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Investing into South Africa

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Investing into South Africa Economic, Institutional and Political Outlook Reggio Emilia 13 March 2013 * South Africa at a glance Area 1,220, 813 km2 Population 50.59 ... – PowerPoint PPT presentation

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Title: Investing into South Africa


1
Investing into South Africa
Economic, Institutional and Political Outlook
Reggio Emilia 13 March 2013
2
South Africa at a glance
  • Area 1,220, 813 km2
  • Population 50.59 million (2011)
  • Currency Rand (Euro 1 Rand 11.58 Jan 2013)
  • Time GMT 2 hrs
  • Head of the State President Jacob Zuma
  • 11 Official languages with English the business
    language
  • Total GDP 305.8 billion (2011)
  • GNI per capita 5,214 (2011)
  • Real GDP Growth 3.5 (2011)
  • Inflation (CPI) 5.6 (PPI) 5.5 (Oct 2012)
  • Main Exports minerals mineral products,
    precious
  • metals metal products, chemical food
    products,
  • automotives components.
  • Main imports machinery, transport equipment,
  • finished products, oil, chemical products.
  • Main trading partners Germany, USA, China,
    Japan, UK
  • France.

3
South Africa- global perspective
  • South Africa is one of the most sophisticated and
    promising emerging markets, offering a unique
    combination of highly developed first world
    economic infrastructure with a vibrant emerging
    market economy
  • South Africa is one of the worlds 26
    industrialised nations
  • The country is also regarded as the gateway to
    Africa
  • South Africa has the largest economy on the
    African continent, accounting for approximately
    25 of the continents GDP
  • According to the World Bank, South Africa ranked
    39th out of 183 in the world for the ease of
    doing business in 2012
  • The Johannesburg Stock Exchange is Africas
    largest and most developed securities exchange
    and ranks 8th out of the G20 nations ahead of all
    the G7 countries

4
South Africa - global perspective continued
  • South Africa remains the worlds top producer of
    minerals such as gold, platinum, rhodium, chrome,
    manganese and vanadium.
  • The country holds 80 of global manganese
    reserves, 72 of chrome, 88 of platinum-group
    metals (PGMs), 40 of gold and 27 of vanadium.
  • Unit labour costs in South Africa are
    significantly lower than those of many other
    emerging markets.
  • According to the 2012-2013 Global Competitiveness
    Index out of 144 countries, South Africa was
    ranked 52nd and scored well in various categories.

5
SADC and South Africa
  • In August 2008 South Africa signed the Foreign
    Trade Agreement to be part of the Southern
    African Development Community (SADC) that
    represents a market of 200 million consumers.
  • In future, we expect that a further integration
    will take place between the three major regional
    blocks (SADC,COMESA EAC), which is a potential
    future market of 700 million consumers.

6
Investing in Africa an improving environment
  • The operating environment in the continent is
    improving visibly and rapidly
  • The average economic growth rate in Sub-Saharan
    Africa is expected to be 6.6 in 2013 according
    to the African Development Bank.
  • Many countries have improved their business
    environment
  • restored macro-economic stability
  • greater predictability increased reliability of
    policy regulatory framework
  • increased transparency and improved
    decision-making
  • privatisation initiatives
  • reduced corruption
  • investment protection promotion
  • intra and inter-regional initiatives
  • emerging middle class and growing consumerism
  • fast-urbanising and youthful population
  • High returns on investment. Ernst Young
    estimates that FDI into Africa will reach 150
    billion by 2015 driven by strong growth in new
    projects.

7
BRICS and South Africa
  • In December 2010 South Africa was invited to
    join Brazil, Russia, India and China in the bloc
    of worlds leading emerging market economies,
    resulting in BRICS.
  • BRICS countries have individually emerged to
    assume new economic rankings and coordinate on
    their positions and actions in international
    organisations, as seen in the United Nations.
  • In the midst of the current global economic
    crisis, many countries in the world are looking
    at BRICS members as the new locomotives for
    global economic growth to provide renewed impetus
    to global economic cooperation.
  • BRICS trade and investment with low-income
    countries have served as a major support system
    in the wake of the global financial crisis (IMF
    Study).

8
BRICS and South Africa
  • BRICS share of global output will increase from
    18 to 26 over the next 10 years and even to
    one-third by 2030.The contribution to global
    economic growth over the last decade has reached
    50, which makes this group of states the leading
    power in global economic development.
  • GDP of BRICS member states in Billion USD in
    2012 Brazil (2425.05) Russia (1953.56) India
    (1946.77) China (8250.24) South Africa
    (390.92). This constitutes 25 of the world GDP.
  • South Africa will host the 5th BRICS Summit on
    26 and 27 March 2013 in Durban, which will
    complete the first cycle of BRICS summits.
  • On the occasion of the BRICS Summit, the BRICS
    Business Council will be launched. Each BRICS
    member will nominate 5 members that are leaders
    of the respective business organisations. The aim
    of the Council is to strengthen economic ties,
    trade and investment between the communities of
    the 5 BRICS countries.

9
National Planning Commission
  • The National Planning Commission is a new
    initiative of government. The NPC is chaired by
    the Minister in The Presidency for National
    Planning and is responsible for developing a long
    term vision and strategic plan for South Africa.
    The Commission will also advise on cross-cutting
    issues that impact on South Africas long term
    development.
  • The establishment of the National Planning
    Commission is our promise to the people of South
    Africa that we are building a state that will
    grow the economy, reduce poverty and improve the
    quality of life of our citizens.
  • The Commission is made up of 25 part-time
    Commissioners appointed by the President on the
    basis of their skills and expertise. The
    Chairperson of the NPC is Minister Trevor Manuel
    and the Deputy Chairperson is Mr Cyril Ramaphosa.
    The Commission is supported by a fulltime
    secretariat of public servants.
  • On 15th August 2012 , the revised National
    Development Plan 2030 entitled, Our future-make
    it work was handed to the President at a special
    joint sitting of Parliament. All political
    parties represented in Parliament expressed
    support for the NDP.
  • On 6th September 2012 the Cabinet Lekgotla
    welcomed the NDP as prepared by the National
    Planning Commission and acknowledged the plan as
    the strategic framework to form the basis of
    future government planning.
  • At the national conference of the ruling party
    ANC held at Manguang from the 16th to 20th
    December 2012, the Vision 2030 and the National
    Development Plan was embraced.

10
South Africa and Italy Bilateral Agreements
  • Key bilateral agreements signed with Italy
  • Bilateral Agreement on the Protection of Seamen
    in Distress (1890)
  • Cooperation on Industrial and Commercial
    Development (1892)
  • Avoidance of Double Taxation (1995)
  • Reciprocal Promotion and Protection of
    Investment (1996)
  • Memorandum of Understanding between Business
    Unity South Africa (BUSA) and Confindustria
    (2007)

11
South Africa and Italy - Trade
  • Italy is an important trade partner for South
    Africa. Between January and September 2012 trade
    exchanges with Italy totaled 2.7 billion Euros
    with a positive balance in favour of South
    Africa. Italy is currently South Africas 14th
    client country and 11th supplier.
  • South Africa mainly exports primary commodities
    to Italy including minerals, precious stones, raw
    hides and skins and iron ores.
  • The leading imports basket from Italy into South
    Africa is made up of high value added
    manufactured products such as machinery, vehicles
    and other automobiles, electrical and electronic
    equipment, antibiotics and other pharmaceutical
    products.
  • The Government is striving to change the
    composition of exports from primary commodities
    and minerals into high value manufactured
    products through incentives and development
    programmes.

12
South Africa and Italy - Investment
  • There is a stable presence of Italian companies
    that have invested in the country. Foreign
    Direct Investments from Italy totaled 111.93
    million Rands in 2010, down from 321.49 million
    in 2009.
  • At the same time FDIs from other countries of the
    world dropped more heavily, thus making Italy the
    10th biggest foreign direct investor in South
    Africa.
  • Some of the more prominent Italian investments
    into South Africa include Salvatore Ferragamo
    (textiles), Ferrero (food), Telit
    (communications), SACE (financial services),
    Augusta (helicopters), Ansaldo (industrial
    systems), Fiat Auto (automotive), Luxottica
    (eyewear) and Building Energy (renewable energy).
  • We trust this sound relationship between South
    Africa and Italy will continue to grow.

13
Why invest in South Africa?
  • Because you will find

14
PROXIMITY TO MARKETS BY SEA
  • Liverpool 25 days
  • New York 20 days
  • Buenos Aires 11 days
  • Jeddah 20 days
  • India 10 days
  • Singapore 12 days
  • Hong Kong 25 days

15
South Africa International Trade Agreements
  • South Africa has signed a number of Foreign Trade
    Agreements in the world, which make it easier to
    do business. Among these are
  • South Africa European Union (EU) Trade,
    Development and
  • Co-operation Agreement (TDCA)
  • Southern African Development Community (SADC) FTA
  • Southern African Customs Union (SACU) India
    Preferential
  • Trade Agreement (PTA)
  • Southern African Customs Union (SACU) - European
    Free
  • Trade Association (EFTA) FTA
  • Africa Growth and Opportunity Act (AGOA)
  • SACU Southern Common Market (Mercosur)
    Preferential
  • Trade Agreement

16
Industrial Development Zones
  • South Africa has four Industrial Development
    Zones (IDZ), which are areas
  • where production is facilitated.
  • These are
  • The Coega (near Port Elizabeth) investment
    hotspot in the Eastern Cape for industries with
    global perspectives
  • East London -automotive industrial hub (Eastern
    Cape)
  • Richards Bay- terminal hub for coal exports
    (KwaZulu-Natal) and
  • Johannesburg International Airport (Gauteng)-
    situated in SAs economic hub, OR Tambo
    Industrial Zone focusses on growth and
    competitiveness of the manufacturing sector in
    the province.

17
Industrial Development Zones - continued
  • The intention of IDZs is to provide investors in
    the zone with direct links to an
  • international port and the facility to import
    inputs and goods into the zone
  • customs duty-free and exempt from VAT. Each zone
    has dedicated customs
  • support for faster processing of documentation.
    IDZs are suitable for export
  • orientated production.
  • The Government is currently working on a new
    policy for the development of
  • new industrial nodes (called Special Economic
    Zones) outside of the
  • traditional industrial areas while improving the
    performance of the IDZs.

18
Investment Opportunities
The Government offers attractive incentives to foreign investors. These are fully described in the DTI Guide to Incentives that will be made available to potential investors by our Economic Office in Milan. Some specific sector opportunities that I would like to highlight are The Government offers attractive incentives to foreign investors. These are fully described in the DTI Guide to Incentives that will be made available to potential investors by our Economic Office in Milan. Some specific sector opportunities that I would like to highlight are
Sector Opportunities
Infrastructure In his State of the Nation address President Jacob Zuma declared that infrastructure is a priority sector for the countrys economy. Over the coming 3 years R845 billion has been budgeted for public infrastructure projects. Five major geographically focused projects are Rail, road and water infrastructure integration project in Limpopo to unlock coal, platinum, palladium, chrome and other materials and to develop the beneficiation of minerals. Improvement of logistics through the Durban-Free State-Gauteng industrial corridor with a range of rail and port improvements. Construction of a new South Eastern node in the Eastern Cape to bolster the provinces industrial and agricultural development and export capacity. Expansion of water, road, rail and electricity infrastructure in the North West. A range of projects on the West Coast including the expansion of the Sishen-Saldanha iron-ore corridor. The private sector will play a role in the delivery of infrastructure through the state-owned companies (such as Transnet and Eskom) and the provincial departments of the nine provinces. Projects will appear on the Tender Bulletin and through the South African Development Bank on the following links www.info.gov.za www.afdb.org
19
Investment Opportunities - continued
Manufacturing The manufacturing sector will receive R3.5 billion (342 million Euros) to establish incentives for local production and for SMEs that are in start-up phase or wishing to increase their capacity. Special emphasis is given to improving competitiveness in the industry and investment in technology. This includes production and upgrading of facilities in various sub sectors such as textiles and clothing, renewable energy and energy saving industries, automotives components.
Agro-processing Over the coming 5 years R4.5 billion (440 million Euros) has been budgeted for agro-processing projects aimed at promoting the development of the rural economy. The main opportunities are in partnering with local farmers and SMEs to add value and export local products. These include fisheries and aquaculture, floriculture, vegetable processing, fruit processing, meat processing, wine production, confectionary, indigenous teas, organic products, natural fibres and essential oils. Another interesting sub sector is production of biofuels, biodiesel bioethanol.
Research Development South Africa will host over 75 of the Euro 1.5 billion Square Kilometre Array (SKA) with the rest located in Australia. This instrument is 50-100 times more sensitive and 10,000 times faster than any radio imaging telescope yet built. Cooperation with Italian companies in this sector will be an opportunity for both countries.
20
Trade exhibitions
  • Conferences and seminars, trade shows and expos
    are held across South
  • Africa. These are important platforms for
    analyzing the market and meeting
  • potential partners.
  • You can find the calendar of events through the
    following link
  • http//www.southafrica.info/news/conferences/
  • Two major South African trade fairs
  • - Africas Big 7 (food beverage)
  • - Indutec (industry technology)
  • are represented in Italy through NGComBrokerSAS.
  • For more information please contact
  • Mr. Giacomo Rotunno
  • Tel. 051 7417932
  • E-mail g.rotunno_at_ngcombroker.com

21
  • Thank you!
  • Contact details
  • South African Embassy Economic Office
  • Via Tanaro, 14 South African
    Consulate-General
  • 00198 Rome Vicolo san Giovanni sul Muro, 4
  • Tel. 39 06 852541 2012 Milano
  • E-mail sae2_at_sudafrica.it Tel. 39 02
    8858581
  • E-mail dtimilan_at_thedti.gov.za
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