SOUTH AFRICA OPEN FOR BUSINESS BUSINESS OPPORTUNITIES Tumelo Nkoane 11 July 2007 emita

SOUTH AFRICAOPEN FOR BUSINESS

BUSINESS BUSINESS

OPPORTUNITIESOPPORTUNITIES

Tumelo Nkoane

11 July 2007

emita

PRESENTATION

OUTLINE

Macro-economic Trends

Gateway to Africa

Sectoral Opportunities

South Africa has a stable macro economic environment, a

strong fiscal position and a range of growing sectors – from

this platform SA is gearing for accelerated growth

SA is a springboard for companies wanting to do business

in Africa

Key Messages

-2.0

0

2.0

4.0

6.0

8.0

1998

Q1 Q2 Q3 Q4

1999

Q1 Q2 Q3 Q4

2000

Q1 Q2 Q3 Q4

2001

Q1 Q2 Q3 Q4

2002

Q1 Q2 Q3 Q4

2003

Q1 Q2 Q3 Q4

2004

Q1 Q2 Q3 Q4

2005

Q1 Q2 Q3 Q4

2006

Q1 Q2 Q3

% change on year earlier % change on previous quarter, annualised

Real growth in Gross Domestic Product (GDP)

Growth has averaged 4% per annum in the past four years and is projected to

increase to 5% for the coming four years.

South Africa has experienced 85 months of continuous growth.

Economic Growth


5

The economy is beginning to generate additional jobs although challenges remain in this regard.

Job Creation

Source: Statistics Pack - Presidency

8000

10000

12000

14000

Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar

2002 2003 2004 2005 2006 2001

Unemployed (official) Broad

Employed Unemployed

Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar

2002 2003 2004 2005 20062001

0%

15%

30%

45%


6

Government is in a very strong fiscal position

Fiscal Situation


% o

f G

DP

93|94 94|95 95|96 96|97 97|98 98|99 99|00 00|01 01|02 02|03 03|04 04|05 05|06-10

-8

-6

-4

-2

0

Budget deficit


7

Inflation

Inflation has stabilised below the 6% target.


%

Inflation CPI

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 20060

2

4

6

8

10

12

14

December


8

After an initial drop associated with a rise in the value of the currency, exports are

beginning to grow again.

Exports


Exports

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

September

% o

f G

DP

0

5

10

15

20

25

30

35

40


Economic Structure

South Africa’s economy has diversified away from primary commodities

Source: SARB

Contribution to National GDP

1946 1956 1966 1976 1986 1996 20060

10

20

30

40

50

60

70

December

% s

hare

Primary sector (Agriculture and Mining)

Secondary sector (incl Manufacturing)

Tertiary sector

Focus Areas of the Strategy

Increased macro-economic stability

Increased investment in economic infrastructure

Sector investment strategies

Development of skilled labour

Strengthening the 2nd economy

Improvement in state organisation and capacity

Gearing for Growth


6% of Africa’s Population

18% of Africa’s GDP

45% of Africa’s mineral production

50% of Africa’s purchasing power

Dynamic force in SADC

Driving force in NEPAD Extensive road & rail infrastructure which connects with Sub-Saharan Africa

Telecoms infrastructure with world-class connectivity and uptime

The Gateway into Africa

STRATEGIC GEOGRAPHIC POSITION TO GLOBAL SHIPPING ROUTES

OUR LOCATION

Business Processing and Outsourcing & IT Enabled Services Call Centres

Back Office Processing

Shared Corporate Services

Enterprise solutions in e.g. fleet management, knowledge management & asset management

Value Proposition

SA offers high quality, low cost destination for BPO in stable investment environment supported by world class infrastructure

Cultural and product affinity with the UK and Europe

Public sector commitment made long-term commitment to this sector, so strong investor support & sustainable reduction in costs over the next few years

Business Opportunities


Tourism

Hotels & self-catering holiday resorts

Adventure, eco-, sport-, conference & cultural tourism

Infrastructure development

Leisure complexes & world class golf courses

Harbour & waterfront developments

Transfrontier conservation

Competitive Advantage

SA’s fastest growing industry

2010 Football World Cup


Agro-processing

Industry Opportunity

Fisheries & aquaculture Freshwater aquaculture & mariculture e.g African catfish; oysters, abalone

Meat Processing Processing exotic/indigenous meats e.g venison; ostrich & crocodileFruit & vegetable processing

Export of deciduous & subtropical fruits; processing indigenous fruit, baby vegetables, nuts (pastachio, cashew, macademia); juices

Indigenous teas Processing & exporting of rooibos & honeybush

Indigenous herbs Processing for medicinal & cosmetic products

Wine production Production of wines for export & local markets

ConfectionaryManufacturing & exporting of confectionary e.g baking products, sweets, chocolates

Natural fibres

Processing of natural fibres from e.g. cotton, hemp, sisal, kenaf & pinable for specialised paper industry


Automotives & components Vehicle interiors e.g. natural fibre interior

Engine parts/components

Electronic drive chain components

Body parts e.g. lights, painted plastic components, airbags, glass wire products,

Aluminium components

Wheels (steel & aluminium)

Catalytic converters

Plastic tool & die manufacturing

Competitive Advantages

Access to aluminium & steel

Removal of tariffs into EU

Competitive tooling costs


Chemical & allied Industries


Organic chemicals Propylene oxide, food acids (citric, lactic, etc), sorbates & flavourants

Inorganic chemicals Titanium derivatives, flurochemicals, phosphates, aluminium fluoride

Pharmaceuticals R&D, clinical trials, active pharmaceutical ingredients, botanical extracts

Other Titanium benefication (pigment), fluro-chemical production for agriculture, steel


Abundant mineral feedstock for inorganic chemical manufacturing

Abundance of agricultural raw materials (sugar, molasses, essential oils – lavender; khakhi-bush; lemon grass)


Clothing, textile & footwear

Large-scale manufacturing of industrial textiles using polyester

Wool & mohair production – downstream opportunities for yarns, knitwear & fabric

Manufacturing of leather uppers


World’s largest producer of mohair

Raw materials to produce any type of leather footwear – bovine; ostrich; crocodile; game leather


Electro-technical industries Manufacturing automotive electronics

Manufacture PC boards for automotive sector

Upgrading existing microchip manufacturing

Upgrading existing telecoms equipment

Power line communications (PLC)

Niche software engineering

Opportunities in defence related electronics

Expansion in pre-payment metering technologies

Partnering for infrastructure (utilities) related projects in Africa

Competitive Edge

Leading the world in prepayment technology and standards

Piloting new innovations


Mining & metal-based industries

Downstream processing & value adding of iron, carbon steel, aluminium & platinum group metals

Aluminium smelting

Casting & forgings

Ferro-alloys

Stainless steel production e.g. stainless steel wire

Manganese metal production & castings

Gold chain manufacturing & handmade jewellery

Comparative Advantage

Large aluminium & steel resources

World’s largest deposits of platinum group metals


Aerospace Aviation related services, including maintenance, repair and overhaul

Rotary and fixed wing components

Aviation training services

Specialised manufacturing of avionics, including health usage monitoring systems

Satellite related services (including tracking and control and applications development)

Rail

Production of infrastructure (tracks, signalling, electrification)

Manufacturing of rolling stock & components

Manufacturing of mining rail equipment

Maintenance (infrastructure & rolling stock) R&D

Marine

Manufacturing & assembly of engines & gearbox

Manufacturing of mechanical components

R&D


Capital Equipment


Re-capitalisation Boilers & heat exchangers; Tool dies & moulds; Petrochemical equipment

Expansion & exportPumps & valves; material handling equipment & straddle crane carries; mechanised mining equipment

New investments Turbine assembly; turbine components; machine tool manufacturing


Access to steel, aluminium

Competitive costs

Engineering technology


Film

Film studio production

Co-production ventures

Distribution infrastructure

Servicing foreign productions

Comparative Advantages

Co-production treaty with UK

Film rebate scheme

Conclusion

South Africa offers compelling business opportunities, with stable macro-economic environment, strong fiscal position and a clear growth strategy based on building on comparative advantages and removing constraints

THANK YOUTHANK YOU

CONTACT USCONTACT US

SOUTH AFRICAN HIGH COMMISSION

TRAFALGAR SQUARE

WC2N 5DP

LONDON

PH. 020 7451 7237

FAX. 020 7839 0634

EMAIL. [email protected]

Documents

SOUTH AFRICA OPEN FOR BUSINESS BUSINESS OPPORTUNITIES Tumelo Nkoane 11 July 2007 emita