Global Players from Emerging Markets: Strengthening ... - Unctad

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140 Outward Foreign Direct Investment by Enterprises from South Africa Table 7. Drivers and motives of OFDI by South African enterprises, by types of enterprises and industry Industry Drivers and motives Enterprises Stated-owned enterprises Government policy supports regional ooperation and infrastructure development Investment opportunities Privatisation in host countries Regional network of operations Private enterprises Natural resources and Access to natural resources agriculture Investment opportunities from privatization Control value chains Access markets Lower cost of production Manufacturing Access to markets and expand growth Sourcing of materials Diversification Trade-supporting Services Access to markets and expand growth Investment opportunities from privatizations Strengthen market position Regional networks Financial motives Transfer of listing and raising of capital Source: Author. provided for changing their listing varied, their core motivations have been the same (Goster 2002). These reasons include the following: (i) Access to larger and cheaper capital to finance expansion; (ii) The possibility of being listed on the London Stock Exchange; and (iii) Companies that encountered saturated domestic market were seeking expansion of markets abroad. Increasing competition and market saturation at home encouraged South African companies to invest abroad to improve competitiveness and profitability. Historical ties played a role in the internationalization, as did investment opportunities that emerged in neighbouring countries through privatization (box 1). For instance, long familiarity with the business environment in the United Kingdom and strong personal and historical ties with the host country were the main reasons for South African OFDI in the United Industrial Development Corporation Eskom PetroSA Transnet South African Airways Anglogold Ashanti Illovo Sugar Metorex Sappi Mondi Sappi Steinhoff DPI Plastics Spamjaard Universal Footwear Sasol, Illovo Sugar Datatec MTN Standard Bank Absa Bank Dimension Data Anglo American Kingdom. The policies adopted by the South African Government to strengthen regional cooperation have led South African SOEs to invest in the region in developing infrastructure facilities and to support business in Africa under the “African Renaissance” initiative. OFDI in the SADC region was influenced by the selective relaxation of exchange controls within the regional group (see OFDI policies). The improved OFDI policy environment (liberalization and relaxation of exchange controls) also contributed to the internationalization of South African companies. • Company drivers. Corporate-specific factors in South African OFDI are similar to those for OFDI of other developing countries. They can be grouped, for instance, into resource-seeking and market-seeking. Resource-seeking. Access to natural resources had led South African companies to invest in Africa and as far away as Australia. For example, in 2003, PetroSA acquired an interest in offshore facilities in Gabon and in Algeria. In 2004, it acquired an interest
Table 8. Selected small and medium-sized TNCs from South Africa CHAPTER XI 141 Company Subsidiary/host country Industry Reasons for OFDI Spanjaard Ltd • Molyslip Zimbabwe (100%) • Spanjaard UK (100%) Metorex • Metorex Burkino Faso BV (Netherlands/Burkino Faso) (100%) • Abbey Commodities (Switzerland) (100%) • Chibuluma Mines Plc (Zambia) (85%) • Ruashi Project (DRC) (68%) DPI Plastics (Pty) Ltd • DPI Oregon (Zimbabwe) (50%) • DPI-Simba (Tanzania) (50%) • Aqualia (Pty) (Mauritius) • DPI International Ltd (Mauritius) (100%) Universal Footwear (Pty) Ltd Box 1. Privatization and investment opportunities for South African OFDI Privatization and investment opportunities in neighbouring countries such as Mozambique and the United Republic of Tanzania encouraged South African companies and SOEs to invest in these countries. The State-owned Industrial Development Corporation (IDC) supports infrastructure development in the Southern African region through taking up equity stakes in projects. For instance, it took a 25 per cent equity interest in the first phase of the Mozal aluminium smelter project in Maputo (Mozambique) and participated in Mozal 2, the expansion project, for a cumulative investment of $538 million. a IDC has an interest in 89 projects and overseas activities in 28 African countries. b Its investment in the continent supports the South African Government’s policy towards African regional cooperation and also responds to investment opportunities offered by privatization in the host country. Similarly, Eskom, an energy utility SOE, has invested in a joint venture project to supply electricity to the Mozal project in Mozambique. It invested about $32 million in 2002 in Lesotho’s main telecommunications service provider. Transnet (a transportation SOE), through its airline subsidiary South African Airways (Pty) Ltd (SAA), acquired a 49 per cent stake in the Tanzanian national airline and has a 19 per cent interest in the Railway Systems of Zambia. Absa Ltd has operations in four African countries: Mozambique, Zimbabwe, the United Republic of Tanzania and Namibia. The first three were results of privatization that provided investment opportunities in Banco Austral in Mozambique, Commercial Bank of Zimbabwe and the National Bank of Commerce in the United Republic of Tanzania. Source: Author, based on companies’ information, BusinessMap database and IDC website. Notes: a BusinessMap FDI database. b IDC website: www.idc.co.za. Chemicals speciality Geographical diversification Industries are zinc, marketing, copper and cobalt. Its UK investment was to establish a conduit for exports of specialized lubicrants and metal powders to that market. The company derives 28% of its revenue outside South Africa. Resource seeking Metorex is a medium-sized mining company. Plastics manufacture Market seeking Two subsidiaries in China Retailing-wholesale Source materials and access to production facilities Source: JSE Securities Exchange, various publications.
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United Nations Conference on Trade
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Preface The landscape of internatio
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Acknowledgements This publication i
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x Global Players from Emerging Mark
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