Exporting to South Africa - Market OverviewSouth Africa - Market Overview
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- South Africa is a country of 55 million people, enjoying relative macroeconomic stability and a largely pro-business environment.
- South Africa is a logical and attractive option for U.S. companies seeking to enter the sub-Saharan Africa marketplace. The country covers 1.22 million square kilometers and is the world’s largest producer of platinum, vanadium, chromium and manganese.
- South Africa is the most advanced diversified and productive economy in Africa. However, its actual growth does not match that of other African economies.
- In 2016, its gross domestic product (GDP) grew by 0.5% to an estimated $ 736.3 billion (based on purchasing power parity – ppp, or $350 billion in the more widely used standard GDP definition). The mature nature of the South African economy is reflected in the mix of economic sectors:
- Primary (including agriculture, fishing and mining): 10%.
- Secondary (manufacturing, construction and utilities): 21%.
- Tertiary (trade, transport and services): 69%.
- The tourism sector has experienced above global average growth, capitalizing on South Africa's natural beauty, wildlife reserves and good infrastructure. The sector is a major foreign exchange earner, along with minerals, agricultural products and some niche, high-tech sectors.
- The country's urban areas boast well-developed infrastructure, comparable to OECD standards. Its growing service sector is a major employer, and the private, corporate side of the economy is well-managed, although facing slow productivity gains. The banking and financial services sector is stable and weathered the 2008 financial crisis well. The Johannesburg Stock Exchange (JSE) ranks among the top emerging market exchanges in the world.
- South Africa is well integrated into the regional economic infrastructure as formalized by membership in the Southern African Development Community (SADC). In addition, the Southern African Customs Union (SACU) agreement with Botswana, Namibia, Lesotho and Swaziland facilitates commercial exchanges. South Africa is a member of the World Trade Organization (WTO), the G20, and BRICS (Brazil, Russia, India, China and South Africa).
- The African Growth and Opportunity Act (AGOA), renewed for a final 10-year period in 2016, provides duty-free access to the U.S. market for most sub-Saharan African countries, including South Africa. The United States and South Africa signed a new Trade and Investment Framework Agreement (TIFA) in 2012. The United States and SACU concluded a Trade, Investment and Development Cooperation Agreement (TIDCA) in 2008.
- The United States is a critical trading and technology partner for South Africa and ranks annually as South Africa’s third-largest partner in two-way trade by value. While Europe and Japan have well-established trade links with South Africa, trade with China, also in financial services, is progressing fast.
- In 2012, the U.S. Department of Commerce launched the “Doing Business in Africa” (DBIA) campaign. This program is likely to continue and brings together resources of various USG agencies to increase trade and investment opportunities for U.S. businesses in Africa. For further information on DBIA, please visit the DBIA page on the International Trade Administration website.
Five reasons why U.S. companies should consider exporting to South Africa:
- South Africa remains a must-consider country in sub-Saharan Africa when new-to-market (NTM) companies consider location options; the logistics infrastructure, English language and benign legal processes make this a low entry-threshold country.
- The business management environment (legal, publicity, marketing, accounting, forensics, process outsourcing, etc.) is arguably the best in Africa.
- South Africa is a business incubator for NTM ideas; as the middle class in Africa grows, business models launched in and from South Africa will find easier acceptance in other sub-Saharan Africa markets.
- The penetration of South African companies and agencies into Africa makes finding the right partner to collaborate with in third markets a low-risk business development model.
- South African companies are receptive to various partnering arrangements with U.S. companies; these range from agency, to licensing, to JV’s, to mergers and acquisitions; some South African companies hope to enter the U.S. market in this fashion
South Africa Trade Development and Promotion