3 years ago

South African Business 2020 edition

  • Text
  • Infrastructure
  • Energy
  • Maritime
  • Trade
  • Tourism
  • Regional
  • Province
  • Industry
  • Economy
  • Investor
  • Invest
  • Africa
  • Africa
  • Sector
  • Investment
  • Business
  • Industrial
  • Projects
  • Economic
  • Mining
A unique guide to business and investment in South Africa. Welcome to the eighth edition of the South African Business journal. First published in 2011, the publication has established itself as the premier business and investment guide to South Africa. Regular pages cover all the main economic sectors of the South African economy and give a snapshot of each of the country’s provincial economies. A special feature focusses on the huge potential for growth and job creation which the tourism industry holds. The possibilities presented by the age of renewable energy for the mining industry is the topic of another special feature and the CEO of Minerals Council South Africa responds to a set of questions on the state of mining in the country. South African Business is complemented by nine regional publications covering the business and investment environment in each of South Africa’s provinces.


SPECIAL FEATURE are many strong agricultural companies in the sector. KwaZulu-Natal is the country’s leading sugar area and has a strong suite in forestry and paper production. Automotive manufacturing and automotive components are doing well, with major investments by most of the major marques and increased exports a feature of the sector. The publication in 2018 of a new Integrated Resource Plan (IRP) is another symptom of the type of increased certainty that an economy needs in order to thrive. The IRP is a road map for South Africa’s electricity generation and the previous administration seemed determined to push for an expensive nuclear programme. The latest plan confirms that the already hugely successful drive for renewable energy will be continued and expanded. Apart from being greener and cheaper, the renewable energy programme has also attracted lots of foreign direct investment (FDI) and provided new employment opportunities. Special Economic Zones (SEZs) South African industrial planners have turned to Special Economic Zones (SEZs) as a model for manufacturing goods locally to replace imports. South Africa has several existing Industrial Development Zones (IDZ) and a Free Trade Port (FTP). The Coega IDZ (Nelson Mandela Bay Metropole) and the Dube TradePort at the King Shaka International Airport outside Durban are two well-known examples. Other licensed IDZs are at Saldanha Bay, East London and Richards Bay. A process has begun to have them all called SEZs. A new SEZ has been formally declared in the northern part of Limpopo, the Musina-Makhado SEZ. The Upington SEZ in the Northern Cape is eagerly awaiting its licence, as is the Tubatse SEZ in eastern Limpopo. Key goals behind the establishment of SEZs are to encourage industries to develop in clusters, leading to economies of scale, skills-sharing and easier access by suppliers. The creation of industrial infrastructure also serves to attract investment and promotes further development. Apart from attracting foreign direct investment and boosting employment, SEZs can also play a role in helping to add new sectors or subsectors to an economy. South Africa is targeting a variety of sectors in SEZs around the country, but there is a decided emphasis on beneficiation, mainly of minerals but also of agricultural products. There is a strong belief that South Africa can do much more with the product of its soils – whether that be using manganese to convert iron into steel or creating fruit juices out of apples and pears. Special Economic Zones are created in terms of the Special Economic Zones Act of 2014 (Act 16 of 2014). The act defines an SEZ as “geographically designated areas of the country that are set aside for specifically targeted economic activities and supported through special arrangements and systems that are often different from those that apply to the rest of the country”. Lower corporate tax rates and duty-free imports are among the advantages that accrue to investors. Sectoral composition of GDP in 2017 Mining and quarrying 8% Manufacturing 13.2% Electricity, gas and water 3.7% Construction 3.9% Trade, catering and accommodation 15% Transport, storage and communication 9.9% Finance, real estate and business services 20.2% Personal services 5.8% General government services 17.7% Agriculture, forestry and fishing 2.6% SOURCE: IDC from StatsSA SOUTH AFRICAN BUSINESS 2020 16

SPECIAL FEATURE Investing in South Africa The South Africa Investment Conference 2019, held in Sandton, Johannesburg, from 5-7 November 2019, is the second such conference, held under the leadership of President Cyril Ramaphosa and represents a major plank in the big drive of his administration to encourage inward investment. At the first such conference, commitments to the value of more than -billion were made in the course of discussions about how best to create partnerships and grow the South African economy. South Africa provides active support for investors by providing a wide range of incentives, including a comprehensive suite of tax incentives for investment in Special Economic Zones (SEZs). Information on this page is taken from the executive summary of “The case for investing in South Africa. Accelerating economic growth by building partnerships”, published by the Department of Trade, Industry and Competition (the dtic). Key facts South Africa offers a unique combination of developed-world infrastructure and logistics networks, and a diversified emerging market (EM) economy offering low sectoral concentration risks. Its gross domestic product (GDP) of R4.65-trillion (9.4-billion at the average $/R exchange rate for 2017) represents circa 16% of Africa’s GDP. The composition of South Africa’s GDP is similar to those of developed economies, diversified and positioned to generate sustainable long-term returns on invested capital. Investment environment • Ranked number one in Africa with regard to Strength of Investor Protection (21st globally) and Protection of Minority Shareholders’ Interests (30th globally). • Ranked 31st in the world in terms of Efficiency of Legal Framework in Settling Disputes. • Progressive constitution. • Independent judiciary provides respect for the rule of law. • Actively addressing corruption. • Meaningful contributor to global governance. • South Africa has produced solid financial returns. The Johannesburg Securities Exchange All Share Index has outperformed other emerging market indices since the start of the new millennium. FDI • The overall stock of foreign direct investment (FDI) in the economy represented 42.8% of GDP in 2016, up from 5.8% in 1994. • Inward FDI has been traditionally dominated by European investors, particularly from the United Kingdom. • Fast-growing presence of Asian investors in recent years, predominantly from China. Raising capital • Twelve initial public offerings (IPOs) in 2017 with total proceeds of .3-billion, compared to 1-million in 2013. A total of 44 IPOs over the period 2013 to 2017, collectively totalling .8-billion. • Five of the top 10 IPOs by value in Africa in 2017 were raised in South Africa. • A total of 251 further offerings (FOs) in 2017 (collectively valued at .6-billion), up from 35 FOs (totalling .6-billion) in 2013. • South Africa accounted for seven of the top 10 further offerings in Africa in 2017. Websites: 17 SOUTH AFRICAN BUSINESS 2020

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