The economic powerhouse of Africa, the Republic of South Africa is one of the diverse and promising emerging markets globally. The country offers a unique opportunity for investment, owing to its strategical positioning, at the tip of the African continent. This opens the business models in the region to a market of about 1- billion people. Part of the BRICS group of countries with Brazil, Russia, India and China, its rapidly expanding middle class makes for an ideal recipe for the investors with bright ideas to position themselves at the world map.
The country is also known for its wealth of natural resources, including coal, platinum, coal, gold, iron ore, manganese nickel, uranium and chromium. Natural resources this has attracted attention from international exploration companies, particularly in the oil and gas sector. South Africa in a very brief period has successfully established a world-class infrastructure, exciting innovation, research and development capabilities.
It is this development that has become the forefront of the invitation South Africa offers to the world today. For professional jobs, labour costs are less than half of the cost of European countries. For manufacturing jobs, labour costs are around one-third cost of Europe.
The government of South African has also introduced various measures to increase the ease of doing business in the country. Programmes like InvestSA and legislation to promote training and skills development and fast-track systems have enabled an environment for business in the country. The country also has a host of investment incentives and industrial financing interventions that are aimed at encouraging commercial activity and its trade rules favour a further expansion in South Africa’s burgeoning levels of international trade.
South African economy invites investment into various diverse sectors and industries that exist in the country. Some of the key sectors attracting high growth and investment potential:
Aerospace &Defence: Globally competitive and acclaimed, South African aerospace and defence industry is one of the most preferred choices for aerospace and defence-related solutions. The industry, helmed by the indigenous skilled labour has helped to expand the national science, engineering and technology base. Aerospace &Defence has successfully put South Africa on the world market through its exports to and global partnerships with many of the world’s leading aerospace and defence companies. The increase in demand and the high success rate has helped the industry to look out for investments beyond its shores. The sector, therefore, remains as one of the best growing sectors in South Africa today, thus attracting investment opportunities in a range of activities. The aerospace industry in South Africa covers commercial and military aviation; air traffic management; aircraft materials, parts and components; system manufacturing; integration; land-based military armaments and equipment.
Pharmaceuticals: Having established a sound supply chain, with local production that meets almost 70% of the pharmaceutical sector’s demand, the demand for pharmaceutical products in South Africa is increasing. As per the industry experts, the South African pharmaceutical sector is forecast to grow around 7% a year and reach R54 billion in value by 2021.
The country also benefits from regularly meeting World Health Organization standards to manufacture pharmaceutical products. This has greatly helped the local pharmaceutical market to expand in size and profit. Moreover, being the only country in Africa to meet WHO standards appeal to multinational corporations than other African countries, which then present an export market. The Department of Trade and Industry (DTI) has also played a major role in pushing the industry growth.
Clean energy: In an attempt to safeguard the exploitation of the natural resources and increasing awareness about climate and the adverse effects of climate change, the world is looking to find new avenues of clean and sustainable sources of energy. South Africa in this regard has emerged as one of the leading market players in the world. The nation has taken giant strides in moving towards replacing fossil fuels with environmentally sustainable technologies, such as wind and solar power. This calls for investment projects that increasing share of the energy mix in future for the country.
To meet the government’s international low-carbon commitments, South Africa is adopting clean energy production. Looking to move away from fossil fuels the government has put an action plan and is willing to share the responsibility with private players willing to engage in the cause. The country is committed to meet its international low-carbon commitments. The country has immense investment appetite ranging from clean technology, components for the wind and solar sectors besides biomass energy, biogas and solar thermal heating technologies. The industrial-scale solar thermal power has a potential market worth more than R100-million, and with an estimated worth of R 3.7 billion for use in agri-processing, according to Green Cape.
Business Process Outsourcing: One of the most profitable sectors of South Africa, the business process outsourcing industry is responsible for playing a substantial role in strengthing the country’s economy. The Business process outsourcing service sector in South Africa is regarded as one of the most promising sectors in the world. The country has one of the best working-class due to South Africa’s competitive advantages of language skills and cultural compatibility. Business process outsourcing sector offers jobs ranging from off-shore services provision, back-office hubs, knowledge process outsourcing, legal process outsourcing, ICT, software design and engineering, game development and transcription services. The BPO industry already employs an estimated 220 000 people across both the domestic and the international segments. With the telecommunications expected to drop, a plethora of investment opportunity is expected to grow in the BPO market.
Mining: Mining has long been one of the most sought after sector for South Africa’s economic development. South Africa is very well known as an established player in gold and diamond mining. The country has one of the best portfolios when it comes to natural resources and mining. The sector is responsible for bringing substantial foreign reserves to the nation’s vault. South Africa’s diverse mineral reserve basket calls for some of the most lucrative investment portfolios.
Opportunities for investment abound across the spectrum of minerals resources. Gold no longer outstrips other minerals, and the mining sector is far more diversified, from precious metals through coal to iron ore and non-ferrous metals like manganese. The country also attracts bids in the precious mining sector such as mining — stands at 80% of the world’s platinum reserve; 78% of the world’s identified manganese resources and chromite ore.
Agro-processing: Equipped with one of the most modern and diverse agro-processing sectors in the region, South Africa presents a great avenue for investment in agro-processing and farming sector involving linkages to wholesale production through intermediate, and retail through final, products. The sector is one of the most thriving and crucial sectors for providing labour-intensive growth and has received extensive support through various government initiated incentive schemes. The sector benefits from competitive input costs, world-class infrastructure, counter-seasonality to the northern hemisphere, and vast biodiversity and marine resources, making it a preferred destination for investments. The increase in the sector has been fueled by population growth, changing consumption patterns – mainly of middle-income groups – and gradually improving overall living standards.
Tourism: Unique geographical presence, diversity in flora and fauna and well-channelised schemes have made South Africa as one of the premier destinations for travellers all across the globe. Tourism, therefore, presents a plethora of opportunity for investors looking to invest in the country. Tourism for many years has been one of the primary drivers of economic growth and job creation in South Africa. Africa’s unique history and natural wonders are gaining attention amid the local and global increase in cultural, heritage, and develop tourism. The tourism industry plays an important role in South Africa’s scheme of things to become a global economy.
Besides these other sectors that offer a good investment opportunity in South Africa are:
Advanced manufacturing sector involving: Advanced materials, Chemicals, Electronics, Fuel cells, Medical devices.
Services sector involving: Film, TV and documentaries, Oil and Gas, Shipbuilding and repairs.
Resource-based industries involving: Aquaculture, Forestry, Mineral beneficiation.
Manufacturing sector involving: Automotives& Rail, Clothing and textiles, Cosmetics, Furniture, Leather and footwear, Pulp and paper, Metals fabrication.
Green industries sector involving: Clean energy, solar and water energy, The waste economy sector.