433369666-The-Case-for-Investing-in-South-Africa

96 |
Contribution to the
economy
Structure
Extensive sectoral
linkages
The broad services sector is the largest in the economy, accounting for 76.3% of
overall GDP. The total employment complement of services-related sectors amounts to
9.7-million people, representing 79% of total employment in South Africa.
The degree of concentration varies widely, from a banking industry dominated by four
large domestic banks to a business services sub-sector encompassing numerous
players with varying degrees of market power, depending on the segment. The retail
and wholesale trade sub-sector is dominated by large companies operating alongside
numerous small- to medium-sized firms.
The services sector is central to the functioning of basically all industries in the
economy due to its extensive linkages (backward, forward and lateral) with a multitude
of input suppliers and producers, as well as end-user consumer markets.
ATTRACTIVENESS OF SOUTH AFRICA’S SERVICES SECTOR
Basis for comparative advantage
Sophisticated, world-class and well-regulated
financial sector that has effectively withstood crises
in global financial markets.
South Africa is sub-Saharan Africa’s largest exporter
of commercial services.
Strong backward, lateral and forward linkages with
other sectors of the economy.
Competitive cost structure relative to global
benchmarks.
Certain segments, such as BPO and film and
television production, draw significant public sector
support, including incentives.
South Africa is recognised as one of the leading
offshore destinations for the global outsourcing of
business services.
Select investment trends in these sectors
• Significant investment has flowed into the
development of South Africa’s offshore business
process outsourcing (BPO) sector, which has been
experiencing robust, double-digit annual rates of
growth.
• Major Chinese investment has been made in
South Africa’s financial sector, accompanying
the strengthening of bilateral ties and the rapid
expansion of trade and investment between the two
countries.
• Some of the world’s largest wholesale and retail
corporates, such as Walmart, H&M, Zara and Mango,
have invested in South Africa in recent years.