11 months ago

South African Business 2023

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A unique guide to business and investment in South Africa. Welcome to the 11th 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, supported by a website at www. A special feature in this journal focusses on the importance of partnerships as the way forward for the country’s growing number of Special Economic Zones. There are now SEZs in eight provinces and collaboration between the private sector and government and its agencies is proving a crucial element in pursuing the goal of industrializing the South African economy. These zones intended as catalysts for economic growth in established sectors and in stimulating new industries. Regular pages cover all the main economic sectors of the South African economy and give a snapshot of each of the country’s provinces. The fact that South Africa’s law-enforcement agencies are arresting people alleged to have been involved in state capture and the Reserve Bank has started freezing assets in other matters leads the national overview because business can’t function properly without the rule of law. South African Business is complemented by nine regional publications covering the business and investment environment in each of South Africa’s provinces. The e-book editions can be viewed online at These unique titles are supported by a monthly business e-newsletter with a circulation of over 35 000. Journal of African Business joined the Global African Network stable of publications as an annual in 2020 and is now published quarterly.


OVERVIEW The Aspen Pharmacare facility in Gqeberha readied itself to make hundreds of millions of doses of the Johnson & Johnson Covid-19 vaccine for South Africa and Africa but the orders didn’t come. As of April 2022, no orders had been received and there was a danger that the facility would close down that section. The Africa Centres for Disease Control and Prevention was concerned about that possibility, and urged African states to order vaccines, partly to keep the capacity to make large volumes of vaccines in a state of readiness. It was anticipated that as many as 500-million doses would be made annually. A consortium of development finance organisations, including the World Bank’s International Finance Corporation, made €600-million in financing available to the South African company to assist it in ramping up production of the vaccines. In Johannesburg, global pharmaceutical company Mylan has purchased a manufacturing site, previously used by Ascendis Health, to make antiretrovirals to cater to the seven-million South Africans living with HIV. The Isando factory will produce effervescent tablets, semi-solid and hard capsules and pills. A new tender for a national supplementary HIV/Aids drug tender, which was previously awarded to foreign companies, is to be issued, opening up opportunities for local manufacturers such as Cipla Medpro. The three-year tender is worth R18.3-billion. Pirates off the west coast of Africa are driving an increase in boatbuilding in South Africa. Companies like Paramount Marine which specialise in security boats are receiving many orders. In 2021, the company announced that its Cape Town facility was making 26 boats for a contract price of more than R850-million. PG Bison, a subsidiary of KAP Industrial Holdings, is investing more than R2-billion at its plant in Mkhondo in Mpumalanga. With operations in four provinces ranging from forestry to the manufacture of medium-density fibreboard (MDP), particleboard and valueadded products, PG Bison is also building a new MDP plant in Mpumalanga to complement its existing Gauteng facility. Sectoral master plans The South African government believes that the existing Proudly South African campaign – which encourages the purchase of locallymade goods – is something to be supported and expanded. Government has identified 27 sectors in which government departments will aim to procure from local suppliers. Speaking at the Proudly South African Summit and Expo 2021, President Ramaphosa said: “There is an express undertaking to increase local procurement over the next five years. Apart from its own commitments, government will also work to lower the barriers to entry, thereby making it easier to establish and grow a business in South Africa.” Government is in the process of rolling out master plans for various sectors. Some (including furniture and plastics) are still in the works but others have been delivered. Goals include: Automotive: to double the number of jobs by increasing local content percentages Clothing, textile, footwear and leather: R500-million from the state for expansion of manufacturing sites Poultry: more than a million extra chickens every week for retail Sugar: soft drink manufacturers to procure 80% from local growers. ■ ONLINE RESOURCES Chemical and Allied Industries’ Association: Manufacturing Circle: South African Textile Federation: SOUTH AFRICAN BUSINESS 2023 68

Construction and property The renewable energy sector has opened up new workstreams. The uptick experienced by the building and home improvement sector during Covid-19 came to an end in 2022 as customers were no longer forced to spend time at home. However, Afrimat’s Construction Index showed in the second half of 2022 that a number of other indicators were trending upwards: plans passed, buildings completed, wholesale trade and building materials. Also, a Financial Mail interview with Raubex CEO Rudolf Fourie in late 2021 produced an upbeat assessment of the construction industry in South Africa. In response to Giulietta Talevi’s question about “future prospects”, Fourie said that tender activity was “buoyant” and that the company’s order book stretching beyond two years was something they had not seen in three decades. Raubex is active in infrastructure, roads and earthworks and materials. Like many South African companies, Raubex is now also present in the burgeoning renewable energy market, offering civil works and electrical installations at projects such as the Redstone CSP project and Copperton wind farm (pictured) in the Northern Cape. For the year ending 28 February 2022, Raubex reported an increase of 30.9% to R11.58-billion and an increase in operating profit to R945.3-million. Covid-19 provided a sharp shock for many business sectors, but with the move towards working from home accelerated by the pandemic, none is going to have to look harder at its models for sustainability than the office rental sector. Logistics, often taken for granted in normal times, became an even more important component of the supply chain during the global lockdown and in the months that followed, with the second ONLINE RESOURCES Afrimat Construction Index: Construction Industry Development Board: SA Reit Association: South African Property Owners Association: SECTOR INSIGHT Home improvers are not at home as much as they were under lockdown. half of 2021 characterised by blockages and delays. In that context, the news that Fortress REIT had successfully let more than 100 000m² of logistics space in KwaZulu-Natal, was significant. FNB, which publishes a regular property barometer, has done an in-depth analysis of previous crises to help understand what may occur in the post-Covid property market. According to John Loos, a property strategist at FNB Commercial Property Finance, the most vulnerable sector is likely to be Retail Property. Smaller neighbourhood centres, with more essential items and greater convenience, will be less vulnerable. Statistics SA has found that the percentage of South Africans living in flats has risen markedly. Whereas 26 out of 100 approved plans in 2013 were for flats, this figure reached 59 in 2016. Although the total number of people living in flats is still relatively small (5.4%), this figure will rise as urbanisation increases. ■ 69 SOUTH AFRICAN BUSINESS 2023

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