Moldova and South Africa (Trade Opportunities)
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Moldova and South Africa Trade Opportunities in 2021 and Beyond The pandemic has forced firms worldwide to rethink business Countries in Eastern Europe are an alternative market that Introduction strategies, investment plans and operations. World trade fell quickly improved their trade performance in the past sharply in the first half of the year and the WTO predicts a 13% decade. Their idiosyncrasies and capacity to quickly adapt contraction in 2020. in time of crisis can represent an advantage, especially during the pandemic. In the past three years, South Africa's exports to Europe have Looking into been growing, 20% of its trade relying on four European For instance, the IMF predicts a less severe recession due countries. While trade and supply chains are globally to Covid in the EaP than in EU countries. However, alternative markets interconnected, the structure of the economy and the successfully doing business overseas requires a thorough government response to various shocks vary significantly from understanding of the factors impacting the local economy. country to country. Therefore, diversifying trading partners is To illustrate this, we took an in-depth look at Moldova. Moldova key to building stronger, smarter supply chains and ensuring a Africa 2020 Author: Hex Opportunities in 2021 and Beyond. Trade Africa. Moldova and South lasting recovery. 11 | Moldova Moldova by the numbers Population: (including Transnistria) 3 million Area: (including Transnistria) 33,700 sq km Major languages: Romanian, Russian Major religion; Orthodox Christianity Currency: Leu Ciuflea Monastery in Moldova Africa 2020 Author: Hex Opportunities in 2021 and Beyond. Trade Africa. Moldova and South 01 | Moldova Surorile Osoianu Background The Republic of Moldova is a small country situated As early as the Stone Age, the territory shared the in South Eastern Europe, that shares borders with same cultural complex with Romania and Ukraine Romania and Ukraine. under the Trypillian-Cucuteni civilization. Later on, Moldovan’s ancestors, the Gets and Dacians were History and Culture The country declared independence from the Soviet influenced by Hellenistic, Roman, Turkish and Union in 1991 and became a parliamentary Slavonic cultures for centuries. of Moldova democratic republic in 1994. While the state language of Moldova is Romanian The history and culture of Moldova are marked by its since its independence, during the Soviet period, position at the crossroads of the Latin, Muslim and most Moldovans became bilingual in Romanian and 02 | Moldova Slavonic civilizations. Russian. In 2019, The World Bank ranked Moldova 48th out of 190 countries in Ease of doing business ranking, an indicator that classifies most business-friendly regulations. With a skilled and multilingual workforce and the lowest labour costs in the region, the most dynamic sectors of the Moldovan economy are automotive, agriculture and wine, manufacturing, textiles and apparel. In 2017, Moldova launched an IT park to foster more growth in its rapidly developing information and communications technology sector. Along with the positive changes, the situation in Moldovan society remains difficult. Political instability, high levels of corruption and delay in structural reforms undermines the transition to a sustainable development. The problems of unemployment and poverty are most critical in rural communities, where more than half of the Wine Cellar in Moldova population lives and works. Overview Moldova is a country that is developing rapidly and is The former soviet country has a consumption-driven actively integrating into the world economy. At the economy, representing 85% of the GDP. The service same time, it is preserving the traditional sectors of sector account for 54% of overall output, reflecting the economy, while seeking foreign private Moldovan economic the heavily-consumer driven structure of the investment in technology and know how. Moldova is economy. With an average gross salary of about €370 among the top 20 global wine exporters, holding in 2019, one of the lowest in Eastern Europe, outline more vines per capita than any other country and Moldova is one of the top 20 countries in the world among the world leaders for speed, penetration and most dependent on remittances (16% of the GDP in availability of the Internet. Africa 2020 Author: Hex Opportunities in 2021 and Beyond. Trade Africa. Moldova and South 2019). 03 | Moldova Moldova Wine “The World Bank ranked Moldova 48th out of 190 countries in Ease of doing business ranking, an indicator that classifies most business-friendly regulations.” “The country relies heavily on remittances, which represent 16% of its GDP in 2019 and come mainly from EU, Russia and Israel.” Africa 2020 Author: Hex Opportunities in 2021 and Beyond. Trade Africa. Moldova and South Moldova EU Day 04 | Moldova Fountain Hotel, Cape Town The Moldovan export and import of goods reached Imports from South Africa consist mainly in The Moldovan retailers market is divided between a historical maximums in 2019. fertilizers (1.2 MUSD), edible fruits, nuts, peel of relatively small number of players, mostly present in citrus fruits, melons (1.1 MUSD), vehicles (0.5 MUSD) the Consumer electronics (8 retailers), Food industry Its main trading partners are Romania, Russian and chemical products (0.3 MUSD). On the other (7 retailers), Fashion & Clothing (6 retailers), Federation and Germany. hand, Egypt imports comprise mainly chemical Homeware (5 retailers) and other sectors (17 products (4 MUSD), pharmaceutical products (3 retailers). Moldova is a member of the World Trade MUSD) and fruits & nuts (1 MUSD). Organization (WTO), has 14 regional trade In the Food industry, “Linella SRL” is the biggest agreements (RTAs) that cover 45 countries and is a At the same time, South Africa is importing from retail network with 100 units in over 40 regions of signatory to the Central European Free Trade Area Moldova goods amounting to 2.3 MUSD such as the country. Smaller retailers are also focusing on (CEFTA). furniture & prefabricated buildings (1 MUSD), imports: “N°1” has only 15 units, mainly in the capital, vegetables, fruits & nuts (0.5 MUSD). but it is one of the main importers in Moldova. As of 2016, Republic of Moldova has signed with the European Union the Deep and Comprehensive Free Since 2009, Moldova has an access to the sea via the Among the international retailers, the following are Trade Area agreement (DCFTA) that allows free port of Giurgiulesti, which is at the confluence of the present on the Moldovan market: Metro Cash & movement of goods, services, capital and people. Danube and the Prut. This is a commercial port with Carry, Kaufland and Fourchette. a passenger terminal. It entails among other things the cancelation of While Moldova’s economy grew 0.9 percent customs duties on imports for most goods and their Goods transportation can also be done via two of the year-on-year in the first quarter of 2020, the gradual reduction for products which are exempt country's rivers. The three principal ports are government forecasts show that the GDP will from the free trade procedure. More information Bender, Rybnitsa and Varnitsa and the port is contract by 3% this year. about the trade agreements to which Moldova is part accessible to both fluvial and maritime vessels. of, can be found here. The large reliance on consumer sectors (retail trade, Distribution and sales channels have developed restaurants and recreation) and remittances as a In 2019, the total imports from South Africa significantly over recent years, though they are still source of revenue represents a serious vulnerability amounted to 3 MUSD. In comparison, Moldovan not as sophisticated as in the rest of Europe. to the consequences of the coronavirus pandemic. imports from Egypt, with which the country has However, the country shows some important signed a trade agreement, amount to 8 MUSD during Sales are mostly concentrated in two major cities of strengths compared to other emergent markets. the same period. the country: the capital city of Chisinau and Balti, the second largest city of the country. Moldova and South Africa. Trade Opportunities in 2021 and Beyond. Author: Hex Africa 2020 Author: Hex Opportunities in 2021 and Beyond. Trade Africa. Moldova and South 05 | Moldova GDP (2018): $11.4 bn GDP (2018) by sectors: Top imports of Moldova: refined petroleum ($626M), services = 54 % insulated wire ($224M), cars ($213M), packaged industry = 23 % medicaments ($199M), broadcasting equipment ($118M), fruits, nuts and spices ($89M), Imports mostly from: agriculture = 10% Romania, Russian Federation, China and Ukraine. Labour force by occupation: services = 57% Top exports of Moldova: insulated wire ($581M), sunflower agriculture = 21% seeds ($201M), hot-rolled iron bars ($176M), wine ($135M), industry/construction = 22% and seats ($133M). Exports mostly to: Romania, Italy, Germany, Russia and Poland. Moldova and South Africa. Trade Opportunities in 2021 and Beyond. Author: Hex Africa 2020 Author: Hex Opportunities in 2021 and Beyond. Trade Africa. Moldova and South 03 | Moldova Imports to Moldova Since 2009, Moldova has an access to the sea via the port of Giurgiulesti, which is at the confluence of the Danube and the Prut rivers. This is a commercial port with a passenger terminal. In 2019, the total imports from South Africa amounted to 3 MUSD. At the same time, South Africa is importing from Moldova goods amounting to 2.3 MUSD. Moldova and South Africa. Trade Opportunities in 2021 and Beyond. Author: Hex Africa 2020 Author: Hex Opportunities in 2021 and Beyond. Trade Africa. Moldova and South 06 | Moldova Giurgiulesti International Free Port The retailing industry In the Food industry, “Linella SRL” is the biggest retail network with 100 units in over 40 regions of the country. Moldova and South Africa. Trade Opportunities in 2021 and Beyond. Author: Hex Africa 2020 Author: Hex Opportunities in 2021 and Beyond. Trade Africa. Moldova and South 06 | Moldova Soroca Fortress Moldova Short term overview Moldova is a trade-dependent country, with small chains.