Exporting to South Africa - Market OverviewSouth Africa - Market Overview
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A country of 55 million people, South Africa enjoys 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 2017, 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 in 2017 experienced 12.8% growth, well above the global average of 8%, by 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 manufacturing and high-tech sectors.
- Some parts of the country's urban areas boast well-developed infrastructure, comparable to OECD standards, but rapid urbanization has led to glaring contrasts. Its growing services sector is a major employer, and the private, or corporate, side of the economy has been traditionally well-managed, although it faces low productivity gains. The banking and financial services sector is stable and weathered the 2008 financial crisis well, but the auditing sector has suffered reputational damage since 2017 due to deficient reporting. The Johannesburg Stock Exchange (JSE) ranks among the top emerging market exchanges in the world.
- South Africa is well integrated into 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 growing fast.
- The U.S Department of Commerce chairs The President’s Advisory Council on Doing Business in Africa (PAC-DBIA), which advises the President, through the Secretary of Commerce, on ways to strengthen commercial engagement between the United States and Africa. For further information on the PAC-DBIA, please see: www.trade.gov/pac-dbia/.
- 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, forensics, process outsourcing, etc.) is arguably the best in Africa.
- South Africa is a business incubator for new-to-market (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, joint ventures (JVs), mergers, and acquisitions; some South African companies hope to enter the U.S. market through similar arrangements.
South Africa Trade Development and Promotion