why south africa?

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SOUTH AFRICA’S INVESTMENT SOUTH AFRICA’S INVESTMENT ENVIRONMENT ENVIRONMENT TRADE AND INVESTMENT SOUTH AFRICA A division of the Department of Trade and Industry November 2005 SOUTH AFRICA’S SOUTH AFRICA’S INVESTMENT ENVIRONMENT INVESTMENT ENVIRONMENT TRADE AND INVESTMENT SOUTH AFRICA A division of the Department of Trade and Industry Minnesota, MN July 2008

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The trade and investment case for Africa's largest economy

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Page 1: Why South Africa?

SOUTH AFRICA’S INVESTMENT SOUTH AFRICA’S INVESTMENT ENVIRONMENTENVIRONMENT

TRADE AND INVESTMENT

SOUTH AFRICA

A division of the Department of Trade and Industry

November 2005

SOUTH AFRICA’S SOUTH AFRICA’S INVESTMENT ENVIRONMENTINVESTMENT ENVIRONMENT

TRADE AND INVESTMENT SOUTH AFRICAA division of the Department of Trade and Industry

Minnesota, MN

July 2008

Page 2: Why South Africa?

•Area 1,219, 090 km2

•Population 44,8m

•Currency R1 = 100 cents

•Time GMT + 2 hrs

•Head of the State: President Thabo M Mbeki

•11 Official languages with English the business language

•Total GDP: 2007 R1 993 bn (US$ 283 bn)

•GDP 2007 per capita: R 41 066 (US$ 5 825)

•Real GDP Growth: 5,1 (2007)

•Inflation (CPIX): 6.5 % (annual 2007 average)

•Exports: Minerals, diamonds, metals and

metal products, food products & automotive components.

•Main trading partners: Germany, USA, China, Japan &

the UK.

South Africa at a glanceSouth Africa at a glance

Page 3: Why South Africa?

SADC and South AfricaSADC and South Africa

Page 4: Why South Africa?

South African EconomySouth African Economy

Source: SARBSource: SARB

  1994 2004 2007

GDP (billions) R 482 R 1 374

US$ 213

R 1 993

US$ 283

GDP per capita R 12 507 R 29 422

US$ 4 561

R 41 066

US$ 5 825

Merchandise exports

(billions)

R 69, 8 R 281,8

US$ 43,6

R495,8

US$ 70

Total Foreign Debt / GDP 21,8% 20,8% Not available yet

GDP Growth 3,2% 3,7% 5,1 %

Unemployment 20% 26,5% 23,05%

Inflation (CPIX) 9% (CPI) 4,3% 6,5%

Prime Rate 15,75% 12% 14,5% (Dec’07)

Page 5: Why South Africa?

South Africa’s investment environment

South Africa today is one of the most sophisticated and South Africa today is one of the most sophisticated and promising emerging markets globally, mainly because of …promising emerging markets globally, mainly because of …

Economic stability & sound macro-economic

management

Competitive sectors/industries

Favourable cost of doing business

Skillsavailability

World class financial system

Excellenttransport &logistical

infrastructure

Abundantnatural

resources

Page 6: Why South Africa?

• South Africa is one of the most sophisticated and promising emerging markets, offering a unique combination of highly developed first world economic infrastructure with a vibrant emerging market economy.

• South Africa is one of the world’s 26 industrialised nations.• The country is also regarded as the gateway to Africa.• South Africa has the largest economy on the African

continent, accounting for approximately 25% of the continent’s GDP.

• According to the World Bank, South Africa ranked 28th in the world for the ease of doing business in 2006.

• The JSE Securities Exchange is Africa’s largest and most developed Securities Exchange and one of the world’s top 20 exchanges.

South Africa from a global South Africa from a global perspectiveperspective

Page 7: Why South Africa?

• South Africa remains the world’s top producer of minerals such as gold, platinum, rhodium, chrome, manganese and vanadium.

• South Africa holds 80% of global manganese reserves, 72% of chrome, 88% of platinum-group metals (PGMs), 40% of gold and 27% of vanadium.

• Unit labour costs in South Africa are significantly lower than those of many other emerging markets.

• South Africa scored well in various categories according to the 2006 World Competitiveness Yearbook (61 countries ranked): Ranked 6th in the world in terms of price stability; Our fiscal policy was ranked in 11th place; 24th position in terms of management practices (business

efficiency); 31st place in terms of attractiveness for foreign direct

investment.

South Africa from a global perspective

Page 8: Why South Africa?

• Upbeat outlook for the SA economy, as we project strong GDP growth averaging 5% p.a. over the next 5 years.

• Strong domestic demand, with robust consumer spending and a rapid increase in fixed investment should underpin the expected higher growth trajectory.

• Despite the recent interest rate increases, we forecast a much shallower interest rate cycle in a low inflation environment.

• Recent increase in interest rates should result in a moderate reduction in the growth of private consumption expenditure (particularly on durable and semi-durable goods, which tend to be rather sensitive to interest rate levels).

• The multi-billion rand capital expenditure program by state owned enterprises, the build-up to the 2010 Soccer World Cup and increased government infrastructure spending will underpin a robust public sector fixed investment growth.

SA economic outlook

Page 9: Why South Africa?

GDP of SA cities and SSA countries

GDP ($bn) Population (m)

1 Nigeria 55.3 129

2 Johannesburg 30 3.5

3 Sudan 18.7 36

4 Cape Town 18.5 3

5 eThekwini 16.5 3.2

6 Kenya 16.1 33

7 Tshwane/Pta 15.2 2

8 Angola 14.4 15

9 Ivory Coast 13.6 18

10 Cameroon 13.0 16

11 Ekurhuleni 11.7 2.2Compiled from SA Cities Network, 2006; World Bank, 2006©US 2007

Page 10: Why South Africa?

Strengths of South Africa’s provinces

Western Cape:•Tourism•Agro-processing•Biotechnology•Petrochemicals•Clothing and textiles•Fishing

Northern Cape:•Agro-industries•Transport and storage•Mining and beneficiation

North West:•Agro-processing•Bio-fuels•Leather products•Mining

Limpopo:•Food processing•Agri-business•Mining•Fertilisers and pesticides •Energy

Mpumalanga:•Tourism•Mining (Coal)•Forestry •Agriculture•Agro-processing

Gauteng:• Financial and business

services• ICT• Pharmaceuticals• Food and beverages• Mining

Free State:•Agriculture•Agro-processing•Machinery and equipment•Mining and beneficiation

Eastern Cape:•Agriculture and forestry•Aquaculture•Automotive•Clothing and textiles•Leather and leather products

KwaZulu-Natal:•Aluminium•Automotive•Petrochemicals•Wood and wood products•Tourism•Clothing and textiles

Page 11: Why South Africa?

STRATEGIC GEOGRAPHIC POSITION TO STRATEGIC GEOGRAPHIC POSITION TO GLOBAL SHIPPING ROUTESGLOBAL SHIPPING ROUTES

Page 12: Why South Africa?

Sector Sub-sectorAgro-processing Fisheries and Aquaculture, Floriculture, Fruit and Vegetable Processing Plants,

Juices, Meat Processing, Wine Production, Confectionery, Indigenous teas and Natural Fibres.

Automotives Interiors, Engine Parts/Components, Electronic, Drive Train Components, Body

Parts, Aluminum Components and Diesel particulate filters.

Chemicals and Allied Industries

•Titanium Beneficiation Initiative,Fluorochemicals Expansion Initiative,Polypropylene Conversion.•Restructuring of State Owned Chemical Enterprises.

Business Process Outsourcing & IT Enabled Services

Call Centres, Back Office Processing and Shared Corporate Services.Enterprise solutions viz. fleet management, knowledge management, asset management solutions.

Electro Technical Manufacturing of: automotive electronics, microchips and telecommunication

equipment.

Tourism Hotels and self-catering holiday resorts, Adventure-, Eco-, Sport- Conference- and

cultural tourism, gaming, infrastructure development, leisure complexes and world

class golf courses, harbour & waterfront developments,transfrontier conservation

areas, cruise liners & transportation.

Investment OpportunitiesInvestment Opportunities

Source: DTI/TISA Source: DTI/TISA

Page 13: Why South Africa?

Sector Sub-sectorClothing, Textiles, Leather and Footwear

•Manufacturing of Industrial Textiles using Polyester

•Production of other natural fibre textiles such as flax

•Wool and mohair production – downstream opportunities for yarns, knitwear and fabric.

•Footwear – manufacturing of leather uppers.

Mining and metal based industries

Aluminum smelter capacity, Capital equipment: machine tool manufacturing and petrochemical equipment, downstream processing and value-adding of iron, carbon steel, aluminum, platinum group metals and gold, ferro-alloys, gold and stainless steel.

Aerospace, Rail and Marine Aerospace: Rotor and fixed wing aviation equipment and services, Helicopters and aircraft components, Aviation training services for African airlines, IDZ at Johannesburg International Airport, warehousing for aircraft parts.

Rail: Rolling stock and services for the domestic market, estimated R7 billion Gautrain which includes infrastructure development and rolling stock, Rail infrastructure of the African continent through NEPAD and Rehabilitation of low density rail line.

Marine: Development of boat yards and wet docks/floating docks, Joint ventures with local shipyards, manufacture of boats, yachts, catamarans and fleet racing boats, custom-made vessels (tugs) and training schools.

Investment OpportunitiesInvestment Opportunities

Page 14: Why South Africa?

Investment OpportunitiesInvestment Opportunities

Sector Sub-sectorCapital Equipment Re-capitalisation of:

•Forgings & Castings•Boilers•Tool dies & moulds

Expansion & export development•Pumps, valves, material handling & straddle crane carriers•Mechanised mining

New investments in:•Turbine assembly•Production of turbine components•Machine tool manufacturing

Film •Film studios and post production facilities.•Co-production ventures.•Distribution infrastructure

Source: DTI/TISA Source: DTI/TISA

Page 15: Why South Africa?

the dti’s Investment Servicesthe dti’s Investment Services

• Sector Information

• Finance to explore investment opportunities in SA

• Facilitating direct Government support in the form of:

- information on investing in SA and the Business Environment

- detailed investment Incentives

- investment facilitation

- after care – ongoing contact

Page 16: Why South Africa?

• the dti Call Centre: 0861 843 384the dti Call Centre: 0861 843 384

• the dti Switchboard: +27 12 394 0000the dti Switchboard: +27 12 394 0000

• Investment Promotion: +27 12 394 1333/1339Investment Promotion: +27 12 394 1333/1339

• Website: Website: www.thedti.gov.za

• E-mail: E-mail: [email protected]

• Postal Address: Private Bag X 84Postal Address: Private Bag X 84

PretoriaPretoria

00010001

South AfricaSouth Africa

the dti’s Contact Detailsthe dti’s Contact Details

Page 17: Why South Africa?

Thank YouThank You