Download BUSA PRESENTATION 2006 By Friede Dowie Chief Officer

South African
Academy of
Engineering
South Africa as a Role Player in the Global Business
and Economic Business Environment
By Vic Van Vuuren
Chief Operating Officer
Business Unity South Africa
4 February 2008
Who is BUSA ?
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BUSA is the voice of organised
business at both national and
international levels in South
Africa, and proactively and
dynamically addresses different
business views.
THE VISION OF BUSA
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BUSA is a unified and fully representative
organisation that contributes to a
vibrant, transforming and growing
economy in South Africa
The South African Economy
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Growth of 3% per year 1994-2004
Growth of over 4% since 2004 (great
reaction after 2001-2002 crisis)
Inflation target 3-6%
Inflation currently over 6% (oil price
influence)
Relatively stable currency since 2002
Strong fiscal discipline in government
Government budget surplus
Current account deficit driven by high
levels of imports
High unemployment at approx 25%
Economic policy
The Government of South Africa demonstrated its
commitment to open markets, privatisation and a
favourable investment climate
Prudent Fiscal Policy has seen the reduction of
government debt and
Macroeconomic stability achieved continues to foster
a positive environment for economic growth
Both monetary and fiscal policy continues to support a
positive investment climate
Some SA’s statistics
South Africa
Population (Million)
GDP (PPP)
GDP Growth (2006)
GDP per capita (US$ at market exchange rates)
47.9
$ 587 billions
5%
13,300
Inflation Rate (CPI)
4.9%
Unemployment Rate
26.7%
Public Debt (% of GDP)
33.2%
Investments (% of GDP)
17.1%
Growing Consumer
Market
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Economic growth lead by consumer demand
Greater employment opportunities and more
people entering the economy
This is evidenced by growing tax base
Increasing importance of services sector
Expanding middle class including through BBBEE
Social security provided to over 7 million
households
Interest in luxury and niche products
4th fastest growing cell phone market in the
world
Recent slowdown as a result of interest rate
increases
Energy Crisis
Infrastructure in regression
South Africa in Africa
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4% of Africa’s
surface
6% of Africa’s
Population
25% 0f Africa’s
GDP
40% of Africa’s
Industrial output
Over 45% of
Africa’s minerals
production
50% of Africa’s
Purchasing Power
Over 50% of
Africa’s energy
Open Economy
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Open economy
Low barriers to trade in goods and
services
WTO member
Preferential market access to key
trading partners including the US
Possible base from which to
export to third countries
Negotiations under way to revise
free trade agreement with the EU
Infrastructure
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Government programme to spend
R400 billion (approx 57 billion USD )
over next 3-5 years
Includes projects for 2010 FIFA World
Cup such as new stadiums
Also includes longer term projects
such as power generation and
transport systems
Part of ongoing programme that
includes government’s social
infrastructure spending
New opportunities always emerging
In addition high levels of private
sector infrastructure spending
Skills, knowledge, technology and
financing required
2006 South African exports
Exports - commodities: gold, diamonds, other metals and minerals, machinery and equipment
Imports - commodities: machinery, foodstuffs and equipment, chemicals, petroleum products,
scientific instruments
Source: http://en.wikipedia.org/wiki/South_Africa
FDIs
Since 1994, South Africa has continously
provided the right climate to attract significant
Foreign Direct investments.
This environment led to the largest single FDI
into South Africa when Barclays bought a
majority share in local bank Absa Group Limited
in 2005.
Deals between the British based Vodafone and
South Africa's Vodacom have also taken place
in 2006.
Financial overview
Sophisticated financial structure with the JSE
Securities Exchange, a large and active stock
exchange that ranks 18th in the world in terms of
total market capitalisation
Recent evolution:
JSE’s Shareholder
composition
The trend of FDIs is also confirmed by the JSE’s evolution!
Source: http://www.jse.co.za/
Priority Sectors
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Business Process Outsourcing
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Tourism
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Bio-fuels and chemicals
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Clothing and textiles
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Mining and mineral beneficiation, Metals and engineering
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Agriculture and Agro-processing, Forestry and paper
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White goods sector
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Creative industries
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Pharmaceuticals
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Capital Goods and Energy
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Telecommunications
Agriculture
accounts for 3.4% of the gross domestic product and 10%
of total employment
Major crops:
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Citrus and deciduous fruits
Corn
Wheat
Dairy products
Sugarcane
Tobacco
Wine (South Africa is the 5th largest producer worldwide)
Wool
Maize
South Africa has many developed irrigation schemes
and is a net exporter of food.
Mining & Metals
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South Africa is the world's largest
producer and exporter of gold and
platinum and also exports a
significant amount of coal
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Another major export is diamonds
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During 2000, platinum overtook gold
as South Africa's largest foreign
exchange earner
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The value-added processing of
minerals to produce ferroalloys,
stainless steels, and similar products
is a major industry and an important
growth area
Telecommunications
The domestic telecommunications infrastructure provides
modern and efficient service to urban areas, including
cellular and internet services. In 1997, Telkom, the South
African telecommunications parastatal, was partly privatised
and entered into a strategic equity partnership with a
consortium of two companies, including SBC (U.S).
In exchange for exclusivity to provide certain services for 5
years, Telkom assumed an obligation to facilitate network
modernisation and expansion into unserved areas.
Four cellular companies provide service to over 20 million
subscribers, with South Africa considered to have the 4th
most advanced mobile telecommunications network
worldwide. The four cellular providers are Vodacom, MTN,
Cell C and Virgin Mobile SA.
Tourism
In 2006 the number of Total ForeignTourist arrivals
went up to 8,395,833 increasing by 13,9 % in respect
of 2005
Source: http://www.southafrica.net/satourism/
Tourism (continued)
Source: http://www.southafrica.net/satourism/
Cost of doing business in South
Africa(2006 Ranking)
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Overall
Starting a business
Dealing with licenses
Employing workers
Registering property
Getting credit
Protecting investors
Paying taxes
Trading across borders
Enforcing contracts
Closing a business
Source: World Bank ranking of 175 countries
29
57
45
87
69
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74
67
43
65
Global Competitiveness Index
for SA
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Overall rank
Basic requirements
Institutions
Infrastructure
Macro economy
Health and primary education
Efficiency enhancers
Higher education
Market efficiency
Technological readiness
Innovation and sophistication factors
Business sophistication
Innovation
Source: World Economic Forum, 2007
44
61
39
43
50
117
36
56
78
46
33
36
32
Global Competitiveness Index
for SA
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Overall rank
Basic requirements
Institutions
Infrastructure
Macro economy
Health and primary education
Efficiency enhancers
Higher education
Market efficiency
Technological readiness
Innovation and sophistication factors
Business sophistication
Innovation
Source: World Economic Forum, 2007
44
61
39
43
50
117
36
56
78
46
33
36
32
THANK YOU!
Vic Van Vuuren
Chief Operating Officer
Business Unity South Africa