Located at the southern tip of the continent of Africa, South Africa is a middle-income emerging market with an abundant supply of natural and labor resources; well-developed financial, legal, communications, energy, and transportation sectors; a stock exchange that is the 18th largest in the world; and a modern infrastructure supporting a relatively efficient distribution of goods to major urban centers throughout the region.

South Africa: The Value Proposition 

South Africa's scenic beauty, magnificent outdoors, sunny climate, cultural diversity, breathtaking scenery, acres of golf courses, and reputation for delivering value for money have made it one of the world's fastest growing leisure—and business—travel destinations. Little wonder South Africa is increasingly becoming an ideal location for international congresses and conventions. 

World-class venues and a supporting infrastructure, top international events, and South Africans' passion for sport combine to make the country a huge draw for sports fans as well. More than 10% of foreign tourists come to South Africa to watch or participate in sporting events, with spectators accounting for 60% to 80% of these arrivals. According to the Department of Tourism, the 2010 World Cup showcased the country to an international audience of approximately 32 million viewers and introduced South Africa to non-traditional markets in Latin America, Eastern Europe and Asia. 

In addition, South Africa boasts a strategic location, a favorable regulatory environment, a sophisticated financial infrastructure, a well-developed transportation system, an established manufacturing base, and a sophisticated information technology structure. The country's favorable demographics and rising middle class make it an attractive market opportunity for consumer as well as business-to-business products and services. 

Strategic Location 

South Africa is a gateway to the rest of Africa. This country accounts for six percent of the population, 18% of the total gross domestic product, and 50% of the purchasing power on the continent, according to U.S. Commercial Service estimates. South Africa is the best entry point into the bigger African market, and most companies are using it to test the waters before a full-fledged dive into Africa. 

Major shipping lanes pass along the South African coastline in the south Atlantic and Indian oceans. Approximately 96% of the country's exports are conveyed by sea, and seven commercial ports are conduits for trade between South Africa and its Southern African partners. 

Favorable Regulatory Environment 

Since the World Trade Organization's (WTO) Uruguay Round in 1994, Southern African Customs Union (SACU) countries, led by South Africa, have reformed and simplified their common tariff structure. Tariff rates have been reduced from a simple average of more than 20% to 5.8%. Notwithstanding these reforms, importers have complained that the SACU tariff schedule remains complex and can create uncertainty. 

The government has developed a number of policies and has passed a number of laws that aim to alleviate the pressures of social imbalances on natural resources and to promote sustainable development. The government has also initiated several housing development, electrification and water services programs, as well as identified focal areas for economic development and job creation. South Africa's intellectual property laws and practices generally conform to those of developed countries, except in the area of geographical indications where there are notable deficiencies. 

Sophisticated Financial Sector 

South Africa's financial services sector, backed by a sound regulatory and legal framework, is superb. Dozens of domestic and foreign institutions provide a full range of services: commercial, retail and merchant banking; mortgage lending; insurance and investment. Foreign banks are well represented and electronic banking facilities have nationwide networks of automatic teller machines (ATMs) and internet banking facilities. The Banks Act is primarily based on similar legislation in the United Kingdom, Australia and Canada. 

Transportation Infrastructure 

South Africa has a modern and well-developed transportation infrastructure. The air and rail networks are the largest on the continent. And the country's ports provide a natural stopover for shipping to and from Europe, the Americas, Asia, Australia and both coasts of Africa. In 2009, the Chinese Ministry of Commerce reported that about 1,000 Chinese enterprises do business in Africa, spanning fields such as trade, transportation, agriculture, and the processing of agricultural products. 

Established Manufacturing Base 

South Africa has developed an established, diversified manufacturing base that has shown its resilience and potential to compete in the global economy. The main sector of South African manufacturing includes automobiles and their associated parts, textiles and clothing, food processing and beverages, mineral-based industries, machinery and equipment, and pulp and paper. The manufacturing sector provides a locus for stimulating the growth of other activities and industries. 

Information and Communications Technologies 

The country's established and sophisticated indigenous information and communications technology (ICT) and electronics sector comprises more than 3,000 companies. It has ready access to cutting-edge technologies, equipment and skills and has the advantage of access to the rapid expansion of telecommunications and IT throughout the African continent. South African software developers are recognized as world leaders in innovation, production and cost efficiency backed by an excellent local infrastructure. 

With the diversity of the local market, first world know-how, and a developing country environment, South Africa is an ideal test lab for new innovations. Gartner, the international research group, rates South Africa as one of its top 30 software development outsourcing destinations putting it on par with Israel, in the Europe, Middle East and Africa region, and next to Australia and India globally. 

Favorable Demographics 

South Africa's black middle class has grown by 30% in just over a year, with their numbers increasing from two million to 2.6 million. The percentage of South African households with a middle class standard of living increased from 23% in the period 1998-2000 to 26% in 2004-2006. 

The black middle class in South Africa are called Black Diamonds. They are a product of the South African government's Black Economic Empowerment (BEE) program that began in 1994 after the end of the apartheid era. They form approximately 10% of the 22 million over-18-year-old black South Africans and contribute up to 40% of the spending in this group. This segment is growing rapidly. 

South Africa's well-off middle class has the spending power, and the country's millions of upwardly mobile poor hold tremendous buying potential. Most of these people are entering the middle class for the first time and materialistic possessions like houses, cars and electronics are being bought with gusto. Their spending remained resilient despite the recent recession.

 

 

( linda )21 Dec,2011

Other News:
Revisiting the Correct Application of the Delivery Terms—Part 1
Doing Business in South Africa—Part 2: The Value Proposition
Where to go for Help
Revisiting the Correct Application of the Delivery Terms—Part 2
Doing Business in South Africa—Part 3: Who’s Doing Business There Now
How you Convert Foreign Currency Transactions into Sterling
Completing the NAFTA Certificate of Origin—Part 1
Doing Business in South Africa—Part 4: Operational and Marketing Challenges