Why is South Africa being targeted with investments of major world companies?


BY MARIO PETKOVSKI

South Africa has become a haven for company giants as they try to expand their market. People in charge of the major companies from all around the world are spotting this trend. South African market is importing and selling billions a year, but the government believes that it has a bigger potential.

As the African continent grows and develops day by day, major companies also see the potential of the market, and they want to conquer it. South Africa is providing much more for the businesses: it is not the only country that provides a chance to expand the market, it is also gateway to the whole continent. The government saw the possibility and need for investments, and developed very stable economic and legal infrastructure that will lower the risk for the investitures.

Furthermore, the country is one of the major forces of the continent on cryptocurrency transactions, being one of the only ones who accepts payments in Bitcoins. They even opened their first Bitcoin ATM, even though people can withdraw only the equivalent to 50 rand. Nonetheless, according to Bitcoin News, the country is thinking of inserting regulations on this sector.

Here is a couple further reasons why big company giants started to see South Africa as a new business opportunity:

  1. Stable legal and regulatory environment for business

South Africa has very stable legal, political standards which makes the environment pleasant for new businesses. The financial system of SA ranks at 18th place out of 140 countries.

  1. Independence of the Banks and Stable currency

Protecting the value of the ZAR and making it more stable is very important when you are trying to attract foreign investments.

  1. Maintaining stable enough financial sector

This country has spent a lot of effort into making the banking sector sophisticated. With stable monetary policies, SA represents the financial center of the continent.

  1. Keeping up with the technology development

When you want to attract company giants in your country, you must give them the tools that they need for the job. The country focuses on following the trends of the world for technology development and their IT infrastructure will make their decisions much easier.

  1. International Reputation

South Africa maybe still on the run looking for investors, but it is considered to be an exceptional internationally established country and it is a member of the G20, World Economic Forum.

  1. Diversified and industrialized economy

The country has many well-developed sectors that bring benefits to new businesses, like mining, tourism, and agriculture.

These are some of the reasons why companies are spotting the country as the way to expand their markets. South Africa’s main concern is attracting foreign investments, as president Cyril Ramaphosa mentioned.

They have already attracted some of the major companies like:

  • McDonald’s who have agreed to invest in South Africa and spend $200 million over the next five years
  • Anglo American which is a mining company, spotted the market with well-industrialized mining sector as their new target and intends on spending $6 billion over the next 3-4 years
  • Procter & Gamble are conquering the African market for many years now, and they are spending millions a year in new developing centers and plantations.
  • The lack of telecommunications in Africa was filled with Vodacom which plans to invest $3.5 billion in telephone-network communications.
  • The automotive industry is on the run as some of the biggest companies of this sector decided to invest in SA. Companies like Ford, Volkswagen, Mercedes-Benz, BMW, Toyota, and Nissan will invest close to $3 billion in new capacity over the next 4-5 years.

These investments will provide this country with much more stable foreign income and it will be like an injection for the economy, just because South Africa’s GDP hasn’t reached significant growth since 2013. The GDP, unfortunately, expanded only a maximum of 2 percent in the last 6 years. The population is growing at an intensive rate achieving growth faster than the economy, which lowers the GDP per-capita.

Also, the unemployment rate is big, reaching almost 30 percent, so if South Africa would like to lower the unemployment by 10 percent, it has to focus on the steady economic growth of minimum 5 percent a year.

President Cyril Ramaphosa and the government spotted the poor economic status of the last years and started a strategy to attract foreign direct investments. The strategy worked so far, and the market attracted more than $10 billion in investments which is increased compared to last year that got only $1.5 billion. If the country continues with these strategies, also maintaining steady financial and economic sector there will be on the right tracks to achieve significant improvement in the GDP and the health of the economy in the country.

Story first appeared at torontocaribbean.com


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