Download SOUTH AFRICA OPEN FOR BUSINESS

SOUTH AFRICA
OPEN FOR BUSINESS
Tumelo Nkoane
11 July 2007
emita
 Macro-economic Trends
 Gateway to Africa
 Sectoral Opportunities
Key Messages
 South Africa has a stable macro economic environment, a
strong fiscal position and a range of growing sectors – from
this platform SA is gearing for accelerated growth
 SA is a springboard for companies wanting to do business
in Africa
Economic Growth
Growth has averaged 4% per annum in the past four years and is projected to
increase to 5% for the coming four years.
8.0
Real growth in Gross Domestic Product (GDP)
6.0
4.0
2.0
0
-2.0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
1998
1999
2000
% change on year earlier
2001
2002
2003
2004
2005
2006
% change on previous quarter, annualised
South Africa has experienced 85 months of continuous growth.
Macro-economic Trends
Job Creation
The economy is beginning to generate additional jobs although challenges remain in this regard.
Employed
Unemployed
14000
45%
12000
30%
15%
10000
Unemployed (official)
8000
Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar
2001
2002
2003
Source: Statistics Pack - Presidency
2004
2005
2006
Broad
0%
Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar
2001
2002
2003
2004
2005
2006
Macro-economic Trends
5
Fiscal Situation
Government is in a very strong fiscal position
Budget deficit
0
% of GDP
-2
-4
-6
-8
-10
93|94
94|95
95|96
Source: Statistics Pack - Presidency
96|97
97|98
98|99
99|00
00|01
01|02
02|03
03|04
04|05
05|06
6
Macro-economic
Trends
Inflation
Inflation has stabilised below the 6% target.
Inflation CPI
14
12
10
%
8
6
4
2
0
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
December
Source: Statistics Pack - Presidency
7
Macro-economic Trends
Exports
After an initial drop associated with a rise in the value of the currency, exports are
beginning to grow again.
Exports
40
35
% of GDP
30
25
20
15
10
5
0
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
September
Source: Statistics Pack - Presidency
Macro-economic Trends8
Economic Structure
South Africa’s economy has diversified away from primary commodities
Contribution to National GDP
70
60
Tertiary sector
% share
50
40
Secondary sector (incl Manufacturing)
30
20
10
0
1946
Primary sector (Agriculture and Mining)
1956
1966
1976
December
Source: SARB
1986
1996
2006
Gearing for Growth
Focus Areas of the Strategy
 Increased macro-economic stability
 Increased investment in economic infrastructure
 Sector investment strategies
 Development of skilled labour
 Strengthening the 2nd economy
 Improvement in state organisation and capacity
Macro-economic Trends
The Gateway into Africa
 6% of Africa’s Population
 18% of Africa’s GDP
 45% of Africa’s mineral production
 50% of Africa’s purchasing power
 Dynamic force in SADC
 Driving force in NEPAD
 Extensive road & rail infrastructure which connects with Sub-Saharan
Africa
 Telecoms infrastructure with world-class connectivity and uptime
OUR LOCATION
STRATEGIC GEOGRAPHIC POSITION TO GLOBAL SHIPPING ROUTES
Business Processing and Outsourcing & IT Enabled Services
 Call Centres
 Back Office Processing
Shared Corporate Services
 Enterprise solutions in e.g. fleet management, knowledge management &
asset management
Value Proposition
 SA offers high quality, low cost destination for BPO in stable investment
environment supported by world class infrastructure
 Cultural and product affinity with the UK and Europe
 Public sector commitment made long-term commitment to this sector, so
strong investor support & sustainable reduction in costs over the next few
years
Business Opportunities
Tourism
 Hotels & self-catering holiday resorts
 Adventure, eco-, sport-, conference & cultural tourism
 Infrastructure development
 Leisure complexes & world class golf courses
 Harbour & waterfront developments
 Transfrontier conservation
Competitive Advantage
 SA’s fastest growing industry
 2010 Football World Cup
Business Opportunities
Agro-processing
Industry
Opportunity
Fisheries & aquaculture Freshwater aquaculture & mariculture e.g African catfish; oysters, abalone
Meat Processing
Fruit & vegetable
processing
Processing exotic/indigenous meats e.g venison; ostrich & crocodile
Export of deciduous & subtropical fruits; processing indigenous fruit, baby
vegetables, nuts (pastachio, cashew, macademia); juices
Indigenous teas
Processing & exporting of rooibos & honeybush
Indigenous herbs
Processing for medicinal & cosmetic products
Wine production
Production of wines for export & local markets
Manufacturing & exporting of confectionary e.g baking products, sweets,
chocolates
Processing of natural fibres from e.g. cotton, hemp, sisal, kenaf & pinable for
specialised paper industry
Confectionary
Natural fibres
Business Opportunities
Automotives & components
 Vehicle interiors e.g. natural fibre interior
 Engine parts/components
 Electronic drive chain components
 Body parts e.g. lights, painted plastic components, airbags, glass wire products,
 Aluminium components
 Wheels (steel & aluminium)
 Catalytic converters
 Plastic tool & die manufacturing
Competitive Advantages
 Access to aluminium & steel
 Removal of tariffs into EU
 Competitive tooling costs
Business Opportunities
Chemical & allied Industries
Industry
Opportunity
Organic chemicals
Propylene oxide, food acids (citric, lactic, etc), sorbates & flavourants
Inorganic chemicals
Titanium derivatives, flurochemicals, phosphates, aluminium fluoride
Pharmaceuticals
R&D, clinical trials, active pharmaceutical ingredients, botanical extracts
Other
Titanium benefication (pigment), fluro-chemical production for agriculture, steel
Competitive Advantage
 Abundant mineral feedstock for inorganic chemical manufacturing
 Abundance of agricultural raw materials (sugar, molasses, essential oils –
lavender; khakhi-bush; lemon grass)
Business Opportunities
Clothing, textile & footwear
 Large-scale manufacturing of industrial textiles using polyester
 Wool & mohair production – downstream opportunities for yarns,
knitwear & fabric
 Manufacturing of leather uppers
Competitive Advantage
 World’s largest producer of mohair
 Raw materials to produce any type of leather footwear – bovine;
ostrich; crocodile; game leather
Business Opportunities
Electro-technical industries
 Manufacturing automotive electronics
 Manufacture PC boards for automotive sector
 Upgrading existing microchip manufacturing
 Upgrading existing telecoms equipment
 Power line communications (PLC)
 Niche software engineering
 Opportunities in defence related electronics
 Expansion in pre-payment metering technologies
 Partnering for infrastructure (utilities) related projects in Africa
Competitive Edge
 Leading the world in prepayment technology and standards
 Piloting new innovations
Business Opportunities
Mining & metal-based industries
 Downstream processing & value adding of iron, carbon steel, aluminium &
platinum group metals
 Aluminium smelting
 Casting & forgings
 Ferro-alloys
 Stainless steel production e.g. stainless steel wire
 Manganese metal production & castings
 Gold chain manufacturing & handmade jewellery
Comparative Advantage
 Large aluminium & steel resources
 World’s largest deposits of platinum group metals
Business Opportunities
Aerospace
 Aviation related services, including maintenance, repair and overhaul
 Rotary and fixed wing components
 Aviation training services
 Specialised manufacturing of avionics, including health usage monitoring systems
 Satellite related services (including tracking and control and applications
development)
Rail
 Production of infrastructure (tracks, signalling, electrification)
 Manufacturing of rolling stock & components
 Manufacturing of mining rail equipment
 Maintenance (infrastructure & rolling stock) R&D
Marine
 Manufacturing & assembly of engines & gearbox
 Manufacturing of mechanical components
 R&D
Business Opportunities
Capital Equipment
Industry
Opportunity
Re-capitalisation
Expansion & export
Boilers & heat exchangers; Tool dies & moulds; Petrochemical equipment
Pumps & valves; material handling equipment & straddle crane carries;
mechanised mining equipment
New investments
Turbine assembly; turbine components; machine tool manufacturing
Competitive Advantage
 Access to steel, aluminium
 Competitive costs
 Engineering technology
Business Opportunities
Film
 Film studio production
 Co-production ventures
 Distribution infrastructure
 Servicing foreign productions
Comparative Advantages
 Co-production treaty with UK
 Film rebate scheme
Business Opportunities
Conclusion
 South Africa offers compelling business opportunities,
with stable macro-economic environment, strong fiscal
position and a clear growth strategy based on building on
comparative advantages and removing constraints
SOUTH AFRICAN HIGH COMMISSION
TRAFALGAR SQUARE
WC2N 5DP
LONDON
PH.
020 7451 7237
FAX.
020 7839 0634
EMAIL. [email protected]