economy, sector province of south africa

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Economy, sector and investment overview of the North West Province of South Africa

PRESENTATION OUTLINE:

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• SA Global Competitiveness 2014

• NWP and SA Quick Facts

• Economic Profile

• Sector Analysis

• North West Province - Industrialisation investment projects

SA GLOBAL COMPETITIVENESS

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The Global Competitiveness Report 2014 – 2015 by the World Economic Forum’s (WEF) assesses the competitiveness landscape of 144 economies, providing insight into the drivers of their productivity and prosperity and measures over 100 indicators. South Africa ranked no 56 in 2014 :

Positive rankings include:

Quality of its institutions (36th)

Including intellectual property protection (22nd),

Property rights (20th),

Efficiency of its legal framework in challenging and settling disputes (ninth and 15th, respectively),

Accountability of private institutions (2nd )

Financial market development remained impressive at seventh place, although their data pointed to "more difficulties" in all channels of obtaining finance

Efficient market for goods and services, business sophistication and innovation, benefiting from good scientific research institutions, and

Strong collaboration between universities and the business sector in innovation were also identified as points supporting competitiveness.

QUICK FACTS: SA and NORTH WEST

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SOUTH AFRICA NORTH WEST OFFICIAL NAM Republic of South Africa North West Province HEAD OF STATE: President Jacob Zuma PROVINCIAL PREMIER:

Supra Obakeng Ramoeletsi Mahumapelo

CAPITAL CITIES:

Bloemfontein (Judicial) Cape Town (Legislative) Pretoria (Administrative)

Mahikeng

POPULATION:

52970624 (2013) IHS Global Insight

3611176 (2013) IHS Global Insight

6.82%

AREA: 1 200 000 KM² 116 320KM² 9.69% TOTAL GDP-R: Constant 2005 prices (R 1000)

R 1 993 432 664 (2013) IHS Global Insight

R 102 693 066 (2013) IHS Global Insight

5.15%

GDP GROWTH: Constant 2005 prices

1.9% (2013) IHS Global Insight

1.6% (2013) IHS Global Insight

GDP PER CAPITA: R37 632 (2013) IHS Global Insight

R28 437 (2013) IHS Global Insight

75.5%

INFLATION: 5.7% ( Dec 2013) STATSSA

5.7% (Dec 2013) STATSSA

UNEMPLOYMENT RATE

25.5% ( June 2014) STATSSA

26% ( June 2014) STATSSA

QUICK FACTS: SA and NORTH WEST

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SOUTH AFRICA NORTH WEST NW as % of SA

EXPORTS VALUE: R 924,5 Billion (2013) IHS Global Insight

R 20,2 Billion (2013) IHS Global Insight

2.18%

IMPORTS VALUE: R 991,2 Billion (2013) IHS Global Insight

R 6 Billion (2013) IHS Global Insight

0.6%

EXPORT PARTNERS:

China 11.8% USA 8.3% Japan 6% Germany 5.7% India 4.2% (2012) (The World Fact book)

EXPORT PRODUCTS

Gold, diamonds, platinum, other metals and minerals, machinery and equipment(2012) (The World Factbook)

IMPORT PARNERS

China 14.4% Germany 10.1% Saudi Arabia 7.7% Japan 4.6% India 4.5% (2012) (The World Factbook)

IMPORT PRODUCTS

Machinery and equipment, chemicals, petroleum products, scientific instruments, foodstuffs (2012) (The World Factbook)

ECONOMIC PROFILE: SECTORS

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Agriculture

MiningManufact

uringElectricity

Construction

Trade Transport FinanceCommuni

tyservices

2013 South Africa 2.4% 9.2% 11.6% 3.0% 3.7% 16.6% 8.9% 21.5% 23.1%

2013 North West 2.5% 41.7% 3.3% 1.6% 2.0% 10.8% 5.7% 12.7% 19.7%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

Sect

or'

s Sh

are

of

Re

gio

nal

To

tal %

Gross Value Added per Region (GVA-R) Broad Economic Sectors (9 sectors) Sector's Share of Regional Total % 2013

(Source: IHS Global Insight Regional eXplorer 745 (2.5q)

ECONOMIC PROFILE: SECTORS

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Primary sectorSecondary

sectorTertiary sector

South Africa 0.08 22.23 69.75

North West 29.18 9.94 60.88

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

%

Gross Value Added by Region (GVA-R) Primary, Secondary & Tertiary Sectors as % of Total

Constant 2005 prices (R 1000) 2013 (Source: IHS Global Insight Regional eXplorer 745 (2.5q)

Contribution from the primary sector is equivalent to 18.87% of SA’s primary sector GVA-R, which is the largest contribution of all nine provinces.

Contribution from the tertiary sector is, equivalent to only 4.52% of SA’s tertiary sector GVA-R.

Contribution from the secondary sector is equivalent to only 2.32% of SA’s secondary sector GVA-R. Given the developments in Africa’s economic powerhouse, Gauteng, A STRATEGIC OPPORTUNITY exists for the expansion of the secondary sector in North West

ECONOMIC PROFILE AND INDUSTRY: INDUSTRY OVERVIEW

MINING: 50% of world’s platinum. Also gold, diamonds, chrome, vanadium, granite, slate, limestone, dimension stone, nickel, silica, manganese, phosphate, fluorspar, zinc and andulasite.

AGRICULTURE: North West is the food basket of Southern Africa. More than 20% of RSA maize crop. Also livestock (cattle & poultry), sunflower seeds and oils; nuts; citrus, tobacco (all GMO free).

MANUFACTURING: Automobile/ non-metallic minerals, fabricated metals, food processing, Soya protein, etc.

TOURISM: Cultural, Natural and Historical Heritage

SERVICES: Business and financial services contributes 14% to provincial GDP and accounts for 5% of employment. Significant opportunities for BPO&O exists within the sector.

GREEN ECONOMY: High potential renewable energy opportunities exist within Municipal Waste conversion, Biomass (converting alien invasive plants into energy) and Solar Technologies including Off-grid energy for rural areas

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NORTH WEST PROVINCE SECTOR ANALYSIS: RECCOMMENDED SECTORS

PROJECTS WITH FOLLOWING CHARACTERISTICS ARE RECOMMENDED

High Tress Index indicates strategic investment opportunity in most districts

High comparative advantage as indicated by Location Quotient

Most sectors identified have high growth performance index

Aligned with national policies and also scores highly on the different economic

metrics designed to evaluate potential

Sectors offer good prospects on market potential based on recent growth,

improving employment to GDP ratios and large international optimism in the

sector.

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IPAP FOOTPRINT IN NORTH WEST PROVINCE

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GVA EMPLOYMENT GOS

CLUSTER 1

METAL FABRICATION 0.8% 1.0% 0.6%

CAPITAL & TRANSPORT EQUIPMENT 0.4% 0.5% 0.3%

AGRO-PROCESSING 1.4% 1.2% 1.3%

CLUSTER 2

PLASTICS, PHARMACEUTICALS AND CHEMICALS

0.9% 0.6% 0.8%

CLOTHING, TEXTILES, FOOTWEAR & LEATHER 0.1% 0.4% 0.0%

FORESTRY, PAPER, PULP & FURNITURE 0.7% 1.0% 0.7%

CULTURAL INDUSTRIES AND TOURISM 1.3% 3.2% 1.7%

The table shows the scope of the IPAP-2 sectors in the Province:

NORTH WEST PROVINCE SECTOR ANALYSIS: COMPARISON OF SECTORS BY MARKET

ATTRACTIVENESS

The sectors with the strongest backward linkage (inputs sourced from local producers in other sectors) opportunities in the NWP are: • Food; • Construction; • Metals; • Automotives; • Clothing; and • Furniture sectors.

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The sectors with the strongest forward linkage opportunities are: • Plastics and chemicals; • Metals; • Construction; and • Automotives More sectors in the NWP use the outputs of metals and chemicals as inputs into their own processes than the outputs of all other sectors, and hence stimulating or investing in the metals and chemicals sectors might alleviate supply constraints and/or stimulate the downstream industries.

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ATTRACTIVE INVESTMENT OPPORTUNITITES PROJECT 1: INFRASTRUCTURE PROJECTS

PROJECT DESCRIPTION PROJECT MOTIVATION

Various construction and

infrastructure projects

required to unlock

economic potential

PROPOSED LOCATION

• Province Wide

SIP 4: Unlocking the economic opportunities in NWP

• Acceleration of investments in road, rail, bulk water, water treatment and

transmission infrastructure

• Enabling reliable supply and basic service delivery

• Facilitate development of mining, agricultural activities and tourism

opportunities

• Open up beneficiation opportunities in mining and agriculture in the North

West Province

The construction sector plays a pivotal role in the development of the provinces

infrastructure, which is necessary to create an enabling environment for

economic growth and development. Currently the NWP offers investment

opportunities relating to road, rail and air transport, bulk water and electricity

transmission infrastructure

ATTRACTIVE INVESTMENT OPPORTUNITITES PROJECT 2: Platinum Valley SEZ

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The SEZ is a joint socio-economic

development project involving key mines

and the NWP government, to develop a

purpose built industrial and commercial

facility that will be allocated to the

production of localised mining goods and

the provision of mining related business

services. The integrated infrastructure is

also expected to provide economic and

social opportunities and benefits to the

industrial area and its community, through

the attraction and concentration of existing

mining suppliers and new businesses.

PROPOSED LOCATION

• Bojanala Platinum District

The NWP is reported to produce 94%, 46% and 25% of South Africa’s

platinum, granite and gold production, and accordingly has a concentration

of mining companies.

Strategic short term objectives of the Mining Supply Park are:

• To provide a low risk start-up solution

• To provide a structured accelerated environment where local Black

Economic Empowerment (BEE) development could take place

• To provide factory space for mining suppliers in an under developed

environment

• To develop on economic principals

• To ensure the placement of an independent entity to develop the park

Strategic long term objectives of the Mining Supply Park are:

• To provide an integrated manufacturing and business service logistics

park for the mining industry based on commercial principles

ATTRACTIVE INVESTMENT OPPORTUNITITES PROJECT 3: AGRO PROCESSING

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Establishment of the Cattle Beneficiation Industrial Park,

including industrial and commercial facilities that

dedicated for production and business services to attract

new businesses, by providing integrated infrastructure in

one location and providing localized environmental

controls that are specific to the needs of the industrial

area.

• Support the beneficiation of cattle through a world

class economy of scale abattoir, meat processing and

packaging plant and cold storage facilities

• Support the beneficiation of cattle hides through an

economy of tannery, leather furniture manufacturing

plant, leather footwear manufacturing plant, etc

70% of the value of NWP live animal and animal

products exports during 2009 comprised live

animals, and only 14% of the value of NWP

exports comprised meat and edible meat

products.

This represents a significant beneficiation

opportunity for the NWP, given that 13% of SA’s

cattle herd is located in NWP, with beef cattle

comprising 60% of the NWP livestock output.

PROPOSED LOCATION

• Dr. Ruth S Mompati District

ATTRACTIVE INVESTMENT OPPORTUNITITES PROJECT 4: SMALL SCALE MILLING

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Establishment and development of the

Small Scale Maize Milling Industry to

facilitate the entry of small scale maize

millers to the NWP rural areas where they

are expected to be competitive, given that

high logistics and transport costs raise the

price of basic food and maize products.

PROPOSED LOCATION

• Dr. Ngaka Modiri Molema District

A third of South Africa’s maize is grown in the NWP. Maize is

allocated to various consumption categories in SA with 50%

used for human consumption, 40% for animal feed and 10%

for Bio-fuels etc.

There is currently a surplus of maize production estimated at

4 million tons.

This intervention thus aims to also sustainably reduce the

current high cost of basic milled products, which would

contribute to poverty reduction in the NWP.

ATTRACTIVE INVESTMENT OPPORTUNITITES PROJECT 5: METAL FABRICATION

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Development of a Metal fabrication, Capital

and Transport Equipment sector

development zone through the facilitation of

general and specific industrial infrastructure,

technical workforce and business support

services to manufacture:

• Metal fabricated components,

• Machinery and equipment,

• Other transport equipment,

• Electrical machinery and apparatus,

PROPOSED LOCATION

• Dr. Kenneth Kaunda District


The Metal fabrication, Capital and Transport Equipment cluster of sectors is

vital to economic development as they produce products, applications and

services that are used throughout the NWP and SA economy in

infrastructure programmes, general construction, engineering, mining,

packaging and automotives.

The aim is thus to strategically position the NWP to develop industrial

capacity and capability to leverage off the National Infrastructure capital

expenditure programme as well as the growth in Renewable Energy and

Energy Efficiency equipment manufacturing.

Current opportunities include manufacturing to supply:

• Public infrastructure and beneficiation chains through

components/systems designated for local procurement

• White goods industry, which is being repositioned for growth

• Solar Water Heaters

ATTRACTIVE INVESTMENT OPPORTUNITITES PROJECT 6: AUTOMOTIVE COMPONENTS

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Establishment of an automotive component

sector development zone for supply to

local, regional and international markets.

The DTI indicates that the policy shift from

the Motor Industry Development

Programme (MIDP) to the Automotive

Production Development Programme

(APDP) in 2013 serves to unlock various

opportunities for vehicle Original

Equipment Manufacturers (OEMs) as well

component OEMs

PROPOSED LOCATION


The APDP has key objectives to:

• Raise vehicle production volumes to 1,2 million vehicles per

annum by 2020

• Substantially diversify and deepen the components supply

chain

To achieve this, there will need to be ongoing increases in

minimum plant volume thresholds and vehicle OEMs will need

to work closely with existing and new component OEMs to

identify areas where greater economies of scale in component

sourcing and/or value chain development will be possible.

This presents an opportunity to grow the component supply

base through the expansion of the existing NWP Brits

automotive component hub for both Original Equipment and

aftermarket component manufacturing.

ATTRACTIVE INVESTMENT OPPORTUNITITES PROJECT 7: PLATINUM BENEFICIATION

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Establishment of a platinum

beneficiation sector development

zone to support the technology

development, pilot production,

testing and commercialization of

hydrogen production, Platinum

Group Metals (PGM) catalysis

components and fuel cell

components

PROPOSED LOCATION


Increasing global energy requirements necessitate the identification

and development of environmentally friendly renewable energy. The

North West University is currently leading in this field. Establishing the

Platinum beneficiation sector development zone through the

facilitation of general and specific research and industrial

infrastructure, technical workforce and business support service to

support the technology development, pilot production and testing,

commercialization and manufacturing of:

• Hydrogen production and storage components, sub assemblies and

complete systems;

• PGM catalysis components, sub assemblies and complete systems;

• Niche application Fuel Cell components, sub assemblies and

complete systems to address regional development challenges

ATTRACTIVE INVESTMENT OPPORTUNITITES PROJECT 8: RENEWABLE ENERGY

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Although SA has an abundance of RE resources

available, the applicability of these for the NWP

depend on a number of factors, and

consequently not all are equally viable for the

NWP. RE sources that were identified to hold

the most potential and a competitive strength

for the NWP are:

• Solar energy (Photovoltaics (PV) as well as

Solar Water Heaters (SWH),

• Municipal solid waste,

• Hydrogen and fuel cell technologies,

• Biomass, and

• Energy Efficiency (EE).

PROPOSED LOCATION

• Province wide

The Renewable Energy (RE) strategy of the North West

Province (NWP) was developed in response to a need for

the NWP to participate meaningfully within the RE sector

of South Africa. The North West provincial RE strategy

provides guidance to stakeholders and assigns roles and

responsibilities for the development and production of RE

in a sustainable manner across the NWP. The RE strategy

aims to:

• Improve the NWP’s environment;

• Reduce its contribution to climate change;

• Alleviate energy poverty;

• Promote economic development;

• Facilitate job creation; and

• Develop the NWP green economy.

ATTRACTIVE INVESTMENT OPPORTUNITITES PROJECT 9: MAFIKENG INTERNATIONAL AIRPORT

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PROJECT FEATURES PROJECT FEATURES

Manufacturing and export hub

Leather processing

Tiles manufacturing

High Tech Manufactured

Central Business services

Duty free zone

Banking

Retail and Shopping

Restaurant

Convention Centre

Business Processing Outsourcing

Hotels

Office Park

Car Park

Multimodal Transport System

Airport Development and Management

Airplane repair and maintenance services

Aviation Academy

Cargo Freight Management

International entry for non scheduled cargo air services

Rail and road network system

Passenger flight services

WHY NORTH WEST PROVINCE? EASY ACCESS TO MARKETS AND GATE WAY TO AFRICA

Bordering Botswana, the NWP is ideally positioned to

access the 14 countries comprising the Southern African Development Community (SADC) as well as the islands off Africa's east coast, and even the Gulf States and India. the NWPs well developed road and rail links provide the platform and infrastructure for ground transportation deep into sub-Saharan Africa.

The SADC FTA signed in August 2008 provides access to a market of over 250 MILLION CONSUMERS

Future FTA with SADC,COMESA & EAC will provide access to a market of over 700 MILLION CONSUMERS

NWP offers easily available skills and distribution channels imperative for commercial ventures into Africa.

NWP plays a significant role in the supply of energy, relief aid, transport and communications to the continent.

NWP is well positioned to be used as a shared services hub for companies’ African operations, especially for Sub-Saharan countries.

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C O N G O

S O U TH A FR IC A

D E M O C R A T IC

R E P U B L IC O F

C O N G O

K E N Y A

T A N Z A N IA

A N G L O A

N A M IB IA

B O T S W A N A

Z A M B IA

Z IM B A B W E

M A L A W I

R W A N D A

B U R U N D I

WHY NORTH WEST PROVINCE? : MARKET AND PRODUCT POTENTIAL

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North West University

• Team of PhD researchers

• Intellectual Property

• Model Development

Decision Support Model

• Assesses the commercial and political risks of doing business in all countries

• Market potential of the various product groups for the remaining countries are assessed by analyzing the growth of imports of a given product and related import market size

• Examines the accessibility of each market (barriers to entry and the degree of market concentration)

Identification of Export market

Potential

• Priorities export promotion activities

• Potential export markets based on the strength of South Africa’s current exports to the identified markets, the potential market’s market size, market growth and import market accessibility.

• DEMAND FOR 5500 SA PRODUCTS IDENTIFIED

SOUTH AFRICAN TRADE AGREEMENTS

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 BRICS multilateral 2010

NORTH WEST ADVANTAGE

Location Advantage

Market Access

Advantage

Resource Base

Advantage

Production Cost

Advantage

WHY NORTH WEST PROVINCE: EXPORT POSSIBILITIES - TOP 10 POTENTIAL EXPORT

PRODUCTS FOR NWP

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RANK PRODUCT DESCRIPTION IPAP-2 CLUSTER TOTAL POTENTIAL

EXPORT VALUE (US$ ‘000)

1 710239 - Diamonds (jewellery) worked but

not mounted or set - 11 742 358

2 720241 - Ferro-chromium, >4% carbon Metal Fabrication, Capital

and Transport Equipment 2 227 206

3 841391 - Parts of pumps for liquids Metal Fabrication, Capital

and Transport Equipment 958 094

4 261000 - Chromium ores and concentrates - 452 706

5 730840 - Props etc for scaffold, shuttering,

pits, iron/steel

Metal Fabrication, Capital


6 730830 - Doors, windows, frames of iron or

steel



7 970500 - Collections and collectors pieces - 184 827

8 721090 - Flat rolled iron or non-alloy steel,

clad/plated/coated,



9 080290 - Nuts edible, fresh or dried - 159 390

10 391729 - Plastic tube, pipe or hose, rigid, nes Plastics, Pharmaceuticals

and Chemicals 71 830

WHY NORTH WEST PROVINCE? : RATIONALE FOR MARKET ENTRY MODEL

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MNE’S RESOURCES

Innovative capabilities

Advanced technology and know-how

Industry-specific marketing expertise

Organization structure and systems

LOCAL FIRM’S RESOURCES

Imitating capabilities

Older technology and know-how

Country-specific marketing expertise

Country specific organization skills

JV

Access to partner’s local knowledge Local expertise - marketing, government relations, etc Reduction of concern about overpayment Both parties have some performance incentives Significant control over operation Both partners contribute hard-to-measure inputs Large expected mutual gains in the long-run

AREAS OF ASSISTANCE FROM PARTNERING COUNTRY

Information about doing business in country

Investment and Export opportunities

Market, market access and trade intelligence

Business partner identification (investment and trade)

Supporting trade missions and visits to country

Networking and other opportunities

Problem solving

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NORTH WEST DEVELOPMENT CORPORATION SERVICES

Facilitating joint venture and equity partnerships

Providing information on financing options and investment incentives

Providing advice on feasibility studies and business plans

Assisting investors to obtain work and business permits

Providing assistance in obtaining suitable factory space

Assisting existing firms to expand and re-invest

Assisting companies to find export markets for their products

Advisory services to improve company growth and performance

Competitiveness improvement support

Advice on productivity and process improvement

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Contact the NWDC for more information or to explore investment opportunities NWDC Rustenburg Trade, investment & industry development office: +27 (0)14 594 257

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Headquarters 22 James Watt Crescent Industrial Site

Mahikeng, 2745

TEL: 18 381 3663

Fax: 18 381 2041

Email: [email protected]

Trade and Investment 1ST Floor Old Mutual Building

171 Beyers Naude Drive, Rustenburg

TEL: +27(0) 14 594 2570

Fax: +27(0) 14 594 2570

mailto:[email protected]

economy, sector province of south africa

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