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

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10 | SOUTH AFRICA AT A GLANCE: ECONOMIC INDICATORS Measure Fast facts Key highlights Gross domestic product (GDP) GDP growth Consumer price inflation Interest rates Exchange rate Trade in goods and services • 2018: USD368.3-billion (ZAR4.87-trillion) • 2017: USD349.6-billion (ZAR4.65-trillion) • 2016: USD296.4-billion (ZAR4.35-trillion) • 2018: 0.8% • 2017: 1.4% • 2016: 0.4% • 2000 to 2018 (average): 2.8% p.a. • 2004 to 2007 average: 5.2% p.a. • 2018: 4.6% (average) • 2010 to 2018 average: 5.3% Policy rate (repurchase rate): • 2018: 6.58% (average) • 21 October 2019: 6.5% • 2018 average: USD1.00 = ZAR13.23 • 21 October 2019: USD1.00=ZAR14.75 • Exports in 2018: USD110.1-billion (ZAR1.46-trillion) • Imports in 2018: USD 108.9-billion (ZAR1.44-trillion) • South Africa has the 30 th -largest economy in the world (GDP size on a PPP USD basis) and is one of Africa’s largest, accounting for approximately 16% of the continent’s GDP. • Small-, medium- and micro-enterprises contributed an estimated 36% to GDP in 2017. • Subdued growth since 2015 due to weak confidence, low investment and employment creation, as well as subdued global demand for some industrial commodities, which weighed on the prices and volume demand for South Africa’s primary export commodities basket. • Implementation of key structural reforms currently underway in sectors including mining, telecommunications and tourism could significantly raise South Africa’s potential growth rate. • Inflation expectations remain anchored well within the SA Reserve Bank’s target band. • Consumer price inflation expected to average 4.2% in 2019 (SA Reserve Bank). • Compared to developed markets, South Africa’s relatively higher interest rates offer attractive returns for yield-seeking investors. The recent levels of South Africa’s prime lending interest rates (banks’ unsecured lending rate to prime borrowers) are as follows: • 2018: 10.08% (average) • 21 October 2019: 10.00% • The rand is the 20 th most-traded currency globally, with over USD21-billion traded daily. • In 2018, Asia was the largest regional destination for South African exports, accounting for 31.3% of total exports by value (primarily mineral commodities), followed by the rest of Africa (26.5%, mainly food products, beverages, machinery, motor vehicles, minerals and agriculture products). Foreign investment Portfolio investment inflows: • 2018: USD6.8-billion (1.8% of GDP) • 2010 to 2018 average: 3.8% of GDP Fixed investment inflows: • 2018: USD5.34-billion (1.4% of GDP) • 2010-2018 average: 1.1% of GDP • South Africa was named the Offshoring Destination of the Year at the 2016 Global Sourcing Association (GSA) Awards. • Three of the best cities for investment expansion of international companies in the biotechnology sector are in South Africa - Johannesburg, Durban and Stellenbosch (Financial Times, 2017). • South Africa makes up approximately 5% of institutional bond holders’ portfolios for equities and bonds. Sources: Statistics South Africa, South African Reserve Bank (SARB), World Bank, EPFR, Bank for International Settlements, Department of Small Business Development, National Treasury, Industrial Development Corporation (IDC) calculations
| 11 SOUTH AFRICA AT A GLANCE: SOCIO-ECONOMIC INDICATORS Measure Fast facts Key highlights Population Highly urbanised population Middle-class indicators Labour market • 58.8-million • 38.4-million working-age population • 64% under the age of 35 • 6% over the age of 65 Percentage of households: • Living in urban areas: 66.4% (2018) • With access to electricity supply for lighting: 90.3% (2016) • 68% have access to mobile phones (2017) • 54% have access to the internet (2016) • 153 mobile subscriptions per 100 inhabitants (2018) • 80% are banked (including social grant recipients) (2018) • 97.1% primary school enrolment rate; 98.8% secondary (2017) • 14.3% of population has a post-school or other qualification (2018) • Total employment in Q2 2019: 16.3-million individuals • Unemployment rate in 2018: 27.1% • Unemployment rate in Q2 2019: 29% • South Africa’s young population presents major opportunities for investors, as the majority of the population is under 35 years of age. • Relatively high access to basic infrastructure. • Highly urbanised country presents concentrated markets, thus reducing distribution costs. • South Africa has a growing middle class. In 2015, the number of people living below the upper-bound poverty line was estimated at 55.5%, down from 66.6% in 2006. • Ranked 17 th in the world for mobile subscriptions. • Increasing primary school enrolments create a base for future skilled workers. • There are several initiatives between the government, private sector and civic organisations to address unemployment (e.g. the Presidential Jobs Summit). GDP per capita USD (PPP) : • 1997: USD7 191 • 2000: USD7 731 • 2018: USD13 675 • South Africa is classified as a middleincome country and is ranked sixthhighest in Africa in terms of GDP (PPP) per capita. Gini coefficient • 2006: 0.72 • 2015: 0.68 • South Africa has a highly progressive social spending system, without which the Gini coefficient would be 10.5% higher. • 17.9-million people (31% of the overall population) benefited from social grants in 2018. Sources: Statistics South Africa, South African Reserve Bank (SARB), Finscope, World Bank, International Monetary Fund (IMF), Deloitte, PWC, National Treasury, IDC
Page 1 and 2: THE CASE FOR INVESTING IN SOUTH AFR
Page 3 and 4: CONTENTS 1. WHY INVEST IN SOUTH AFR
Page 5 and 6: 10 REASONS WHY YOU SHOULD INVEST IN
Page 7: | 3 WORLD-RENOWNED FOR INDUSTRIAL I
Page 11 and 12: | 7 SOUTH AFRICA AT A GLANCE • So
Page 13: | 9 SOUTH AFRICA AT A GLANCE: INFRA
Page 19: 3. ECONOMIC OVERVIEW
Page 22 and 23: 18 | - Manufacturing output increas
Page 24 and 25: 20 | FISCAL POLICY GEARED TOWARDS F
Page 26 and 27: 22 | GLOBAL ECONOMIC DEVELOPMENTS
Page 28 and 29: 24 | RELATIVE PERFORMANCE OF SELECT
Page 31: 4. POLICY FRAMEWORK
Page 34 and 35: 30 | MICROECONOMIC POLICY INTERVENT
Page 36 and 37: 32 | INDUSTRIAL POLICY SUPPORT Attr
Page 38 and 39: 34 | TRADE POLICY: MAIN BENEFITS OF
Page 41: 5. ENABLING ENVIRONMENT
Page 44 and 45: 40 | EASE OF DOING BUSINESS: SOUTH
Page 46 and 47: 42 | ATTRACTIVE INCENTIVES TO SUPPO
Page 49: 6. OPPORTUNITIES FOR INVESTORS
Page 52 and 53: 48 | SECTORAL STRENGTHS OF SOUTH AF
Page 54 and 55: 50 | EXPORT-ORIENTED SECTORAL OPPOR
Page 56 and 57: 52 | SOUTH AFRICA AS A KEY REGIONAL
Page 59: 6.1 AGRICULTURE AND AGRO-PROCESSING
Page 62 and 63: 58 | SA GDP, 2018 WELL-ESTABLISHED,
Page 64 and 65:
60 | AGRICULTURE AND AGRO-PROCESSIN
Page 67:
6.2 MINING AND MINERALS BENEFICIATI
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66 | A HIGHLY DEVELOPED AND DIVERSI
Page 72 and 73:
68 | BASE METALS AND METALS FABRICA
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70 | INVESTMENT OPPORTUNITIES IN MI
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72 |
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74 |
Page 80 and 81:
76 | MANUFACTURING SECTOR’S EXPOR
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78 | AUTOMOTIVE INDUSTRY: EXPORT-OR
Page 84 and 85:
80 | AUTOMOTIVE VALUE CHAIN: INVEST
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82 | ELECTRICAL MACHINERY AND EQUIP
Page 88 and 89:
84 | CHEMICALS AND CHEMICAL PRODUCT
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86 | CLOTHING, TEXTILES, FOOTWEAR A
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88 | ADVANCED MANUFACTURING • The
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90 | ADVANCED MANUFACTURING: OPPORT
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92 |
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94 |
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96 | Contribution to the economy St
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98 | BUSINESS PROCESS OUTSOURCING (
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100 | FINANCE AND INSURANCE • The
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102 | OCEANS ECONOMY • Several fa
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| 107 AN EXTENSIVE INFRASTRUCTURE D
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| 109 INFRASTRUCTURE DEVELOPMENT PL
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GREEN INFRASTRUCTURE INVESTMENT OPP
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SOUTH AFRICA: BUILDING PARTNERSHIPS
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