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ZA Update: Transport sector helps boost ZA economic growth

South Africa’s transport sector is contributing heavily to unexpected economic growth whilst EU nations loan €600 towards sustainability efforts

Following our latest South Africa update, please see the most recent news affecting ZA supply chains below.

Transport sector contributes to boost in ZA economy

South Africa’s manufacturing industry saw 2.9% year on year growth in September 2022, figures that were expected to decline by around 2 and a half percent instead. The boost in production is likely a result of manufacturing facilities, such as Toyota, covering the shortfall caused by flooding earlier in the year.

Production output increased overall by 1.9% across the middle 2 quarters of the year, bucking the trend from a 5% decline in Q1 2022.

€600 million loaned to ZA by key EU nations

A loan agreement has been signed between South Africa, France, and Germany in a €600 million deal aimed at bolstering South Africa’s transition to greener energy sources and a move away from coal power.

The agreement was signed by President Ramaphosa (South Africa), President Macron (France) and Federal Chancellor Olaf Scholz (Germany) during the COP27 summit in Egypt.

With both France and Germany pledging a loan of €300 million (R5.3billion) each, the arrangement represents a significant marker in the Just Energy Transition Partnership which was launched at COP26. The initiative’s main aim is to help support South Africa on its journey to a low-climate economy, supported by the UK, the US, France, Germany, and the rest of the European Union.

Bayhead Road construction to fix Durban port congestion

Construction work on the Bayhead Road bypass in Durban is nearing completion, a statement by the Transnet Port Authority has confirmed. The 1.6km stretch between Durban Container Terminal and Island View is one of the interventions being put in place to decongest Durban port and increase efficiency across its terminals.

It is expected that the building works will be completed in time for the Christmas break, increasing the efficiency of port traffic in the new year.

South Africa now offers a more attractive business environment

According to the latest PwC report, South Africa’s ranking as being ‘attractive to private companies’ has improved.

South Africa now finds itself sitting at number 25 in the 35-strong territory list, which ranks the attractiveness of private business environments across 33 countries across the EMEA region. The jump of 7 places since 2021’s rankings is predominantly down to the country’s ‘Economic Reconstruction and Recovery Plan’, which stated that efforts would be made to ensure it is easier for private businesses to operate in the region.

However, investment and planning is still needed to improve South Africa’s ranking for macroeconomics and ESG (environmental, social and governance) factors where it currently sits in the bottom third.

Transnet lift force majeure on coal rail line

The imposition of a force majeure, which was declared on 10th November, has now been lifted by Transnet Freight Rail following restoration works on rail tracks.

The restoration work came as a result of the 97-wagon derailment on November 8, which has now been cleared by the TFR and private sector teams. The critical works were necessary due to the damage caused to both tracks and rolling stock between Bloubank and Nhlazatshe, severely impacting the infrastructure.

According to Transnet, the lines were reopened at reduced operational levels on November 19th with normal service phased in from 25th November.

Port and rail strikes impact South Africa’s start to Q4

The BankservAfrica Economic Transactions Index fell to a 10-month low during October, signalling a poor start to Q4 following rail and ocean port strikes.

Transnet strikes, as well as power cuts across the country had led to a downturn in export volumes at the start of Q4, with the continued rise in the cost of living having a further negative impact on the South African economy.

South Africa’s slowing trade also reflects declining global growth which has affected many nations as consumer demand dwindles.

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Our dedicated South Africa team is on hand to support you and keep your supply chain moving. If you would like more information regarding South Africa supply chains, contact the team here or complete the contact form below

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