08.11.2019 Views

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

South Africa's investment proposal

South Africa's investment proposal

SHOW MORE
SHOW LESS

You also want an ePaper? Increase the reach of your titles

YUMPU automatically turns print PDFs into web optimized ePapers that Google loves.

100 |<br />

FINANCE AND INSURANCE<br />

• <strong>The</strong> f<strong>in</strong>ance and <strong>in</strong>surance sector, which accounts<br />

<strong>for</strong> 6.4% of overall GDP, is one of the largest and<br />

fastest grow<strong>in</strong>g. It recorded GDP growth of 4.7%<br />

per year over the period 2000 to 2018.<br />

• <strong>The</strong> sector is well developed and comparable to<br />

those <strong>in</strong> developed economies. It encompasses<br />

all types of f<strong>in</strong>ancial <strong>in</strong>termediation, <strong>in</strong>clud<strong>in</strong>g<br />

commercial and retail bank<strong>in</strong>g, <strong>in</strong>vestment<br />

asset management, <strong>in</strong>surance and pension fund<br />

management activities.<br />

• <strong>South</strong> <strong>Africa</strong> has highly developed f<strong>in</strong>ancial markets<br />

and a well-function<strong>in</strong>g, strongly regulated f<strong>in</strong>ancial<br />

<strong>in</strong>dustry. <strong>The</strong> major banks are Standard Bank, Absa<br />

Group, FirstRand, Nedbank and Capitec, some of<br />

which provide commercial, retail and <strong>in</strong>vestment<br />

bank<strong>in</strong>g services throughout the cont<strong>in</strong>ent. <strong>The</strong><br />

proliferation of technological <strong>in</strong>novations has led to<br />

an <strong>in</strong>creas<strong>in</strong>g number of players offer<strong>in</strong>g valueadd<strong>in</strong>g<br />

compet<strong>in</strong>g services and products <strong>for</strong> both<br />

the ma<strong>in</strong>stream and underserviced segments of the<br />

population.<br />

• <strong>The</strong> <strong>in</strong>surance segment accounts <strong>for</strong> around 80%<br />

of total direct premiums generated on the <strong>Africa</strong>n<br />

cont<strong>in</strong>ent. Life <strong>in</strong>surance is dom<strong>in</strong>ant, account<strong>in</strong>g<br />

<strong>for</strong> 75% of the <strong>in</strong>surance sector.<br />

SELECT INVESTMENT OPPORTUNITIES IN FINANCE AND<br />

INSURANCE:<br />

• <strong>The</strong> f<strong>in</strong>ancial services segment provides significant growth<br />

opportunities, particularly <strong>in</strong> the lower ends of the consumer market.<br />

Despite a highly concentrated bank<strong>in</strong>g <strong>in</strong>dustry structure, smaller<br />

banks have been tak<strong>in</strong>g advantage of this potential.<br />

• Black economic empowerment legislation cont<strong>in</strong>ues to drive demand<br />

<strong>for</strong> private equity funds, creat<strong>in</strong>g growth opportunities <strong>for</strong> <strong>in</strong>vestors <strong>in</strong><br />

this area.<br />

• Demand <strong>for</strong> asset management services is grow<strong>in</strong>g on the back of<br />

changes <strong>in</strong> tax legislation and an expand<strong>in</strong>g middle class<br />

• Increas<strong>in</strong>g penetration rates of the non-life <strong>in</strong>surance sub-sector<br />

and enhanced life densities are expected to drive robust growth <strong>in</strong><br />

<strong>South</strong> <strong>Africa</strong>’s <strong>in</strong>surance sector, represent<strong>in</strong>g a significant <strong>in</strong>vestment<br />

opportunity.<br />

• Insurance solutions such as pay-per-use <strong>in</strong>surance (<strong>for</strong> example, on<br />

car <strong>in</strong>surance), <strong>in</strong>surance comb<strong>in</strong>ed with f<strong>in</strong>anc<strong>in</strong>g (<strong>for</strong> example, microloans<br />

to purchase solar panels).<br />

• Specialised data provision and data management services.<br />

COMMUNICATIONS<br />

• <strong>The</strong> communications sector accounts <strong>for</strong> 1.9% of<br />

GDP and is a key enabler of other bus<strong>in</strong>ess services<br />

sectors <strong>in</strong> the <strong>South</strong> <strong>Africa</strong>n economy. It is also one<br />

of its fastest-grow<strong>in</strong>g sectors.<br />

• <strong>The</strong> sector encompasses telecommunications (key<br />

players be<strong>in</strong>g fixed-l<strong>in</strong>e operator Telkom, and mobile<br />

ICT companies MTN, Vodacom, Cell C and Telkom),<br />

national postal services (predom<strong>in</strong>antly state-led)<br />

and associated courier activities.<br />

• <strong>The</strong> liberalisation of the domestic telecommunications<br />

market, particularly due to the Electronic<br />

Communications Act of 2005, facilitated the<br />

proliferation of new entrants and <strong>in</strong>creased<br />

competition <strong>in</strong> the sector.<br />

• <strong>The</strong> country’s telecommunications sector is<br />

among the largest on the <strong>Africa</strong>n cont<strong>in</strong>ent. It is<br />

also deemed to be one of the most complex and<br />

technologically advanced telecommunications<br />

systems.<br />

• Domestic telecommunications are at the <strong>for</strong>efront<br />

with respect to the adoption of technological<br />

<strong>in</strong>novations compared to regional peers, result<strong>in</strong>g <strong>in</strong><br />

the local <strong>in</strong>dustry’s grow<strong>in</strong>g penetration of regional<br />

markets.<br />

• Saturation of the domestic mobile market and shifts<br />

from voice and SMS to data have created significant<br />

growth opportunities <strong>in</strong> 4G Long-Term Evolution<br />

(LTE) services.<br />

• Release of high-demand broadband spectrum,<br />

aimed at reduc<strong>in</strong>g data costs and encourag<strong>in</strong>g<br />

<strong>in</strong>vestment, is imm<strong>in</strong>ent.<br />

SELECT INVESTMENT OPPORTUNITIES IN<br />

COMMUNICATIONS:<br />

• Commencement of the spectrum licens<strong>in</strong>g process is<br />

imm<strong>in</strong>ent, open<strong>in</strong>g up <strong>in</strong>vestment opportunities <strong>in</strong> the digital<br />

and telecommunications <strong>in</strong>dustries. Investment <strong>in</strong> advanced<br />

telecommunication applications: Internet of Th<strong>in</strong>gs (IoT) applications<br />

such as telematics and smart devices; <strong>in</strong>ter-device communications<br />

technology.<br />

• Big data tools <strong>for</strong> report<strong>in</strong>g and analytics.<br />

• Resell<strong>in</strong>g of global cloud plat<strong>for</strong>ms.<br />

• Bus<strong>in</strong>ess franchis<strong>in</strong>g opportunities <strong>in</strong> Voice over Internet Protocol<br />

(VoIP) solutions.<br />

• e-Services across <strong>in</strong>dustries (e.g. technology/applications <strong>for</strong><br />

e-government and e-health).<br />

• Data centres, LTE-A data-only mobile network play.<br />

• Opportunities <strong>for</strong> consolidation or <strong>in</strong>vestment <strong>in</strong> fibre <strong>in</strong>ternet service<br />

providers (ISPs).<br />

• Frontier ICT technology skills development.

Hooray! Your file is uploaded and ready to be published.

Saved successfully!

Ooh no, something went wrong!