South African companies take a R10 million per day hit

South African companies are feeling the impact of the unrest in Mozambique.

This week, South Africa’s Border Management Authority (BMA) temporarily closed the Lebombo border post between South African and Mozambique as protests against the outcome of the October elections that extended 49 years of Frelimo rule intensified.

Additionally, the Maputo port—a major hub for South African chrome exports— is now closed to cargo.

The port’s operator, Maputo Port Development Co., announced its decision to halt cargo reception in coordination with customs and Mozambican border authorities, citing security concerns.

News24 has reported that 34 people have died in the violence since the 9 October poll that handed Frelimo candidate Daniel Chapo 71% of the vote.

Mozambique is a key trade partner for South Africa, with SARS reporting R114.55 billion of exports and R18.95 billion in imports in 2023.

The Road Freight Association (RFA) CEO Gavin Kelly said that the closure has caused severe disruption to all forms of trade logistics—air, rail, road, and sea—resulting in a near-complete halt to movement.

This has led to financial repercussions for both countries, including loss of revenue from duties, income tax, VAT, and corporate tax, as well as a decline in income for businesses of all sizes.

In response to questions sent by BusinessTech, Kelly said that the RFA has estimated that the current full closure/suspension of Port of Maputo operations and the ceasing of any road freight logistics within Mozambique is costing the South African economy R10 million per day and that direct losses to freight logistics amount to approximately R6 million.

This covers vehicle damage or loss, driver injuries or fatalities, looting of goods, difficulty retrieving vehicles, disruptions to exports and imports, business losses from unfulfilled consignments, reduced fleet capacity affecting linked or other agreements, and additional costs for security deployments.

The remainder of the losses are spread across other sectors, including services, manufacturing, tourism, retail, mining, and agriculture, with some industries being more reliant on road freight transport than others.”

The situation has exposed the vulnerability of South Africa’s mining logistics, especially at a time when the national logistics provider, Transnet, is struggling with inefficiencies that have driven some companies to seek alternative routes, such as through Maputo.

Barbara Mommen, Trade and Transport Corridor Specialist, highlighted that while the complex circumstances leading to the current situation are understood, the primary concern is the severe challenges facing trade not only in South Africa and Mozambique, but across the entire region due to the destabilisation of the Maputo Corridor.

Dr. Juanita Maree, CEO of the Southern Africa Association of Freight Forwarders (SAAFF), warns that the crisis will have long-term negative effects on the entire SADC region.

The disruption at the Port of Maputo will take time to resolve, affecting trade volumes and straining government resources for rebuilding infrastructure and replacing essential equipment.

“Additionally, many essential jobs are now at risk, while the ripple effects for informal, small and medium businesses will be felt for some time. Business will limp forward into an uncertain future after this troubled, disruptive period,” said Maree.

Although “we can jump up and down and say we that we need commerce to continue, we need to keep moving stuff across the border in terms of goods and people, the reality is that we don’t want to send (in our case) our drivers into a situation where their safety cannot be guaranteed and where there’s a heightened risk,” Kelly told Newzroom Afrika.

As protests intensify, the Department of International Relations and Cooperation advised South Africans to delay all non-essential travel to Mozambique until further notice.

Read: One of South Africa’s biggest retailers takes a hit – with more stores closing