Investment Opportunities in South Africa

Helping Indian companies do business with Africa

	INDIA : India’s Trade with the African Region notched US$ 38.96 Billion in the year 2009-10 (DGCI&S provisional figures) constituting 8.37% share in India’s total trade. Trade with the region has grown at a CAGR of 18.10% from US$ 4.48 Billion in 1996-97.	AFRICA : 54 Countries, 1 billion people, US$ 1.01 Billion of trade. Imports worth US$ 468 billion include Mineral Fuels, Oils, Machinery, Vehicles including Boats, Ships, Aircrafts, Electronics & Electricals, Iron & Steel & Articles thereof, Cereals, Plastics, Pharmaceuticals, etc. Top 20 product groups imported by select African countries ............. [More].

Investment Opportunities : South Africa

The South African economy is mainly based on private industries and enterprises even though the government participates in many ways. Through the Industrial Development Corporation, the government started and controlled a wide range of public corporations, many relating to industrial infrastructure. During 1990s the government partially privatized airlines and telecommunications despite fierce opposition from various trade unions. The official economic policy has continues partially or completely privatizing many public enterprises.

The total inflow into South Africa through the FDI for the following years has been listed below.

Total Merchandised inflow

(FDI)

2007

2006

2005

2004

Inflow (value in US $ Million)

5,692.10

-527.1

6,643.80

799.2

South Africa holds a wide range of natural resources thus giving it a lot of opportunities for industries like agriculture, mining, energy, tourism etc.

Opportunity in Agriculture Sector

The climate in South Africa helps in growing many different crops.The province with the most varied and prolific agricultural sector is the Western Cape. There is a massive export of wine by South Africa which is now the 5th largest producer worldwide. Deciduous fruit is also of major importance which includes grapes, apples, cherries, pears, peaches, citrus and other fruit being exported in great quantities with the majority being exported to Europe. There is a great amount of wheat production in the region Mpumalanga and the Free State. The Free State has the highest production in maize which is considered a staple food in South Africa. The Karoo inland region provides for good opportunity for livestock farming, sheep farming. Cattle farming is popular amongst the locals and flourishes more in the more well watered eastern areas of South Africa. The province of Western Cape is famous for its ostrich farming along with an extensive dairy farming in the Garden Route area just to the south. Sugarcane farming is mainly done on the KwaZulu-Natal coast along with other subtropical fruits such as mangoes, papaya, bananas and melons being extensively cultivated in KwaZulu-Natal, Limpopo and Mpumalanga Thus the great variation in the climate of South Africa provides great opportunity for agriculturists.

Opportunity in Mining Sector

South Africa has a large amount of gold, silver, coal deposits.South Africa’s mineral wealth is found in diverse geological formations, some of which are unique and extensive by world standards. Some of the country’s minerals include:

Gold: the unique and widespread Witwaters Rand basin yields some 96% of South Africa’s gold output.
Diamonds( in Kimberliters, Alluvial and marine deposits): the country is among the top producers of Diamonds.
Titanium: Heavy mineral sand occurrence containing titanium minerals are found along the coastline.
Manganese: enormous reserves of manganese are found in the sedimentary rocks of the Transvall super group.
Platinum: group metals (PGMs) chrome and vanadium- these minerals occur in the Bushveld Complex in Mpumalanga, Limpopo and northwest. More than half of the world’s chrome and platinum reserves are in this deposit

Opportunity in Tourism

South Africa is one of the most diverse and enchanting countries in the world. There is an exotic combination of landscapes, people, history and culture offered to the tourist is a unique and inspiring experience. South Africa has a heady mix of third and first world cultures along with the best and least crowded beaches in the world.The tourism industry of South Africa is valued at $10 billion a year .This is expected to rise even further as the South African government and the private sector invest in the marketing and promotion drive. The tourism infrastructure available in the country is sophisticated and developed the key opportunities exist in this arena given the rise in demand. The eco-tourism segment promises a huge investment and development potential. Thus the tourism industry can grow many folds in the near future.

Opportunity in Energy Sector

The African Development Bank has approved a R100-million investment in the evolution of One Fund which will be the first specialized private equity fund on the acceleration and deployment of clean energy and sustainable technologies across southern Africa.The 10-year private equity fund which is managed by Cape Town based inspired Evolution Investment Management will make equity and equity-related investments in sustainable projects and companies with the aim of not only achieving carbon reductions but also ensuring the sound environmental, social and economic performance of these investments.

Opportunity in Telecommunication

South Africa is considered one of the leaders of the telecommunications in the African continent. It has 4.03 million installed exchange lines which represents around 100 lines for every 1,000 inhabitants(approximately).There is a large transmission area necessitated by the country geographical spread of 1,2 million sq km utilising 125 million km of transmission circuits. The optical fiber and digital micro are the main transmission media for the network interconnecting all the major centres.

In the coming years the current 4.03 million exchange lines is expected to grow around 7 million out of this 2 million would be additional lines and will be aimed at increasing telephone penetration in under-serviced urban and rural areas. The remaining 1 million lines will cater for growth in developed areas.

The following table highlights the industrial sectors of South Africa

Industry	Exports 2007	Share in World	Imports 2007	Tariff
Agriculture and hunting	1,961.60	0.60%	1,198.00	13.00%
Forestry and Fishing (PRODUCTS)	160	0.40%	52.5	11.20%
Mining and quarrying	9,916.00	4.20%	1,784.20	5.30%
Petroleum	1,840.60	0.10%	11,036.30	5.60%
Food, beverages and tobacco	2,568.10	0.40%	3,221.10	18.70%
Machinery and equipment	5,233.90	0.40%	10,194.90	6.60%
Electrical and electronic equipment	1,680.50	0.10%	9,143.80	8.80%
Precision instruments	385.8	0.10%	2,218.50	8.30%
Motor vehicles and other transport equipment	6,459.80	0.40%	10,319.70	9.30%
Other manufacturing	1,421.70	0.40%	1,434.40	13.70%
Recycling	1,482.30	1.70%	124	5.70%
Textiles, clothing and leather	637.8	0.10%	2,800.70	13.80%
Wood and wood products	1,657.70	0.50%	1,396.20	9.10%
Publishing, printing and reproduction of recorded media	104.9	0.10%	586.6	9.00%
Coke, petroleum products and nuclear fuel	1,415.80	0.20%	3,541.50	5.90%
Chemicals and chemical products	4,315.90	0.30%	7,116.70	5.70%
Rubber and plastic products	580.8	0.20%	1,673.00	10.90%
Non-metallic mineral products	397.7	0.30%	1,238.40	11.20%
Metal and metal products	21,554.20	1.80%	4,823.30	8.10%
Mixed goods (trade data)	183.1	0.40%	147.6	8.70%

For Further Reference

National Customs

Department of Trade and Industry

Doing Business With South Africa (Source: The World Bank Group)

54 AFRICAN COUNTRIES