Rising transport costs weigh on SA agricultural exports

CHAMWE KAIRA

Rising transport costs linked to higher fuel prices contributed to a decline in some South African agricultural exports to neighbouring countries, including Namibia, during the second quarter of 2026, according to the South African Reserve Bank (SARB).

The SARB, in its September 2026 Quarterly Bulletin, said agricultural exports came under pressure during the quarter as higher transport costs weighed on volumes to regional markets.

The central bank said the increase in global energy and petroleum prices, following war-related disruptions, filtered through to South Africa’s domestic economy and pushed up transport costs.

South African consumer fuel price inflation reached 34.3% in June 2026, according to the bulletin.

The higher transport costs affected exports of vegetable products, animal fats and oils to neighbouring countries.

The SARB specifically said regional agricultural exports were “weighed down by lower exports of vegetable products to some neighboring countries as higher transport costs weighed on volumes”.

Among the affected products was wheat or meslin flour, with exports to Eswatini, Botswana and Namibia declining during the second quarter.

The decline came despite relatively strong overall performance in South Africa’s agricultural sector.

Agricultural output during the first half of 2026 was 3.5% higher than in the corresponding period of 2025, supported by a record commercial maize harvest.

The bulletin also highlighted the importance of the Common Monetary Area (CMA) to South Africa’s trade.

Namibia, Lesotho and Eswatini together account for about 9% of South Africa’s manufactured exports.

The Rand remains widely used in the three smaller CMA economies. Between the 2019/20 and 2025/26 financial years, the rand accounted for an annual average of more than 70% of the total currency circulating in Namibia, Lesotho and Eswatini combined.

The use of the Rand also affects the seigniorage income of the central banks in the three countries. The SARB said the circulation of South African Rand in Namibia reduces demand for the country’s domestic currency and, consequently, the seigniorage income that would otherwise accrue to the Bank of Namibia.

Under the CMA arrangements, South Africa makes annual compensation payments to Namibia, Lesotho and Eswatini to compensate for the loss of seigniorage revenue.

The compensation calculation takes into account the estimated amount of South African currency circulating in the three countries and South African long-term government bond yields.

Total estimated compensation paid by South Africa to the three CMA partner countries increased from about R1 billion in 2019/20 to a record R1.4 billion in 2023/24.

It subsequently declined to R1.1 billion in 2025/26. The SARB attributed the decline to slower growth in South African notes and coins in circulation and lower government bond yields.