusiness products buying R1,5bn worth of wine, R1,2bn worth of apples and pears, and R4,8bn of citrus in 2015.
Currently, our exports to Europe are covered by European treaties like the Trade, Development and Co-operation Agreement, and the recently signed Southern African Development Community-EU Economic Partnership Agreement (EPA). Once Brexit comes into play, however, South Africa would need to sign a Free Trade Agreement or similar trading arrangement with the UK, or risk the “Most Favoured Nation” principle becoming applicable, putting our exporters at a significant disadvantage.
The UK is also the largest investor in the Western Cape, responsible for a quarter of all investment into our province. Over the past twelve years UK companies invested in 62 greenfield projects worth over R15bn. In recent years Wesgro has facilitated 6 UK investments worth over R330m, creating 143 jobs.
Many UK investors into the Cape chose to operate out of Britain because of how open and connected that market was to the world. Brexit has now called that into question, which has led to an increase in economic uncertainty. Wesgro will be reminding companies from the UK that the Cape is a safe, secure investment destination that can provide a stable base for them to grow new markets in South Africa and the rest of Africa.