1

A country PresentationOn

The Republic of South AfricaPresented by 122041225612211122271221512229

2

IntroductionOfficially the Republic of South Africa, is a country located at the southern tip of Africa.

2,798 kilometres (1,739 mi) of coastline that stretches along the South Atlantic and Indian oceans.

 To the north lie the neighbouring countries of Namibia, Botswana and Zimbabwe; to the east are Mozambique and Swaziland; and within it lies Lesotho, an enclave surrounded by South African territory.

 

25th-largest country in the world by land area

Close to 53 million people,  24th-most populous nation

3

PROVINCES

4

PESTEL ANALYSIS

5

POLITICAL

6

South Africa’s smooth and peaceful political transition to a constitutional democracy remains an icon of remarkable political achievement.

This political transition brought political freedom and civic rights and extended social services to millions of South Africans.

7

Celebrated its centenary in 2012.Looks set to remain the strongest political force during the second country strategy period (2013-2016). The elected ANC President is expected to stand for national presidency the 2014 election.

The ruling party: The African National Congress (ANC)

8

South Africa has achieved the 1st Millennium Development Goal (MDG) − halving the proportion of the population living on less than USD 1 a day

The government is keen on tackling issues such as providing adequate public health services, improving the quality of education, tackling income inequality, reducing unemployment and especially among the youth.

9

Government announced GROWTH, EMPLOYMENT AND REDISTRIBUTION STRATEGY (GEAR) policy

President - Jacob Zuma

10

Unique system for the election of its president.Unlike other former British colonies and dominions who have adopted a parliamentary republican form of government and those that follow the Westminster system, South Africa's President is both head of state and head of government and Commander-in-Chief of the South African National Defence Force (SANDF). Contrary to presidential systems around the world, the President of South Africa is elected by the Parliament of South Africa rather than by the people directly or an Electoral College

11

South Africa is ranked as an upper-middle income economy by the World Bank

Newly industrialized country.

Its economy is the largest and most developed in Africa

28th-largest in the world

ECONOMY

In terms of purchasing power parity, South Africa has the seventh-highest per capita income in Africa.

South Africa has been identified as a middle power in international affairs, and maintains significant regional influence.

12

13

14

GDP LAST PREVIOUS HIGHEST LOWEST FORECAST UNIT

GDP GROWTH RATE 0.70 2013-09-30 3.20 7.60 -6.30 1.64 2013-12-31 PERCENT

GDP ANNUAL GROWTH RATE

1.80 2013-09-30 2.30 7.10 -2.70 2.17 2013-12-31 PERCENT

GDP CONSTANT PRICES

1994585.00 2013-08-15 1990901.00 1994585.00 5495.00 2032473.07 2013-11-30 ZAR MILLION

GROSS FIXED CAPITAL FORMATION

401802.00 2013-08-15 398743.00 406805.00 46980.00 412663.81 2013-11-30 ZAR MILLION

GROSS NATIONAL PRODUCT

2050458.00 2013-08-15 2056326.00 2056326.00 355030.00 2076876.38 2013-11-30 ZAR MILLION

GDP 384.31 2012-12-31 401.80 401.80 7.34 393.96 2013-12-31 USD BILLIONGDP PER CAPITA 6003.46 2012-12-31 5923.99 6003.46 3394.93 6095.43 2013-12-31 USD

GDP PER CAPITA PPP 10959.74 2011-12-31 10520.03 10959.74 4183.73 10995.25 2012-12-31 USD

15

19

ACTUAL PREVIOUS HIGHEST LOWEST FORECAST DATES UNIT FREQUENCY

24.70 25.60 31.20 21.90 23.53 | 2013/12 2000 - 2013 PERCENT QUARTERLY

21

In the third quarter of 2013, South African jobless rate decreased to 24.7 percent, the lowest value in almost two years. The number of people without work went down to 4.66 million, down from 4.72 million in the previous three months.

22

Emerging Markets Opportunity IndexSource: Grant Thornton SALatest publication date: February 2013South Africa's ranking: 14 out of 26 countries

Global Competitiveness IndexSource: World Economic ForumLatest publication date: September 2013South Africa's ranking: 53 out of 148 countriesIt took over Brazil to take second place among the BRICS' economies, with China at 29 and Brazil dropping to 56th place (from 48).

Doing Business reportSource: World Bank and International Finance CorporationLatest publication date: September 2012South Africa's ranking: 39 out of 185 countries

23

Economic freedomSource: The Heritage FoundationLatest publication date: January 2013South Africa's ranking: 74 out of 177 countriesModerately free Economy

24

SOCIAL

25

RSA on Human Development Index

26

PDI

IDV

MAS

UAI

LTO

0 20 40 60 80 100 120

49

65

63

49

69

38

49

76

65

80

20

66

30

118

77

48

56

40

61

93

39

36

95

RussiaIndiaChinaBrazilRSA

HOFSTEDE

27

11 official languages, highest number of any country in the world.

About 80 percent of South Africans are of black African ancestry

The remaining population consists of Africa's largest communities of European, Asian, and multiracial ancestry.

Constitutional democracy, which comprises a parliamentary republic and nine provinces.

 Rainbow Nation concept.

Multiethnic society.

28

29

Corruption Perceptions IndexSource: Transparency InternationalLatest publication date: November 2012South Africa's ranking: 69 out of 176 countries

Press freedomSource: Reporters Without BordersLatest publication date: January 2013South Africa's ranking: 52 out of 179 countries

Global Gender Gap IndexSource: World Economic ForumLatest publication date: 2012South Africa's ranking: 16 out of 135 countriesSouth Africa is the second-highest ranking African country, after Lesotho at 14.

30

Cost of livingSource: MercerLatest publication date: June 2012South Africa's ranking: Johannesburg rated 154 and Cape Town 179 out of 214 cities Johannesburg has been rated as one of the most affordable city in the world for foreigners in the Worldwide.Cost of Living survey, regarded as the world's most comprehensive study of this type.Out of 214 cities on five continents, Johannesburg was found to be almost three times cheaper than the most expensive city, Tokyo.

31

Expat experienceSource: HSBC Bank InternationalLatest publication date: November 2012South Africa's ranking: 6th best out of 26 countriesSouth Africa is one of the best countries in the world to live in, according to a global survey of more than 5 100 expatriates.

Dream destinationSource: WAYNLatest publication date: May 2013South Africa's ranking: 1 out of 7South Africa was named as the top dream destination in the world by members of the world's largest traveland lifestyle social network, Where Are You Now (or WAYN.com).

32

 African Union (AU), and has the largest economy of all the members. It is also a founding member of the AU'sNew Partnership for Africa's Development(NEPAD).Commonwealth of Nations. The country is a member of the Group of 77 Southern African Development CommunitySouth Atlantic Peace and Cooperation Zone Southern African Customs UnionAntarctic Treaty SystemWorld Trade OrganizationInternational Monetary Fund

International Groups

 G20G8+5BRICS

33

Technological

34

World-class infrastructure

World-class infrastructure:Modern transport networkWidely available energySophisticated telecommunications facilities.

South Africa’s success in hosting the world’s largest sporting event, the 2010 FIFA World Cup, has shown that the country is capable of undertaking – and successfully completing – major projects on time.

35

IT industry competitiveness index

Source: Economist Intelligence UnitLatest publication date: 2011South Africa's ranking: 47 out of 66 countriesSouth Africa ranks 47th out of 66 countries measured in the 2011 IT industry competitiveness index, with a score of 35 out of a possible 100.

36

PORTS OF RSA

1) Durban.2) Richards Bay3) Cape Town 4) Port Elizabeth5)Saldanha Bay6) South Africa's only river port, East London, is situated at the estuary of the Buffalo River in Eastern Cape province. Two other coastal cities--Simonstown, south of Cape Town, and Mossel Bay, between Cape Town and Port Elizabeth.

37

CAPETOWN

38

DURBAN

39

Major cities

1. Cape town

2. Johannesburg

3. Durban

4. Pretoria

5. Port Elizabeth

6. Bloemfontein

7. Nelspruit

8. Pietermaritzberg

9. Kimberley

10. Polokwane

40

Industry

• Mainly mining- platinum and gold• Automotive• Tourism• Electronics

Around 90% of World’s Platinum reserves are found in RSA

41

Agriculture as a percentage of GDP is around 2%.

This implies that the economy is maturing, moving towards the secondary and tertiary sectors.

638 000 people formally employed (Statistics SA, 2012 Q2) – although it’s estimated that around 8,5-million people are directly or indirectly dependent on agriculture for their employment and income.

Agriculture and the economy

42

The sector's significance is largely because of its potential to create jobs, and is a key focus of the New Growth Path, a plan by the government to create 5-million new jobs by 2020. Plans include programmes to promote commercially oriented small-scale farming. Support is also available to smallholders on land acquired through land reform.

43

Aquaculture (fish farming)

Priority sectorLarge potential for job creation Scales up to meet increasing domestic demand. In general, greater focus is being paid to processed goods and domestic processing capabilities to help boost the value of exports

44

Agro processing

Counter-seasonality to EuropeVast biodiversity and marine resourcesCompetitive input costsWorld-class infrastructureThe processing of freshwater aquacultureMaricultureExotic and indigenous meats, nuts, herbs and fruit.WinesConfectionary Natural fibres

45

It contributed R280-million to the GDP in 2011, which is 20% of the total amount generated by the manufacturing sector. It is the third largest contributor to GDP within the sector, after chemicals and metals (Statistics SA, 2012).

46

47

Manufacturing

Relatively small contribution to economyJust 13.3% of jobs and 15% of GDP. Labour costs low, The cost of the transport, communications and general living is much higher.

After a steep decline of 10.4% in 2009, the manufacturing sector performed well in 2010, growing by 5%

48

Accounts for about 10% of South Africa's manufacturing exportsContributes 7.5% to the country's GDP and employs around 36,000 people.Annual production in 2007 was 535,000 vehicles, out of a global production of 73 million units in the same year. Vehicle exports were in the region of 170,000 units in 2007, exported mainly to Japan (about 29% of the value of total exports), Australia (20%), the UK (12%) and the US (11%). South Africa also exported ZAR 30.3 billion worth of auto components in 2006.

Automotive industry

49

Production plants in South Africa:

BMWFordVolkswagenDaimler-ChryslerGeneral Motors Toyota

Component manufacturers with bases in the country:

Arvin Exhaust Bloxwitch Corning Senior Flexonics. About 200 automotive component manufacturers in South Africa, and more than 150 others that supply the industry on a non-exclusive basis..

50

The industry is concentrated in two provinces:The Eastern CapeGauteng.  

Companies producing in South Africa can take advantage of the low production costs and the access to new markets as a result of trade agreements with the European Union and the Southern African Development Community

51

Legal

52

According to the WEF:

South Africa does well on measures of the quality of its institutions (ranking 41st overall)Intellectual property protection (18th )Property rights (20th)Efficiency of its legal framework in challenging (13th). Settling disputes 12th

53

World-class, progressive legal framework.

Legislation pertaining to commerce, labour and maritime issues is particularly well developed.

Laws relating to competition policy, copyright, patents, trademarks and disputes conform to international norms and conventions.

The independence of the judiciary is guaranteed by the Constitution.

54

Trade and industry is undertaken within the framework of a free enterprise economy

The courts are open to foreigners on exactly the same terms and conditions as South African citizens.

South African banking regulations rank with the best in the world, while the sector has long been rated among the top 10 globally.

55

The JSE Limited rates among the top 20 stock exchanges in the world by market capitalisation. The JSE's rules and their enforcement are based on global best practices.

JSE has harmonised its listing requirements, disclosure and continuing obligations with those of the London Stock Exchange (LSE) and offers superb investor protection.

56

Amended company law, which eliminated many redundant requirements and simplified the incorporation document.

It also reduced the number of days required to register property and simplified business exit regulatory requirements

Import tariff has been reduced significantly, so as the tax on international trade and transactions

57

Besides other African countries—include Germany, the United States, China, Japan, the United Kingdom and Spain. 

Principal international trading partners of South Africa

Chief exports include corn, diamonds, fruits, gold, metals and minerals, sugar, and wool. Machinery and transportation equipment make up more than one-third of the value of the country’s imports. Other imports include chemicals, manufactured goods, and petroleum.

58

Exports $101.2 billion (2012 est.)

Export goods gold, diamonds, platinum, other metals and minerals, machinery and equipment

Main export partners  China14.5% United States 7.9% Japan 5.7% Germany 5.5% India 4.5% United Kingdom 4.1% (2012 est.)

Imports $106.8 billion (2012 est.)

Import goods machinery and equipment, chemicals, petroleum products, scientific instruments, foodstuffs

Main import partners  China 14.9% Germany 10.1% United States 7.3% Saudi Arabia7.2% India 4.6% Japan 4.5% (2012 est.)

FDI stock $73.6 billion (31 December 2011 est.)

EXIM

59

EXIM

The value of imported goods in South Africa is $106.8 billion (2012 est), and the value of exported goods is $101.2 billion (2012 est)

Imported goods: machinery and equipment, chemicals, petroleum products, scientific instruments, foodstuffsExported goods: gold, diamonds, platinum, other metals and minerals, machinery and equipment

Exports

61

Doing Business in RSA

62

63

64

Procedure Time to CompleteNumber of Days

Associated Cost

Register at the Companies and Intellectual Property Commission (CIPC) 5-7 days ZAR 175

Open a bank account 1-2 days No charge

Register for income tax, VAT, and employee withholding tax (PAYE and SITE) at the South African Revenue Service (SARS) 12 days No charge

4. Register for unemployment insurance at the Department of Labor

4 days (simultaneouswith procedure 4) No charge

5. Register with the Commissioner in deference to the Compensation for Occupational Injuries and Diseases Act

Around 10 days simultaneous with Procedure 4 no charge

65

 Local Currency

RatingForeign Currency

RatingCountry

AssesmentFederative Republic of Brazil A- BBB A-

Russian Federation BBB+ BBB BBB

Republic of India BBB- BBB- BBB+Peoples Republic of China AA- AA- AA-Republic of South Africa A- BBB A-

GLOBAL COMPETITIVE INDEX

69

70

SA and the global economy

Population 10 million people

Economy 67% ( R1100 bn to R1834 bn)

GDP per capita 28% ( R28 536 to R36 591)

Real Disposable income 32% ( R17 775 to R23 569)

SA withstands global downturn

Robust financial institution; and

Moderate external debt

Current world economic impact on SA

Driving away potential & existing investors Investors become more risk averse move assets from emerging markets to safer investment environments

Slowdown in global demand Rand will experience a prolonged depreciation

E.g. Slowdown in Chinese economy (larger trading partner)

Cost push inflation(food and oil prices ) negative impact on SA economy

New member of BRICS

SA ranked amongst the best in the world in;

Financial sector, strength in reporting & auditing standards, protection of investors rights

Large sized economy

SA and the global economy

A challenging environment

Structural changes seen in SA

• Significant shift towards service sectors, major contributor to GDP

• Finance, real estate and business services sector grown from 16% to over 20% of GPD

• Decline in the role of mining and agricultural sectors

• 12% of the country is suitable for planting crops rethink approach to agriculture to improve food security

• Hold worlds largest reserves of gold, platinum, chrome ore and magnesium ore

  Actual Estimate Forecast

  2010 2011 2012 2013 2014

Final household consumption 3.7 4.9 3.6 3.8 4.2

Final government consumption 4.9 4.6 4.1 4.1 4.1

Gross fixed capital formation -1.6 4.3 4.1 4.5 6

Gross domestic expenditure 4.2 4.1 3.9 4.2 4.9

Exports 4.5 6 2.9 5.8 6.6

Imports 9.6 9.4 7.2 7.1 8.3

Real GDP growth 2.9 3.1 2.7 3.6 4.2

Headline CPI inflation 4.3 5 6.2 5.3 5.1

South African competitiveness relative to peers

Competitiveness ranking to

peers

Overall ranking

4th

Institutions 1st

Infrastructure ranked

5th

Health and primary

education 9th

Labour market

efficiency 8th

Macro environme

nt

6th

Market size 9th

South African competitiveness relative to peers

Ineffective Government bureaucracy

Inadequate Educated workforce

Restricted Labour

regulations

Corruption Crime Theft

SA Problematic

factors for doing business

Business institutions ranked 4th on financial development market

Business sophistication ranked 38th (out of 142 countries)

Goods market efficiency ranked 32nd (out of 142 countries)

Innovation achieved ranked 41st (out of 142 countries)

Po

siti

ve im

pac

t o

n F

DI’s

Tackling unemployment, poverty and education

Unemployment

• Unemployment rate dropped from 31% (2005) to 23.9% (2011)

• Two key trends• Discourage work

seekers,• High rate of youth

unemployment, 71% of unemployed are aged between 15-34 years.

Education

• Poor quality of education

• Literacy and numeracy test scores remains low by African and global standards

• Government dedicates 6% of GDP to education

• SA’s teachers are amongst the highest paid in the world

Poverty

• SA considered an under- middle income country

• 39% of population lives under the poverty line of R418 per person per month

Governments plan

• NPC plans to reduce the number of people living under the poverty line to zero by 2030

• Create 11 million jobs in 20 years

• Improve education system

The State of the Nation Address, 2012/13 Budget

9 key issues within the South African economy

Job creation Infrastructure expansion

Transition to a low carbon economy

Transformation of urban and rural

spaces

Education and training

Providing quality health care

Building a capable state

Fighting corruption

Transformation and unity

5 major infrastructure programmes

Geographically-focused Integrated approach

Mining, transport & agriculture

R4.8 billion was allocated to expanded public works programme and the New Jobs fund that began operating in June of 2011, received over 2500 applications and committed over R1 billion in allocations to various projects.

Key Points ( regarding addition in to BRICs)

World’s richest country in terms of its mineral reserves

World’s largest producer of platinum, chrome, vanadium and manganese, the third-largest gold-miner, and offers highly sophisticated mining-related professional services, contributing significantly to the BRICS resource pool.

Third largest coal exporter

Contd.

Globally recognized financial market development and sophistication

The regulation of the Johannesburg Stock Exchange was ranked 1st in the world

South Africa is ranked 2nd for both the soundness of banks and the efficacy of corporate boards.

Over the past decade, substantial increases in government social service and infrastructure development. (R642 Billion in last 3 years)

Comparison of BRICS

84

85

86

87

88

89

90

Testimonials: Ease of doing business

91

92

93

94

Referenceswww.southafrica.info/business/economy/globalsurveys.htm#.UtVy__QW0ms 9/12www.southafrica.infoHow the world rates south africa reportGlobal competitive index report 2013Africa Competitiveness index reportDoing business report: World Bankwww.doingbusiness.orgEmerging Markets opportunity index report: Grant ThortonEconomic freedom report by The Heritage Foundationwww.heritage.orgIT industry competitiveness index: Economist Intelligence Unitwww.globalindex.bsa.orgCorruption Perceptions Index : Transparency Internationalwww.transparency.orgen.rsf.orgwww.expatexplorer.hsbc.comwww.wayn.comMediaClubSouthAfrica.comhttp://www.statssa.gov.za/keyindicators/gdp.asp

95

THANK YOU ! ! !