Doing Business in South Africa - IAR Multicultural Summit
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Donnadelliah Maluleke, Counsel Economic for South Africa's Midwest consulate in Chicago, talks about the nation's economy and growth. (April 26, 2013)
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Doing Business in South Africa - IAR Multicultural Summit
- 1. DOING BUSINESS IN SOUTH AFRICADOING BUSINESS IN SOUTH AFRICA With members ofWith members of Presenter: Donnadelliah MalulekePresenter: Donnadelliah Maluleke Consul EconomicConsul Economic Date:Date: April 26April 26thth , 2013, 2013
- 3. •Overview of Africa •South Africa in context of SADC Agenda for the dayAgenda for the day OVERVIEW OF AFRICA SA IN CONTEXT ECONOMIC POSITION GLOBAL COMPETITIVENESS SOME SUCCESS STORIES THE REAL ESTATE MARKET OPPORTUNITIES
- 4. The Economist labelled Africa “the hopeless continent” in 20002000
- 6. “Africa’s hopeful economies: The sun shines bright The continent’s impressive growth looks likely to continue” Economist, Dec 2011Economist, Dec 2011
- 7. Africa today* *See “Lions on the Move: The Progress and Potential of African Economies” **According to a report by South Africa’s Standard Bank
- 8. Africa tomorrow* *See “Lions on the Move: The Progress and Potential of African Economies” **According to a report by South Africa’s Standard Bank
- 9. SADC and SouthSADC and South AfricaAfrica • SADC FTA signed in August 2008 – market of 200 million consumers • Future FTA with SADC,COMESA & EAC with a market of 700 million consumers
- 10. Gateway into AfricaGateway into Africa •Area 1.219.090 km2 •Population 49,1m (estimate) •Currency R1 = 100 cents •Time GMT + 2 hrs •Head of the State: President Jacob Zuma •11 Official languages with English the business language •Total GDP: 2010 R2,460bn (US$ 364bn) •GDP 2010 per capita: R50,107 (US$ 7,410) •Real GDP Growth: 2.8% (2010) •Inflation: 4.1% (annual 2010 average) •Main Exports: minerals & mineral products, precious metals & metal products, chemical & food products, automotives components. •Main trading partners: USA, Germany, China, Japan & the UK.
- 11. Proximity to markets by seaProximity to markets by sea • New York – 20 days • Liverpool – 25 days • Buenos Aires – 11 days • Jeddah – 20 days • India – 10 days • Singapore – 12 days • Hong Kong – 25 days
- 12. 40% of Africa’s Industrial output 50% of Africa’s Spending power 25% of Africa’s GDP
- 13. South African economy YEAR 1994 THEN 2004 IN 2011 GDP (billions) R 482 US$ 60 R 1 374 US$ 171 R 2 964 US$ 408,8 Merchandise exports (billions) R 69, 8 US$ 8.7 R 281,8 US$ 35.2 R671 US$ 92,5 GDP Growth 3,2% 4,6% 3,1 % •Open economy •Diversified Industrial sectors •South Africa positioned as a manufacturing centre of excellence •Sound business case for investment and profit •Gateway to Africa and markets of more than 200 Million consumers •Africa is the next big story after China and India
- 14. South Africa’s leading trade partners (2011) Export Country Rand (millions) 1. China 85,297 2. United States 59,629 3. Japan 55,295 4. Germany 43,168 5. United Kingdom 28,681 6. India 24,333 7. Netherlands 21,504 8. Switzerland 21,373 Import Country Rand (millions) 1. China 103,130 2. Germany 77,263 3. United States 58,395 4. Japan 34,527 5. Saudi Arabia 32,300 6. India 29,195 7. United Kingdom 29,144 8. Iran 26,697
- 15. Major sources of foreign direct investment into South Africa Source Country Projects Capex Avg Capex * Jobs Created Avg Jobs Companies United States 118 57,267.5 485.0 15,150 128 102 UK 90 55,385.5 615.6 16,786 186 71 Germany 43 17,646.0 410.7 6,382 148 38 India 34 22,101.5 650.0 6,074 178 26 France 24 10,326.8 430.2 1,960 81 21 China 23 13,397.8 582.8 8,595 373 20 Switzerland 21 12,168.9 579.6 7,960 379 16 Australia 21 57,292.6 2728.4 6,887 327 15 Japan 20 18,847.5 942.6 3,097 154 16 Netherlands 19 4,842.7 255.0 1,508 79 15 Notes: 1) © fDi Intelligence, from the Financial Times Ltd 2012. Data subject to terms and conditions of use 2003 – Feb.2012 * Rand millions (I EURO = approx R10)
- 16. Companies entering the region: • Walmart has recently acquired Massmart, a South African retailer for $2.4 bn • Massmart has operations in 14 African countries with a target of opening 150 new stores across Africa over the next three years • The acquisition positions Walmart to expand into fast growing African markets • Rockwell Automation has recently purchased Hiprom, an automation systems integrator based in South Africa • The acquisition is set to accelerate the growth of Rockwell Automation’s business in the Sub-Saharan region • Aon South Africa, a subsidiary of Aon Corporation, has acquired Glenrand MIB • The acquisition will add approximately 15,000 corporate, public sector, specialty and commercial clients to Aon’s client base •Glenrand MIB’s existing operations in Sub-Saharan Africa will strengthen Aon’s network, which together span owned offices in 14 countries across the region
- 17. South African trade agreements • USA Africa Growth and Opportunity Act (AGOA) •South Africa – European Union (EU) Trade, Development and Co-operation Agreement (TDCA •Southern African Development Community (SADC) FTA •Southern African Customs Union (SACU) - European Free Trade Association (EFTA) FTA Agreements in the making: • PTA with India • PTA with Mercosur • SADC-EAC- COMESA T-FTA
- 18. South Africa
- 19. South Africa’s investment environment South Africa today is one of the most sophisticated and striving emergingSouth Africa today is one of the most sophisticated and striving emerging markets globally, mainly because of …markets globally, mainly because of … Political & economic stability with sound macro-economic management Competitive sectors/industries Favourable cost of doing business Skills availability World class financial system Excellent transport & logistical infrastructure Abundant natural resources
- 20. Defining categories in SA’s property market NON-URBAN TOWNSHIP RURAL URBAN METROPOLITAN SOWETO Tembisa, Mamelodi Khayelisha Umlazi Graaff-Reinett Mabiligwe Umthatha Thohoyandou Kroonstaad Durban Johannesburg Cape Town Pretoria Port Elizaberth
- 21. Why invest in the South African property market? • SA is a country of sunshine & beautiful beaches • SA political has left a shortage of property and this factor created long term growth potential • Less restrictions to ownership • A growing economy focused on developing a strong middle class provides an increased demand for homes • Substantial taxation breaks of up to 20% are on offer • A tax break on rental for five years is available for renovation projects
- 22. Why invest in the South African property market? • The housing property market shows steady growth of about 13% in the Western Cape and 15.6% in metro areas • Favourable exchange rate for the American market as $1 = R8.6 • A strong regulated property purchase system creates Investor confidence in the market • All documentation and transactions are written in English with a transparent transfer system • No stamp duty free is an added benefit for property purchase • No VAT is incurred for property purchase, although sellers will pay agents’ fees that are subject to VAT
- 23. Trends and outlook of SA’s property market • SA trends have their own identity & deviation from international trends sales have improved since the global economic crisis • Change of faces of homeowners – (in the last 5 yrs from 40%- 56% non-white) • Great benefits from the NCA, hence low impact from crisis • Strong legal support such as the Consumer Protection Act (CPA) • Requirement for PoE submission for NQF 4 & 5 respectively for practitioners
- 24. SA’s position in the property market •Ranked 6th in the world by Knight Frank Global Housing Index, when Dubai -38th , UK-11th , and USA 22nd , led by China •Full-titles sales remain the backbone of SA’s real estate sales •In the residential category R300k –R5m full-title sales in 5 yrs rose from •R75bn – R111bn before plumbing to R52bn •According to StatSA there has been a decline of 11.2% of plans passed y/y & 33.5% construction in buildings completed outside of expenditureby government on RDP housing and social housing projects
- 26. SA growth prospects Source: House Price South Africa, 2011 At this point House Price South Africa has forecast a blanket of 5% house price growth in South Africa over the next 5 years subject to annual fluctuations. The forecast for the next 5 years after that to 2020 is 3%- 5%, subject to annual fluctuations. Adjustments to this prediction will be made as significant economic and social data comes to light.
- 27. SA’s property returns by sector
- 28. Opportunities in the SA’s property market • Real Estate including the leisure market • Commercial Space • Sectional titles • Public Private Partnership with governmental initiatives
- 29. Examples of industry players in the SA’s property market
- 30. South Africa is open for businessSouth Africa is open for business SOUTH AFRICA CONSULATE GENERALSOUTH AFRICA CONSULATE GENERAL CHICAGOCHICAGO 312 939 7929312 939 7929 dmaluleke@thedti.gov.zadmaluleke@thedti.gov.za
Notes de l'éditeur
- 50 plus sovereign countries Brutal past and an uncertain future Deep pockets poverty amongst the abundance of wealth An abundance of untapped resources Not one country
- South Africa is the economic powerhouse of Africa, producing more than 40% of the continent’s industrial output and accounting for 50% of the continent’s spending power. South Africa’s GDP comprises 25% of the entire continent’s GDP. With excellent transport infrastructure and boasting two world-class ports in Durban & Richards Bay, South Africa is the gateway to sub-Saharan Africa. The port of Durban is the busiest in Africa and the largest container port in the southern hemisphere, handling nearly 2,3 million container moves per annum.