RIYADH, 27 April 2004 — South Africa offers lucrative opportunities to industrialists, businessmen and other investors, according to Ambassador Abdulhamied Gabier.
It is the gateway to other markets in Africa and occupies a strategic location along the world trade routes, providing easy access to all major markets, the ambassador told Arab News.
He said that apart from the abundance of natural local resources the country also has a well-developed industrial infrastructure. “South Africa boasts sophisticated financial sectors and has developed excellent road, rail and air infrastructure and telecommunications. It offers low energy costs and low-cost industrial and residential land and buildings,” he said.
The region has one of the world’s highest concentrations of mineral deposits which include manganese ore, platinum group metals, chrome ore, gold, alumino-silicates, vanadium, diamonds, coal and oil. These make the region one of the leading investment destinations.
Gabier said that in a leading international investment study location, South Africa was ranked fifth. The US Department of Commerce lists Pretoria among the top 10 emerging world markets.
Among the factors contributing this conclusion are:
• Significant balance of payments surpluses, which make South Africa an international trader of stature.
• The government as well as the major political parties promote foreign investment and a free-market economy to achieve growth.
• South Africa was a founding member of the General Agreement on Trade and Tariffs and is involved in the World Trade Organization.
• Environmental conservation and protection receive high priority in South Africa that abounds with plants and indigenous animals.
• The Competition Board regulates or prevents monopolistic situations and restrictive practices.
Gabier said that some of his country’s natural strengths include a well-developed physical infrastructure in electricity generation, railroad network (34,000 of track), road network (50.6 km per 1000 sq. km.).
“There are also efficient postal facilities, technological resources, good medical facilities, export-oriented economy, low electricity costs and sophisticated financial and commercial services environment,” Gabier said.
South Africa’s top ten investment sectors include
• Telecommunications, ZAR 6.93 billion;
• Energy and oil, ZAR4.51 billion;
• Motor and components , ZAR 4.24 billion;
• Food and beverages, ZAR4.14 billion;
• Chemicals and plastics, ZAR2.99 billion;
• Mining and quarrying, ZAR2.41 billion;
• Hotel, leisure and gaming, ZAR1.16 billion;
• Property, ZAR1.27 billion;
• and financial services, ZAR1.12 billion.
Gabier noted that Saudi companies have invested in his country’s services and forestry sectors as well as in the telecommunications industry.
There are also many opportunities in the downstream petrochemical industry. Joint ventures have also been signed between South Africa and Saudi Arabia in engineering.
The breakdown of economic activities in South Africa is as follows: Manufacturing, 23%; financial services, 17.9%; commerce and trade, 16.1%; government, 15.2%; mining, 7.7%; transport, 7.7%; agriculture, 4.5%; and others, 7.0%.
Some 20 years ago, the South African economy was dominated by gold mining and agriculture. The government realized that this situation was not sustainable and encouraged the development of the manufacturing sector.
While the mining sector is still an important income contributor to the national economy and still one of the largest in the world, it has been overtaken by the manufacturing sector, which boasts a vast diversity of products with a good mix of large and small-scale industries like the automotive sector.
South Africa’s main imports are capital goods.
“South Africa has preferential market access to a number of countries including the European Union (EU), Canada, Hungary, Japan, Norway, Switzerland, and the United States,” Gabier said.
With its climatic conditions opposite to those northern countries of the world, South Africa can offer summer products during northern winters (like summer fruit during December) and absorb the production overruns on seasonally affected products of the North (like air conditioners).
Since the establishment of a democratic government, South Africa has proved that it can manage its economy efficiently. This is reflected in a steady decline in inflation from 12% to around 6.5%.
This trend is expected to continue with a rate of 5% by the coming year. In addition, the government is committed to reducing company taxation, which was steadily reduced from a high of 50% to 30% in the current financial year.
Mohammad Dangor, South African Consul General in Jeddah, said that his country’s national GDP in 1996 was US$126 billion, the biggest in Africa.
“We also generate more than half of Africa’s electricity at rates among the cheapest in the world.
South Africa’s six main trading partners are the UK, USA, Germany, Japan, Italy, and The Netherlands. We have an economically active labor force of 14.5 million people with a per capita GDP of about $2,985,” he said.
He said that there are no restrictions on foreign investment and profit repatriation is allowed on tax-paid profits. Major sources of direct and indirect foreign investment are the US, UK, Malaysia, Germany and Switzerland.
“South Africa has attained political stability and is moving well on the path toward economic growth and liberalization. In accordance with our macro-economic strategy we have phased down tariff barriers well ahead of the WTO timetable and this is reflected in the high number of multinationals starting operations in South Africa,” he said.
He added that South Africa’s international orientation has brought about a competitive business environment highly receptive to new ideas and work practices. “We invite you the Saudi and Gulf businessmen to consider South Africa as your quality location for trade and investment,” he said.
