Investing in South Africa Roadmap 2020 - InvestSA

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Investing in South Africa Roadmap 2020 - InvestSA
Investing in South Africa
          Roadmap 2020
Investing in South Africa Roadmap 2020 - InvestSA
1   SOUTH AFRICA INVESTOR ROADMAP                                                                                                                          Foreword
                                    1. Foreword

                                    2. Why Invest in South Africa?

                                    3. Fast Facts on South Africa                   9
                                    	Economic indicators
                                       Socio-economic and demographic indicators        It is with great pride that InvestSA, a division of the Department of Trade and
                                       Political and legal environment                  Industry (the dti), and Deloitte Africa bring you the updated and revised version
                                       Arts, culture and sports                         of South Africa’s Investor Roadmap 2020.
                                       Residing and working in SA
                                                                                        South Africa has a number of characteristics that make it a compelling
                                                                                        investment destination on the African continent.
                                    4. Economic Overview of South Africa           16
                                                                                        The Investor Roadmap provides both foreign and domestic investors with a
                                       National economic overview
                                                                                        broad overview of the social, regulatory and economic environment in which
                                       Provincial economic overview
                                                                                        they can expect to operate, highlighting the key features and investment
                                    5. Sector Overviews & Opportunities            23   incentives that we believe make doing business in South Africa an attractive
                                       Green economy                                    proposition.
                                                                                        It is hoped that this publication will serve as the single most comprehensive
                                       Resource-based economy
                                                                                        and authoritative source of information for investors, exporters and businesses
                                                                                        arriving at our shores.
                                       Advanced manufacturing
                                                                                        For more information and advisory support, please contact us.
                                    6. Doing Business in South Africa              37

                                       Starting a business
                                       • Registration process
                                       • Business vehicles

                                       Cost of doing business
                                                                                        Mr Yunus Hoosen
                                       • Telecommunications
                                       •	Electricity
                                       • Property
                                       •	Water
                                       • Transport
                                       • Fuel

                                       Labour costs and skills availability

                                    	Overview of Special Economic Zones


                                       Regulatory requirements and legislation
                                       • Corporate
                                       • Labour
                                       • Finance
                                       • Intellectual property
                                       •	Environment                                      Disclaimer
                                       • Telecommunications                               Unless otherwise stated, the information in this Investor Roadmap is based on
                                       • Mining                                           conditions that existed in March 2019.
                                       • Transformation
                                                                                          The authors accept no responsibility for any errors this guide may contain,
                                       Land acquisition process
                                                                                          whether caused by negligence or otherwise, or for any loss, however caused,
                                    	Environmental impact assessment                      sustained by any person that relies on the information herein.
                                       Incentive programmes		                             While all attempts have been made to provide up-to-date statistics and other
                                    7. Key Contacts                                76     details, this Investor Roadmap is not exhaustive and readers are advised to
                                    8. Addendum                                    81     consult with their advisors and/or the relevant government agency.

    2                                                                                                                                                                1
Investing in South Africa Roadmap 2020 - InvestSA
2    SOUTH AFRICA INVESTOR ROADMAP                                                                                                                                                                                                                                                       Why invest in South Africa?

    Why Invest in South Africa?
    10 Reasons to Invest in South Africa                                                                                                Attractive and Connected Emerging Market

     1   Quality infrastructure and efficient logistics
         With well-established and continued investment in infrastructure, South Africa is positioned as a key global hub
         and an attractive gateway into the rest of the continent.
                                                                                                                                                                                                                                                                                                        Largest port
         Largest presence of multinationals in Africa
                                                                                                                                                                                                                                                                                                         (Port of Durban)
     2                                                                                                                             South Africa is one of the most diversified and industrialised economies in                                                                                               in Africa
         South Africa is the investment destination of choice of a sizeable number of global corporates, who enjoy the             Africa with the most affluent consumer market in Africa.*
         benefits of doing business in the country. More than 180 Fortune Global 500 companies are present in South
                                                                                                                                   Its well-established infrastructure and strategic location, positions South Africa
                                                                                                                                   as a key global hub and an attractive gateway into the rest of the continent.                                                                                           +96%
     3   Manufacturing hub                                                                                                                                                                                                                                                                               of households
                                                                                                                                                                                                                                                                                                         have access to
         South Africa has a well-developed, diversified manufacturing base that has shown its potential to compete
                                                                                                                                      Most sophisticated financial services                                                                                                                              mobile phones
         globally, and serves as a manufacturing hub to supply the rest of the continent for a number of consumer product
         companies.                                                                                                                   services sector in Africa
     4   Lucrative emerging market
         South Africa’s growing middle class and most affluent consumer base in Africa presents attractive returns on                                                                    Largest installed electricity
                                                                                                                                                                                         generation capacity in Africa
     5   Favourable market access to global markets

         The African Continental Free Trade Area (AfCFTA) will boost intra-Africa trade and create a market of over 1bn
         people with a combined GDP of over US$2trn. South Africa has several trade agreements that provide an export              Largest coal terminal
         platform into global markets.
                                                                                                                                   (Richards Bay) in Africa                                                                                                                                                internet
     6   Innovation and tech hub
                                                                                                                                                                                                                                               smartphone                                                   users
         The Global Innovation Index ranks South Africa number one in innovation in Africa. South Africa’s intellectual
         property rights protection is regarded as the second best in Africa. South Africa is also fast becoming a technology
         hub in Africa and has a growing ecosystem in the tech sector ranging from technical expertise to finance support
                                                                                                                                       3        rd
                                                                                                                                       most connected
         for entrepreneurs.
                                                                                                                                                                                                                                         of population covered                                   Fortune Global 500
     7   Abundant natural resources                                                                                                    shipping network                                                                                                                                              companies are
                                                                                                                                                                                                                                         by 4G/LTE network
         South Africa is abundantly endowed with precious metals. It is the world’s leading producer of platinum group                 in Africa                                                                                                                                                       present in
         metals, the sixth-largest producer of gold, has world-renowned underground mining expertise and more than 100                                                                                                                                                                                South Africa
         listed mining companies with operations in the country.

         Africa’s leading financial hub                                                                                               Top 3 international airports                                                                                    Most efficient
         South Africa has a sophisticated banking sector with a major footprint in Africa. It is also a financial hub in Africa,      in Africa Johannesburg, Cape Town                                                                               air transport                                      3rd best
         with the Johannesburg Stock Exchange (JSE) the largest stock exchange by market capitalisation in the continent.             and Durban                                                                                                      service in Africa                                      overall
         Young trainable labour force                                                                                                                                                                                                                                                                    infrastructure
     9                                                                                                                                                                                                                                                                                                      in Africa
                                                                                                                                   *when considering economies with populations above 5 million.
         South Africa has a number of world-class universities and technical colleges, producing a skilled, talented, and          Sources: IMF, 2018; WEF, 2018; Skytrax, 2018; World Bank, 2018; AfrAsia Bank, 2018; StatsSA, 2018; UN, 2018; World Internet Stats 2019; ICASA, 2019
         capable workforce. It offers a diversified skillset, a large pool of trainable labour, and government support for
         training and skills development.

    10 Excellent quality of life
         South Africa is renowned for its quality of life, offering both high quality city experiences and more tranquil and
         breath-taking landscapes.

     2                                                                                                                                                                                                                                                                                                            3
Investing in South Africa Roadmap 2020 - InvestSA
2      SOUTH AFRICA INVESTOR ROADMAP                                                                                                                                                                                                                      Why invest in South Africa?

     Preferred Investment Destination in Africa                                                                                                 Affordable Production Destination with Sizeable Talent Pool

                                                  Sample of Fortune Global 500 companies present in South Africa

                                                              Automotive            Resources     Financial Services               FMCG
                                                                                                                                                                                                         Average cost per sqm prime office space, 2018
              South Africa is Africa’s
               preferred investment
            destination for multinational                                                                                                                                                                            $170          $165
                    companies.                                                                                                                                                                                                              $130
         Thanks to its highly sophisticated
        business environment, world-class                                                                                                                                                                                                                        $11     $10     $10        $9
      financial services sector and excellent
     transport links, South Africa is regarded
        as the leading springboard into the
                rest of the continent.

       More than 180 Fortune Global 500                                                                                                             Employment costs as share of total business cost, 2016
    companies have invested in South Africa,                                                                                     Engineering             35%
       the largest concentration in Africa.

    The country offers attractive opportunities                                                                                                                                     22%
       for investors seeking new markets,                                                                ICT
               or strategic assets.                                                                                                                                                                           14%

      In 2018, President Cyril Ramaphosa
     embarked on an ambitious investment
          drive to secure US$100bn in                                                                                                                  Malaysia                    Turkey                 South Africa                    Brazil
              investments by 2023.                                                                                                     Retail

        In 2018, South Africa witnessed
        a more than fivefold increase in                                                             Electronics                                                                                                         Number of graduates                                      2014-17
           FDI inflows, accounting for                                                                                                                                                                                                                                           % change
              close to 18% of FDI                 FDI inflows, 2017 vs 2018
                inflows into Africa.                                                                                                                                                                                      185 373         191 524     203 076          210 931     14%
                                                                           US$7.1 bn
                                                                                                                                                                                                                                                                       61 580      15%
                                                                                                                                                                                                                                                      59 125
                                                                                                                                                                                                                            55 574         58 090

              FDI inflows to South Africa                                                                                                                                                                                                             45 480           47 143      20%
              increased more                                                   $130                                                                                                                                         42 343         42 917

              than           between 2017         US$1.3 bn                                                                                                                                                                 37 076         36 654     42 107           44 434      11%

                         x5  and 2018
                                                    2017                     2018                                                                                                                                           50 380         53 863     56 364           57 772      11%

                                                                                                                                                                                                                            2014            2015          2016          2017
                                                                                                Sources: Reuters, 2018; UNCTAD, 2019
                                                                                                                                                                                                                          Science, Engineering and Technology
                                                                                                                                                                                                                         	Other Humanities
                                                                                                                                                                                                                         	Education
                                                                                                                                                                                                                          Business/Management

                                                                                                                                                Sources: Colliers International, 2018; Rode, 2018; CBRE, 2018; World Bank, 2018; DHET, 2018

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Investing in South Africa Roadmap 2020 - InvestSA
2     SOUTH AFRICA INVESTOR ROADMAP                                                                                                                                                                                                                          Why invest in South Africa?

    Key Highlights and Quick Facts                                                                                                                   A Snapshot of South Africa’s Key Economic Hubs
                   Connected to the world                                        Young and capable population
                   South Africa is well-connected to the rest                    Close to 60 million people call South Africa home, making it                                                                                                GAUTENG
                   of the world. Most major international                        the 5th most populous country in Africa.                                                                                                                    Commercial hub of the country with largest presence
                                                                                                                                                                                                                                             of MNCs in Africa
                   destinations across all continents are
                                                                                 South Africa has a highly urbanised and young population.
                   accessible from South Africa via direct                                                                                                                                                                                   • Provincial GDP: R1 594bn (34% of SA’s GDP)
                                                                                 The country’s universities are among the best on the
                   flights on a daily basis.                                                                                                                                                                                                 • Contribution to provincial GDP:
                                                                                                                                                                                                                                               – Finance, real estate & business services: 24%
                   World-class private education                                                                                                  South Africa is Africa’s economic powerhouse and                                             – Manufacturing: 15%
                                                                                 In addition to its universities, South Africa has 50 Technical
                                                                                 and Vocational Education and Training (TVET) colleges
                                                                                                                                                  most important consumer market. It is home to four of the                                    – Trade, catering & accommodation: 14%
                   South Africa has number of world-class,
                   progressive private education providers                       that focus on technical and vocational skills development.       10 wealthiest cities in Africa, accounting for more than                                   • Key cities: Johannesburg and Pretoria
                   from pre-primary, primary to secondary and                    Currently there are 700 000 TVET students studying at 267        US$500bn in personal wealth.
                   tertiary levels. Some of the world’s most                     campuses across the country.
                   renowned business schools run programmes                                                                                       The country is home to Africa’s largest luxury market,
                                                                                 •   38m South Africans are of working age                                                                                                                                                  KWAZULU-NATAL
                   in the country.                                                                                                                valued at US$2.2bn or 37% of continent’s total luxury market.                                                             Home to Africa’s largest port and
                                                                                 •   56% of the population is below 30 years                                                                                                                                                a key manufacturing region
                   Outstanding medical facilities                                                                                                                                                                                                         LIMPOPO
                                                                                 •   2 in 3 South Africans live in urban areas                                                                                                                                              • Provincial GDP: R746bn
                   South Africa has a well-established network                                                                                                                                                                                                                (16% of SA’s GDP)
                   of medical facilities, offering world-class                   •   4 of Top 5 African universities are in South Africa                                                                                                                MPUMALANGA          • Contribution to provincial GDP:
                   medical treatments not only to the domestic                   •   70% of the workforce have at least secondary                                                                                                                                             – Manufacturing: 18%
                                                                                                                                                  South Africa’s largest provinces                                       NORTH WEST           GAUTENG
                   market, but also to the region. In 1967, the                      education                                                                                                                                                                                – Finance, real estate &
                                                                                                                                                  by size of provincial GDP                                                                                                     business services: 17%
                   first ever heart transplant was performed at
                   the Groote Schuur hospital in Cape Town,                      •   95% of the adult population is literate                                                                                                                                                  – Trade, catering &
                                                                                                                                                                                                                                                         KWAZULU                accommodation: 15%
                   reflecting South Africa’s pioneering role in the                                                                                                                                                              FREE STATE
                                                                                                                                                                                                                                                          -NATAL            • Key city: Durban
                   medical field.
                                                                                 Africa’s best universities                                                                                          NORTHERN CAPE
                   Exceptional value
                                                                                 •   University of Cape Town                                      WESTERN CAPE
                   While providing an exceptional lifestyle with                                                                                  Strong services, agricultural and
                                                                                 •   University of Witwatersrand                                  manufacturing sectors
                   worldclass restaurants, shopping and leisure
                                                                                                                                                                                                                              EASTERN CAPE                                Top 10 African cities
                   activities, South African cities are among the                •   Stellenbosch University                                      • Provincial GDP: R633bn
                                                                                                                                                                                                                                                                          by wealth, 2017
                   most affordable places to work and live in.                                                                                      (14% of SA’s GDP)
                                                                                 •   University of KwaZulu-Natal                                                                                   WESTERN CAPE
                                                                                                                                                                                                                                                                           Rank        City        Total wealth
                                                                                                                                                  • Contribution to provincial GDP:
                   Unbeatable climate                                                                                                               – Finance, real estate & business                                                                                        1    Johannesburg      US$276bn
                                                                                                                                                      services: 25%                                                                                                          2      Cape Town       US$155bn
                   With up to 300 hours of sunshine per month
                                                                                 Progressive democracy                                              – Trade, catering &                                                                                                      3         Cairo        US$140bn
                   and its mild and sunny winters, South Africa                                                                                                                                   EASTERN CAPE
                                                                                                                                                      accommodation: 17%
                   offers an unbeatable climate. The country’s                   Since its first democratic election in 1994, the country has                                                     Strong automotive cluster                                                  4         Lagos        US$108bn
                                                                                                                                                    – Manufacturing: 15%
                   climate is perfect for outdoor enthusiasts.                   developed a strong track record of democracy.                                                                                                                                               5        Durban           US$55bn
                                                                                                                                                  • Key city: Cape Town                           • Provincial GDP: R359bn (8% of SA’s GDP)
                                                                                                                                                                                                  • Contribution to provincial GDP:                                          6        Nairobi          US$54bn
                   Unmatched natural beauty                                      South Africa’s constitution has been hailed as one of the
                                                                                                                                                                                                                                                                             7        Luanda           US$49bn
                                                                                                                                                                                                    – Trade, catering & accommodation: 20%
                                                                                 most progressive constitutions in the world.
                   From pristine beaches, lush forests to open                                                                                                                                      – Finance, real estate & business services: 19%                          8       Pretoria          US$48bn
                   plains and rolling hills, South Africa’s diverse              The country’s vibrant and active civil society and media                                                           – Manufacturing: 13%                                                     9      Casablanca         US$42bn
                   geography offers unmatched recreational                       ensure accountability and transparency in government.                                                            • Key city: Port Elizabeth                                                 10        Accra           US$38bn
                   options. Its Big Five game reserves, including                •   5th strongest investor protection in Africa
                   the world famous Kruger National Park, are an
                   ideal destination for nature lovers.                          •   2nd most independent judiciary in Africa

                                                                                 •   3rd freest media in Africa

                                                                                 •   4th highest Democracy Index (EIU) ranking in Africa

    Sources: DHET, 2018; World Bank, 2018; Mo Ibrahim Index, 2018; EIU, 2018; Times Higher Education, 2018; Reporters Without Borders, 2018          Sources: StatsSA, 2019; AfrAsia Bank, 2018

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Investing in South Africa Roadmap 2020 - InvestSA
3   SOUTH AFRICA INVESTOR ROADMAP                                                                                                     Fast Facts on South Africa

                                    Fast Facts on South Africa

                                    Economic indicators                                                          Measure          Fast facts
                                    Key highlights                                                               Gross domestic   2020f: R5.62trn (US$403.0bn)
                                    •   South Africa is the second largest economy in Africa.                    product (GDP)    2019f: R5.24trn (US$385.5bn)
                                                                                                                                  2018: R4.91trn (US$376.8bn)
                                    •   As Africa’s anchor economy, South Africa became a
                                                                                                                                  2017: R4.65trn (US$349.3bn)
                                        member of the BRICS grouping in 2010.
                                                                                                                                  2016: R4.35trn (US$295.8bn)
                                    •   South Africa’s prudent monetary policy has kept                                           2015: R4.05trn (US$317.7bn)
                                        consumer prices well within its target range of 3%-6%.                   GDP growth       2020f: 1.5%
                                    •   Compared to other major African economies, South                                          2019f: 0.6%
                                        Africa has a relatively low commercial bank lending rate.                                 2018: 0.8%
                                                                                                                                  2017: 1.3%
                                    •   Over the last three years, the South African rand was the
                                                                                                                                  2016: 0.6%
                                        best performer among major currencies compared to the
                                                                                                                                  2015: 1.3%
                                        US dollar, gaining more than 6% against the US dollar.
                                                                                                                                  2000 to 2018: 2.8% p.a. (average)
                                    •   The South African rand is freely convertible.
                                                                                                                 Consumer price   2018: 4.8% (average)
                                    •   South Africa’s foreign exchange policy has been                          inflation        2010 to 2018: 5.3% (average)
                                        progressively relaxed over recent years, with only minor                 Interest rates   Policy rate (repo rate):
                                        delays in the conversion and transfer of funds.                                           • 2018: 6.59% (average)
                                    •   In 2017, South Africa was the largest exporter in Africa                                  • 23 Jan. 2019: 6.75%

                                        – exporting almost twice as much as Nigeria, Africa’s                    Exchange rate    2018 average: US$1.00 = R13.25
                                        second largest exporter.
                                                                                                                 Merchandise      Exports in 2017: US$88.3bn
                                    •   In 2017, South Africa was the largest importer in Africa                 trade            Top export destinations:
                                        – importing almost one-third more than Egypt, Africa’s                                    • China: US$8.7bn
                                        second largest importer.                                                                  • US: US$6.6bn
                                                                                                                                  • Germany: US$5.8bn
                                                                                                                                  • Japan: US$4.2bn
                                                                                                                                  • India: US$4.1bn
                                                                                                                                  Imports in 2017: US$83.0bn
                                                                                                                                  Top import sources:
                                                                                                                                  • China: US$15.2bn
                                                                                                                                  • Germany US$9.6bn
                                                                                                                                  • US: US$5.5bn
                                                                                                                                  • India: US$3.9bn
                                                                                                                                  • Saudi Arabia: US$3.8bn

                                    Sources: IMF, 2018; UNCTAD, 2018; StatsSA, 2018a; SARB, 2018 & 2019; Business Insider, 2018

    8                                                                                                                                                            9
Investing in South Africa Roadmap 2020 - InvestSA
3       SOUTH AFRICA INVESTOR ROADMAP                                                                                                                                                                                                           Fast Facts on South Africa

    Socio-economic and demographic indicators                                  Measure                   Fast facts                                  Political and legal environment                                   Measure            Fast facts
    Key highlights                                                             Population                •   57.7m population                        Key highlights                                                    Government         •   Parliamentary democracy
    •   South Africa is by far the most affluent economy in Africa                                       •   37.5m working-age population            •   South Africa has been hailed as the most stable               Legal system       •   Mix of Roman-Dutch law (primarily
        when considering economies with populations above                                                •   65% under the age of 35                     democracy in Africa.                                                                 civil), common law and statute
        5 million.                                                                                       •   6% over the age of 65
                                                                                                                                                     •   South Africa has the most independent and transparent                                (primarily economic affairs)
                                                                                                         •   Annual population growth: 1.6%
    •   South Africa is the fifth most populous country in Africa.                                                                                       judicial processes in Africa, guaranteeing investors a fair                      •   Constitution protects basic
                                                                               Highly urbanised          Share of population living in urban             and reliable business environment.                                                   freedoms and secures rights
    •   While South Africa has a young population, its age
                                                                               population                areas:                                                                                                                               and dignities (including property
        dependency ratio is among the lowest in Africa.                                                                                              •   South Africa has the best regulatory environment for
                                                                                                         • 2018: 66.4%                                                                                                                        rights and protection of minorities
    •   About one-quarter of South Africans live in either                                               • 2020f: 67.4%
                                                                                                                                                         businesses in Africa, making it a favourable investment                              based on ethnicity, gender, sexual
        Johannesburg, Cape Town, Durban or Ekurhuleni. These                                             • 2025f: 69.8%
                                                                                                                                                         destination.                                                                         preference, etc.)
        urban hubs are well connected and present attractive                                                                                         •   The South African Reserve Bank is well-managed and
                                                                               Middle class              •   Motorisation rate: 176 vehicles                                                                           Fiscal policy      •   Balances development needs
        consumer markets.                                                                                                                                independent, ensuring predictability and consistency in
                                                                               indicators                    per 1 000 people (2017)                                                                                                          with fiscal sustainability and
    •   South Africa is Africa’s largest market for automobiles                                          •   57% of the population have                  monetary policy.                                                                     intergenerational equity
        and has the largest fleet of cars on the continent.                                                  access to the internet (2017)           •   The Johannesburg Stock Exchange (JSE) is the 19th             Monetary policy    •   Inflation targeting regime
                                                                                                         •   67% of adult population have an             largest in the world by market capitalisation. On 1st March
    •   A number of government initiatives, such as the Jobs                                                                                                                                                                              •   Target range of 3% to 6% for
                                                                                                             account with a financial institution        2019 the JSE’s market capitalisation was R15.9trn.
        Fund, are geared towards employment creation.                                                                                                                                                                                         the year-on-year increase in the
                                                                                                         •   95% of population has access to
                                                                                                                                                                                                                                              headline CPI
    •   South Africa faces challenges of inequality; however                                                 improved water source (2018)
        its progressive social spending system has helped to                                                                                                                                                           Capital controls   •   Regulation of foreign inflows is
                                                                               Labour market             Unemployment rate:
        mitigate the impact of inequality.                                                                                                                                                                                                    limited
                                                                                                         • 2017: 27.5%
                                                                                                                                                                                                                                          •   Foreign outflows are permitted
    Age distribution, 2018                                                                               • Q3 2018: 27.5%
                                                                                                                                                                                                                                          •   Some limits on permanent residents
                                                                       80+                               • Q4 2018: 27.1%
     Male                                                                                                                                                                                                                                    and citizens apply
                                                                       70-74                             • Q2 2019: 29.0%
     Female                                                                                                                                                                                                           Financial sector   •   Highly developed bond and equity
                                                                       60-64   GDP per capita                       Current prices           PPP
                                                                       50-54                             1998:        US$3 159              $7 204
                                                                                                                                                                                                                                          •   Banks regulated under ‘twin peaks’
                                                                                                         2008:        US$5 802             $11 739
                                                                       40-44                                                                                                                                                                  model, with central bank overseeing
                                                                                                         2018:        US$6 560             $13 775
                                                                       30-34                                                                                                                                                                  both macro- and micro-prudential
                                                                               Gini coefficient          •   2006: 0.72                                                                                                                       policy
                                                                                                         •   2015: 0.68                                                                                                                   •   Signatory to Basel III accords

                                                                                                                                                                                                                       Trade              •   WTO member since 1995
                2000                0                   2000                                                                                                                                                           agreements         •   Bilateral agreements with most
                                Thousands                                                                                                                                                                                                     major trading partners
                                                                                                                                                                                                                                          •   Preferential access to US and EU
    Population distribution, 2018                                              Population (million), 2016-23f
                                                                                                                                                                                                                                              market through AGOA and EPA
                                       Gauteng, 25%                                                                59.3   60.2    61.2     62.1                                                                                          •   Regional markets via SADC Free
                                                                                    55.6   56.5   57.4       58.3
                                       KwaZulu-Natal, 20%                                                                                                                                                                                    Trade Area
                                      	Western Cape, 11%                                                                                                                                                                                 •   Transcontinental free trade area
                                      	Eastern Cape, 11%                                                                                            South Africa has the most admirable                               Investment         •   International investors protected
                                       Limpopo, 10%                                                                                                 Constitution in the history of the world.                         agreements             under South African court system
                                       Mpumalanga, 8%
                                                                                    2016   2017   2018       2019   2020   2021f   2022f   2023f     Cass R. Sustain, Harvard law scholar                              Arbitration        •   The International Arbitration Act 15
                                       North West, 7%
                                       Free State, 5%                                                                                                                                                                                        of 2017 positions SA as a primary
                                       Northern Cape, 2%                                                                                                                                                                                     seat for arbitration

    Source: IMF, 2018; World Bank, 2018d; StatsSA, 2018b; OICA, 2018

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Investing in South Africa Roadmap 2020 - InvestSA
3     SOUTH AFRICA INVESTOR ROADMAP                                                                                                                                                                             Fast Facts on South Africa

    Arts, culture and sports                                                                                                  Quality of life
    Key highlights                                                                                                            Residing and working in South Africa
    South Africa is a great place to work, play and live. Its diverse climate and                                             •   South Africa is a vibrant multi-cultural society with
    geography offers a wide range of leisure activities from swimming, golfing,                                                   11 official languages including: English, Afrikaans,
    cycling, mountaineering and more all year round. In general, South Africans are                                               isiNdebele, isiXhosa, isiZulu, Sepedi, Sesotho,
    a very sports-enthusiastic nation, and avid followers of local and international                                              Setswana, SiSwati, Tshivenda and Xitsonga.
    sporting events.
                                                                                                                              •   Johannesburg and Pretoria ranked amongst the top
    In addition to outdoor activities, its cultural diversity and cosmopolitan cities                                             23% of the most affordable cities (133 cities ranked in
    makes South Africa an exciting place to work and live.                                                                        five continents).

    South Africa’s rich cultural heritage manifests itself in the country’s creative                                          •   South Africa provides a wide choice of quality
    industry that has produced world class artists, musicians, writers and actors.                                                accommodation, both to rent or buy, with property
                                                                                                                                  ranking 11th in the HSBC’s Expat Explorer Survey 2018.

                                                                                                                              •   There are excellent private schools including access to
    Select arts, culture and sports personalities
                                                                                                                                  alternative teaching philosophies such as Montessori
                                                                  Sport                                                           and Waldorf. There are also international schools in
                                                                                                                                  the major cities which follow the American, British,
                                                                                                                                  French or German curriculum or the International

                                                                                                                              •   8% of South African universities rank in the top 16%
                                                                                                                                  of universities in the world.

         Bryan Habana               Chad le Clos               Gary Player              Caster Semenya    Wayde van Niekerk   •   South Africa has well-trained medical staff with world
         (rugby player)              (swimmer)                   (golfer)                   (runner)          (runner)            class private hospitals and clinics.

                                                                                                                              •   South Africa ranks in the top 20 out of 149 countries
     Film/TV                                                                       Literature                                     in the WEF’s 2018 Global Gender Gap report, which
                                                                                                                                  ranks countries on progress towards gender parity.

                                                                                                                              •   South Africa has been declared one of the 18
                                                                                                                                  megadiverse destinations in the world. The country
                                                                                                                                  is home to the famous Big Five (rhino, elephant, lion,
                                                                                                                                  leopard and buffalo).

           Gavin Hood               Trevor Noah              Charlize Theron             John Maxwell        Zakes Mda        •   66 sites in South Africa have Blue Flag status for
       (producer/director)           (comedian)                 (actress)                  Coetzee                                outstanding environmental management of coastlines
                                                                                                                                  and coastal waters for tourism and development.
     Music                                                                         Fashion
                                                                                                                              •   A day at SA’s beaches costs an average of almost
                                                                                                                                  half of what is costs in Norway, rated the world’s most
                                                                                                                                  expensive beach.

                                                                                                                              •   South Africa is home to 10 UNESCO World Heritage

          Black Coffee         Yvonne Chaka Chaka           Ladysmith Black             Trevor Stuurman      David Tlale
                                                               Mambazo                                                        Sources: Conservation International, 2018; Wildlife and Environment Society of
                                                                                                                              South Africa, 2018; TravelBird, 2017; Economist Intelligence Unit, 2018b; HSBC,
                                                                                                                              2018; The Times Higher Education World University Rankings, 2019; World
                                                                                                                              Economic Forum, 2019; UNESCO, 2019

      12                                                                                                                                                                                                                               13
Investing in South Africa Roadmap 2020 - InvestSA
3       SOUTH AFRICA INVESTOR ROADMAP                                                                                                                                                               Fast Facts on South Africa

    Education                                                          South Africa’s 5 largest universities by students
                                                                       enrolled, 2017
    Key highlights
    Committed to universal access                                             University                                                                           No. of students
                                                                              University of South Africa (Unisa)                                                                  200 546
    The South African government is committed to providing
    quality education to every child in the country and is                    Tshwane University of Technology                                                                      45 990
    working towards achieving universal access to education.
                                                                              North West University                                                                                 45 052
    In order to achieve this goal, the government launched no-
    fees schools in the poorest districts of all nine provinces.              University of Pretoria                                                                                39 709
    In addition, the government is committed to providing free                University of Johannesburg                                                                            38 800
    tertiary education for students from poor and working class
                                                                       South Africa’s 5 largest universities by graduates, 2017
    Primary and secondary education in numbers
                                                                              University                                                                      No. of graduates
    •   25 762 schools
        • 23 796 public schools
                                                                              University of South Africa (Unisa)                                                                    44 842
        • 1 966 independent schools                                           North West University                                                                                 16 004
    •   12.9 million learners
                                                                              Tshwane University of Technology                                                                      14 754
        • 12.5 million learners in public schools
        • 0.4 million learners in independent schools                         University of Pretoria                                                                                13 273
    •   433 320 educators                                                     University of Johannesburg                                                                            13 004
        • 399 156 educators in public schools
        • 34 164 educators in independent schools
    •   29.8 learners per educator                                     Enrollment rates, 2010-17
        • 31.3 learners per educator in public schools














        • 11.8 learners per educator in independent schools.
                                                                     % of age group

    Tertiary education in numbers

    •   26 public universities
    •   731 601 students* enrolled                                                     2010           2011           2012          2013         2014         2015          2016         2017
    •   The largest share of students are enrolled in Humanities        Compulsory education (7-15 years old)                                    Secondary (14-18 years old)
    •   210 931 graduates
    •   Science, Engineering and Technology accounts for the           Students and graduates enrolled by field, 2017
        largest share of graduates
    •   Unisa is the largest open distance learning institution in                                                                              30%                              31%
                                                                                                                            28%                             29%
        Africa                                                                                                 23%                                                                       22%
    •   Unisa is the longest standing dedicated distance               16%
        education university in the world.

                                                                                 Education                          Business                      Science,                         Other
                                                                                                                   Management                   Engineering &                    Humanities
                                                                        Students enrolled by field                            Graduates by field

    * Full-time equivalent students
    Source: Higher Education Data Analyzer, 2018

        14                                                                                                                                                                                                                 15
Investing in South Africa Roadmap 2020 - InvestSA
4       SOUTH AFRICA INVESTOR ROADMAP                                                                                                                                                                         Economic Overview of South Africa

    Economic Overview of South Africa

    National economic overview                                         FDI inflows, 2017 vs 2018                                     Sectoral contribution of national GDP, 2018
                                                                                                                US$7.1bn                                                    Agriculture, forestry and
    Key highlights
                                                                                                                                                                             fishing, 2%
    •   The services sector is by far the largest contributor to the                                                                                                        Mining and quarrying, 8%
        South African economy, accounting for close to 70% of                                                                                                               Manufacturing, 13%
        value add.                                                                                                                                                         	Electricity, gas and water, 4%
    •   The largest sub-sector of the economy is finance, real                                                                                                              Construction, 4%
        estate and business services, accounting for one-fifth of                    2017                           2018
                                                                                                                                                                           	Wholesale, retail, motor trade and
        value add.                                                                                                                                                           accomodation, 15%
                                                                                                                                                                            Transport, storage and
    •   The fastest growing sectors over the last 10 years were        FDI inflows by sector, 2017                                                                           communication, 10%
        agriculture, forestry and fisheries; construction; and
                                                                                                                                                                            Finance, real estate and business
        general government services.                                   Sector                                         Share of FDI
                                                                                                                                                                             services, 20%
    •   The services sector is the largest contributor to national     Finance, insurance, real estate and                 44.6%                                            General government services, 18%
        employment.                                                    business services                                                                                    Personal services, 6%

    •   The three largest employment creators between 2013             Mining and quarrying                                21.2%
        and 2018 were finance; construction; and community             Manufacturing                                       15.9%     National employment by sector, Oct-Dec 2018
        and social services.                                                                                                                                                Agriculture, 5%
                                                                       Transport, storage and communication                10.2%
    •   In 2018, South Africa witnessed a rapid increase in FDI                                                                                                             Mining, 2%
                                                                       Wholesale and retail trade, catering and            6.5%                                             Manufacturing, 11%
        inflows, accounting for close to 18% of FDI inflows into
                                                                       accommodation                                                                                        Utilities, 1%
        Africa. The strong increase in investment inflows was
        driven by investments in mining, petroleum refining, food      Community, social and personal services             1.4%                                             Construction, 9%
        processing, ICT, and renewable energy.                                                                                                                              Trade, 20%
                                                                       Construction                                        0.1%
                                                                                                                                                                            Transport, 6%
                                                                       Agriculture, forestry, hunting and fishing          0.1%                                             Finance, 16%
                                                                       Electricity, gas and water                          0.1%                                             Community and social
                                                                                                                                                                             services, 22%
                                                                                                                                                                            Private households, 8%
                                                                       FDI inflows by origin, 2017

                                                                       Country                                        Share of FDI
                                                                                                                                     10-year average growth of top 3 sectors, 2008-17
                                                                       UK                                                  27.0%
                                                                       Netherlands                                         18.0%     Agriculture, forestry and fishing                                       3.7%

                                                                       Belgium                                             14.8%                        Construction                                  3.3%
                                                                       US                                                  6.7%
                                                                                                                                       General government services                             2.7%
                                                                       Germany                                             4.9%
                                                                       China                                               4.7%
                                                                       Japan                                               3.8%
                                                                       Australia                                           3.6%
                                                                       Luxemburg                                           2.7%
                                                                       Mauritius                                           1.1%
                                                                       Rest of world                                       12.7%

    Sources: StatsSA, 2018 & 2019; UNCTAD, 2019

        16                                                                                                                                                                                                                                  17
4       SOUTH AFRICA INVESTOR ROADMAP                                                                                                                                                                             Economic Overview of South Africa

    Provincial economic overview                                                                                                         Provincial contribution to GDP, 2017

    Key highlights                                                                                                                                                                    Gauteng, 34%
                                                                                                                                                                                                                              As we expand our
                                                                                                                                                                                      KwaZulu-Natal, 16%                     presence in Southern
    •   Gauteng (34% of national GDP), KwaZulu-Natal (16%)             •   Gauteng and KwaZulu-Natal (KZN) have strong
        and the Western Cape (14%) are the three largest                   manufacturing industries. In Gauteng, metal products,
                                                                                                                                                                                     	Western Cape, 14%                      Africa, Hisense remains
        regional economies in terms of contribution to the                 food and beverages, chemicals, mining-related
                                                                                                                                                                                     	Eastern Cape, 8%                       committed to providing
                                                                                                                                                                                      Mpumalanga, 8%
        national economy.                                                  manufacturing and the automobile sector are leading                                                                                                solutions that will enable
                                                                                                                                                                                      Limpopo, 7%
                                                                           sub-sectors of the province’s manufacturing sector. In                                                                                             growth and sustain
    •   The economies of all provinces are well diversified,                                                                                                                          North West, 6%
                                                                           KZN the automobile sector, pulp and paper products,
        without showing an overdependence on a single industry.
                                                                           rubber and plastics, chemicals and petro-chemicals,
                                                                                                                                                                                      Free State, 5%                         economic development.
        North West, Northern Cape, Mpumalanga and Limpopo                                                                                                                             Northern Cape, 2%
    •                                                                      food and beverages, as well as textiles and clothing are                                                                                           Hisense Middle East-Africa
        have strong mining clusters.                                       key sub-sectors.                                                                                                                                   Holdings
    •   Gauteng and Western Cape are home to well developed            •   In all provinces the tertiary sector recorded the strongest
        and mature financial services, real estate and business            average growth between 2010 and 2017.
        service sectors.

    Sectoral GDP composition by province, 2017                                                                                           Provincial employment by sector, Q4 2018

                                                                                                                                                   6%             9%     9%                          9%                        8%         9%         8%
              12%                                                                                                                                                                        12%                9%
                                                                                  13%                       12%
                                       17%         17%            17%                                                     19%
              7%                                                                                             4%
                                                                                  8%                                                              19%
                                                                                                                                                                                                                              20%         18%        22%
                                       5%                         6%                                                                                                                                 23%
                                                    8%                                                                    4%                                                                                24%
                                                                                                5%          12%                                                  28%     32%
                           7%                                                                                                                                                            27%
                                                                  17%                                                     15%
              25%                                                                                            7%                                                                                                                                      8%
                                                   16%                                                                                                                                                                                    13%
                                                                                  6%                                                              19%
                          19%                                                                                                                                                                        14%    10%               22%                    4%
                                       12%                                                                                5%
                                                                                                            15%                                                  11%     6%                                                               5%
                                                                                  12%                                                                                                    11%                3%
                                                   10%            13%
                                                                                                                                                   6%                    6%
              11%                                                                                                         15%                                     5%                                 7%
                           9%          12%                                        3%           10%                                                                                       5%                                    7%                    24%
                                                                                  4%                                                                                                                        18%                           21%
                                                   14%                                                                    3%                                             15%
                                       3%                         15%             5%                                                              19%
              17%                                                                                                         4%                                     20%                                 20%
                                       4%                                                                                                                                                17%
                                                    3%                                         14%          13%           3%                                                                                                  20%
                          20%          3%
                                                                  4%                                                                                                     8%                                 9%                            8%
                                                    4%                                                                                                                                                                                               10%
                                                                  4%                                                                               9%                          –1%                                –1%
              5%                                                                                4%                                                                                                                                        3%
                                                                                                                                                                         5%              7%          9%                                                    –1%
                                                   11%                                          3%                                                               12%                                        6%
              3%           4%                                                     34%                                                                                                          –1%
                                       22%                                                                                                                                                                                     8%         9%         6%
                           3%                                                                                             29%
                                                                  18%                                                                                                    8%
                                                                                                            24%                                   13%                                    9%                                         –1%
              15%                                                                              15%                                                                                                   13%    13%                                      7%
                                                   11%                                                                                                            9%                                                                      6%
                          13%                                                                                                                                                            3%                                   12%
                                                                  2%                                                                                                     12%
                                       8%                                                       3%                                                 8%                                    7%                                               8%         9%
              4%                                    5%            4%                                                                                              6%                                 5%     6%
                           2%                                                     3%            1%           3%           3%                                                                                            1%–         –1%

              WC           EC          NC           FS            KZN             NW            GP           MP           LP                       WC             EC     NC              FS          KZN    NW                 GP         MP          LP

     Agriculture, forestry and fishing  Mining and quarrying  Manufacturing  Electricity, gas and water                               Agriculture  Mining  Manufacturing  Utilities  Construction  Trade  Transport
     Construction  Trade, catering and accommodation  Transport, storage and communication                                             Finance  Community and social services  Private households
     Finance, real estate and business services  Personal services  Gerneral government services
                                                                                                                                         Source: StatsSA, 2018 & 2019

        18                                                                                                                                                                                                                                                  19
4     SOUTH AFRICA INVESTOR ROADMAP                                                                                                                                                               Economic Overview of South Africa
    Provincial economic overview (cont.)                                                                                                                                                Northern Cape        Most important manganese
                                                                                                                                                                                                             mining region in the world

                                                                                                                                                                                                              Agriculture, forestry and
                                                                                                                                                                                                               fishing, 8%
                                                                                                                                                                                                              Mining and quarrying, 22%
                                                                                                                                                                                              R96bn           Manufacturing, 3%
    Agriculture, forestry          Mining and              Manufacturing   Trade, catering and Finance, real                                         Limpopo                                                  Trade, catering and
        and fishing                quarrying                                 accommodation estate and business                                                                                                 accommodation, 12%
                                                                                                 services                                                                                                     Finance, real estate and
                                                                                                                                                                                                               business services, 13%
                                                                                                                                                                                                             	Other, 42%
    Gauteng                             Commercial hub of the                                                                     North West*           Mpumalanga
                                        country with the largest
                                        presence of MNCs in Africa
                                                                                                                                                                                        Free State           Major producer of potatoes,
                                                                                                                                          Gauteng*                                                           grains and vegetables
                                         Agriculture, forestry and
                                                                                                                                                                                                              Agriculture, forestry and
                                          fishing, 1%
           R1 594bn**                                                                                                                                                                                          fishing, 5%
                                         Mining and quarrying, 3%
                                                                                                                                                                                                              Mining and quarrying, 11%
                                         Manufacturing, 15%
                                                                                                                                                                                              R235bn          Manufacturing, 11%
                                         Trade, catering and                                                                         Free State
                                                                                                                                                          KwaZulu-Natal*                                      Trade, catering and
                                          accommodation, 14%
                                                                                                                                                                                                               accommodation, 14%
                                         Finance, real estate and
                                                                                                                                                                                                              Finance, real estate and
                                          business services, 24%
                                                                                                                                                                                                               business services, 16%
                                        	Other, 44%
                                                                                                            Northern Cape                                                                                    	Other, 42%

    KwaZulu-Natal                       Key manufacturing
                                        region and home to
                                                                                                                                                                                        North West           Most important platinum
                                                                                                                                                                                                             mining region in the world
                                        Africa’s largest port
                                                                                                                                                                                                              Agriculture, forestry and
                                         Agriculture, forestry and                                                                Eastern Cape                                                                fishing, 3%
                                          fishing, 4%
                                                                                                                                                                                                              Mining and quarrying, 34%
              R746bn                     Mining and quarrying, 2%                                                                                                                            R301bn          Manufacturing, 5%
                                         Manufacturing, 18%
                                                                                                                                                                                                              Trade, catering and
                                         Trade, catering and
                                                                                                                                                                                                               accommodation, 12%
                                          accommodation, 15%
                                                                                                      Western Cape                                                                                            Finance, real estate and
                                         Finance, real estate and
                                                                                                                                                                                                               business services, 13%
                                          business services, 17%
                                                                                                                                                                                                             	Other, 33%
                                        	Other, 44%

    Western Cape                        Strong services, agricultural      Eastern Cape             Strong automotive clusters     Mpumalanga            Key coal mining and forestry   Limpopo              Key producer of tropical
                                        and manufacturing sectors                                                                                        region                                              fruits and second most
                                                                                                     Agriculture, forestry and
                                                                                                                                                                                                             important PGM producer in
                                         Agriculture, forestry and                                   fishing, 2%                                         Agriculture, forestry and
                                                                                                                                                                                                             the country
                                          fishing, 4%                                                Mining and quarrying, 0%                             fishing, 3%
                                         Mining and quarrying, 0%                                   Manufacturing, 13%                                  Mining and quarrying, 24%                          Agriculture, forestry and
              R633bn                     Manufacturing, 15%                      R359bn             Trade, catering and                 R349bn          Manufacturing, 13%                 R340bn           fishing, 3%
                                         Trade, catering and                                         accommodation, 20%                                  Trade, catering and                                Mining and quarrying, 29%
                                          accommodation, 17%                                         Finance, real estate and                             accommodation, 15%                                 Manufacturing, 3%
                                         Finance, real estate and                                    business services, 19%                              Finance, real estate and                           Trade, catering and
                                          business services, 25%                                    	Other, 46%                                           business services, 12%                              accommodation, 15%
                                        	Other, 38%                                                                                                     	Other, 34%                                         Finance, real estate and
    * Icon indicates largest contributing province of respective sectors                                                                                                                                       business services, 15%
    ** Provincial GDP                                                                                                                                                                                        	Other, 36%
    Source: StatsSA, 2019

      20                                                                                                                                                                                                                            21
5   SOUTH AFRICA INVESTOR ROADMAP                                                                                        Sector Overviews & Opportunities

                                    Sector Overviews
                                    & Opportunities
                                    South Africa’s diverse economy offers an array of opportunities for investment.
                                    While mining and mineral beneficiation remains an important sector for export
                                    earnings and growth, business is increasingly geared towards services and
                                    manufacturing industries.

                                    Five sector clusters have been identified for investment, in order to increase
                                    the country’s industrial base in critical sectors of production and value-added
                                    manufacturing, to diversify South Africa’s exports, and to contribute to job
                                    creation in the economy.


                                                               Clean Energy, Energy & Resource                          Water and
                                                                 Efficiency, and Clean Transport                        Sanitation

                                                                                                   Green Economy

                                              Electronics, White
                                            Goods and Fuel Cells                                                                                      Ocean Economy

                                             Aerospace and
                                          Defence Industries                                                                                               Global Business
                                                                                                                                         Services          Services
                                             Chemicals and          Manufacturing
                                         Advanced Materials
                                                                                                     Priorities                                       Film, TV and
                                             and Medical Devices                                                                                      Documentaries

                                                                    Manufacturing          Leather, Footwear,                        Resource-based
                                         Metals Fabrication                                Clothing and              Forestry,          Economy
                                                                                           Textiles               Pulp, Paper                            Agro-Processing
                                                    Cosmetics                           Automotive, Yellow       and Furniture
                                                                                        Metals and Heavy          Mining & Mineral                  Aquaculture
                                                                                        Vehicles                     Beneficiation

    22                                                                                                                                                             23
5       SOUTH AFRICA INVESTOR ROADMAP                                                                                                                                                                Sector Overviews & Opportunities

                  Green Economy

             Clean Energy, Energy & Resource
                                                                                          Waste Economy                                               Water and Sanitation
              Efficiency and Green Transport

    Thanks to its climatic conditions South Africa has one           In 2016, South Africa generated 111 million tonnes of          As South Africa is a water-scarce country and is ranked
    of the highest potentials for solar and wind energy. The         waste, of which approximately 75% was landfilled and           as the 30th driest country in the world, there is a high
    Government is keen to leverage this great renewable              only 25% reused or recycled. General waste was the most        demand for innovative solutions for water management. It
    energy potential to reduce the country’s current over-           recycled type of waste with close to 40% being recycled,       is projected that water demand will outstrip supply by 17%
    reliance on fossil fuels for electricity generation and to set   while less than 1% of hazardous waste was recycled in          by 2030.
    the country on a carbon-light growth path.                       2017.
                                                                                                                                    The 2017-18 drought conditions in the Western Cape have
    Utility-scale renewable projects are driven by the               South African companies, such as waste-to-protein              highlighted the need for more efficient water usage and
    Renewable Energy Independent Power Production                    company AgriProtein, have developed innovative and             drought management to reduce per capita consumption.
    Procurement Programme (REIPPPP), which has attracted             sustainable solutions for waste treatment, that address
                                                                                                                                    According to the Department of Water and Sanitation,
    investments of close to R202bn since its inception in 2011       some of the country’s most pressing environmental
                                                                                                                                    water losses amount to 37% of water consumption. Given
    and are supported by the Government.                             challenges.
                                                                                                                                    scarcity of supply, water loss prevention is crucial for South
    Rooftop solar PV and energy efficiency technology are            New and changing legislation and regulations will unlock       Africa.
    among the key drivers for energy services in South Africa.       a number of key waste streams, notably organics. These
    The commercial and industrial sector presents major              changes aim to simplify rules and procedures for alternative
    opportunities for rooftop solar and energy efficiency            waste treatment technologies and activities.                   Opportunities
    technology due to their relatively high electricity costs,                                                                      •   Supply and manufacturing of advanced water
    large use of electricity and favourable size of premises.                                                                           technologies
                                                                                                                                    •   Supply and manufacturing of water-efficient devices
                                                                     •   Development of solutions for green waste, abattoir
    Opportunities                                                                                                                   •   Supply of smart water metering systems
                                                                         waste, the organic fraction of solid waste
    •   Roll-out of renewable energy technologies                                                                                   •   Provision of technologies and services for water reuse in
                                                                     •   Processing/recycling of e-waste
    •   Adoption of energy efficiency technologies                                                                                      the industrial sector
                                                                     •   Thermal treatment technologies for dirty mixed plastics,
    •   Solar energy technologies and components                         refuse derived fuels and thermoform PET                    •   Supply of alternative water supply technology
        manufacturing (solar panels, solar water geysers,                                                                           •   Water efficiency technology for the agricultural industry.
                                                                     •   Waste related infrastructure development, expansion and
        timers, etc.)
    •   Wind turbines and components manufacturing
                                                                     •   Pyrolysis/gasification; anaerobic digestion
    •   Pyrolysis/gasification; anaerobic digestion
                                                                     •   Recycling (plastics, paper, glass, e-waste, etc.
    •   Energy storage.

        24                                                                                                                                                                                                                        25
5       SOUTH AFRICA INVESTOR ROADMAP                                                                                                                                                                 Sector Overviews & Opportunities


                         Ocean Economy                                            Global Business Services                                         Film, TV and Documentaries

    South Africa is committed to leverage its opportune            South Africa has a mature and globally competitive market          With excellent film infrastructure, world-class studios and
    location and extensive coast line to grow its Ocean            for Global Business Services which is supported by world-          hard-working crews, South Africa has established itself
    Economy. The Government’s strategic support programme          class business infrastructure. Operating costs are up to           as a credible and competitive film and TV production
    called Operation Phakisa, has set a target to grow the         50-60% lower than in England and Australia, with key               destination.
    Ocean Economy’s GDP contribution to R177bn by 2033,            supporting incentives reducing these to similar cost ranges
                                                                                                                                      A range of award-winning movies and TV series have been
    equivalent to a 350% increase in its total value-add in        as India.
                                                                                                                                      filmed and/or produced in the country. Optimal climatic
                                                                   Growing at 22% annually and faster than global industry            conditions and a choice of highly diverse locations add to
    Recent gas condensate discoveries off the coast of             peers, the sector continues to attract international               the country’s attractiveness for filmmakers.
    South Africa are set to boost the country’s role in the        investments in industry verticals such as technology and
                                                                                                                                      South Africa’s competitive overhead costs, highly capable
    global hydrocarbon industry. Its strategic location allows     communications, financial services, legal and healthcare,
                                                                                                                                      talent pool, comparable internet speeds and growing
    South Africa to serve all major oil fields in West and East    creating quality jobs.
                                                                                                                                      number of domestic distribution platforms position the
    Africa. Five of the country’s major ports provide excellent
                                                                   There is a move towards delivery of next-generation                country well for opportunities in the global US$270bn
    oil rig and drillship repair and maintenance services at
                                                                   contact centre and digital services, with a core strength          animations industry.
    competitive rates.
                                                                   being a high quality multichannel customer experience,
    Local boat and small shipbuilders are highly sophisticated     supplemented by deep analytics.
    and globally competitive, supplying crafts to a wide range                                                                        Opportunities
    of clients across the world.                                                                                                      •   Development of feature films and documentaries (with
                                                                                                                                          these being the largest segments of the local film
                                                                   •   Establishment of call centres                                      industry)
                                                                   •   Back-office processing facilities                              •   Although animation is the smallest segment in the
    •   Repair and maintenance of ships and drilling rigs,
                                                                                                                                          industry (around 3%), the proliferation of new technology
        supported by extensive infrastructure and deep supply      •   Provision of shared corporate services
                                                                                                                                          and skills can unlock significant growth
        chains                                                     •   Enterprise solutions such as fleet and asset
                                                                                                                                      •   Consultancy and training services provision for business
    •   Investment in next-generation ship and boat-building           management services
                                                                                                                                          and skills development programmes to support emerging
        technology services                                            Legal process outsourcing
                                                                   •                                                                      filmmakers and fast-track transformation in the industry
    •   Bunkering, re-supply and medical support services              Evolution of the industry from voice-driven towards omni-
                                                                   •                                                                  •   Opportunities across the value chain, including film
    •   Provision of storage and logistics services                    channel delivery of services                                       concept development, film product packaging and
                                                                       Analytics solutions services enabled by South Africa’s             distribution, private equity financing, pre- and post-
    •   Port operations consulting services                        •
                                                                       skills capability, including root cause analysis, predictive       production management companies and marketing
    •   Provision of maritime training services                                                                                           services
                                                                       analytics, knowledge process outsourcing and digital
    •   Opportunities for private equity investment in local and       investment platforms.                                          •   Post production and visual effects studios to enable
        pan-African project development                                                                                                   end-to-end production in South Africa
    •   Oil and gas exploration and support opportunities.                                                                            •   Investing in new specialised studio space

                                                                                                                                      •   Skills development and training across the industry.

        26                                                                                                                                                                                                                         27
5       SOUTH AFRICA INVESTOR ROADMAP                                                                                                                                                                         Sector Overviews & Opportunities

                  Resource-based Economy

                        Agro-processing                                                    Aquaculture                                    Mining and Mineral Beneficiation                             Forestry, Pulp, Paper and Furniture

    South Africa’s commercial agricultural sector is well-         South Africa’s aquaculture sector is relatively small,       The mining and mineral beneficiation sector plays a pivotal   South Africa’s forestry industry is concentrated in the
    developed and globally competitive. Thanks to diverse          contributing about 0.8% to the country’s fish production,    part in South Africa’s economy. The sector contributes        following provinces: Eastern Cape, KwaZulu-Natal,
    climatic and geological conditions, South Africa is well       and accounting for less than 0.2% of the national GDP.       more than 7% to the local economy and provides inputs         Limpopo, Mpumalanga and the Western Cape. Pine
    suited for the cultivation of a wide range of crops and        However, given its growth potential, aquaculture has been    into various manufacturing sectors including metal            (49.6%), eucalyptus (43%) and wattle (7%) are the most
    products including grains, sugarcane, fruits, vegetables,      earmarked as a priority sector by the government and is a    fabrication, automotive and jewellery manufacturing.          commonly cultivated tree species on South African
    nuts, beef, poultry, mutton, wool, fish and seafood.           target sector of Operation Phakisa.                                                                                        plantations.
                                                                                                                                South Africa’s mineral reserves are among the most
    Located in the Southern Hemisphere, South Africa               Thanks to its natural resources, extensive coastline and     valuable in the world. The country has the world’s largest    South Africa has a well-established forestry sector with
    enjoys counter-seasonality to the Northern Hemisphere,         good water quality, South Africa is well equipped for        reserves of platinum group metals (PGMs) and manganese,       a fully-integrated value chain including pulp, paper
    positioning it well to supply lucrative consumer markets in    aquaculture development.                                     and some of the largest gold, diamonds, chromite ore and      and furniture manufacturing. In 2018, wood-related
    Europe and North America with its agricultural products.                                                                    vanadium deposits.                                            manufacturing contributed about US$10bn to the local
                                                                   South Africa is one of the largest producers and exporters
                                                                                                                                                                                              economy. Pulp is a key product of the country’s forestry
    A sophisticated and competitive agro-processing industry,      of abalone and is famous for its farmed premium abalone      South Africa’s mining capabilities and experience make it
                                                                                                                                                                                              industry. South African pulp manufacturers are highly
    with a fully-integrated value chain, has been built on South   (Haliotis midae). The country produces about 1 700 tonnes    a world leader in, for example, deep-level mining and the
                                                                                                                                                                                              innovative and globally competitive.
    Africa’s diverse agricultural sector, accounting for 23%       of abalone per year. Hong Kong is estimated to account       premier source of mining-related skills in Africa.
    of the country’s manufacturing sector and making it the        for 90% of South Africa’s annual abalone exports. Annual                                                                   About 80% of South African plantations are certified under
    largest sub-sector of manufacturing.                           abalone exports to China (Mainland and Hong Kong) are                                                                      the Forest Stewardship Council (FSC) system, providing
                                                                   estimated to reach US$135m in 2020.                          Opportunities                                                 the industry with sustainable raw material.
                                                                                                                                •   Development of new resources (coal, manganese, PGM,
                                                                                                                                    vanadium, etc)
                                                                   Opportunities                                                                                                              Opportunities
    •   Fruit and vegetable canning                                                                                             •   Coal-bed methane
    •   Sub-tropical and tropical fruit juice processing           •   Farming of freshwater and salt water species                                                                           •   Re-afforestation and new afforestation
                                                                                                                                •   Coal-to-liquid
    •   Oil seed production, edible oil processing, oilcake        •   Supply of aquaculture equipment and technology                                                                         •   Timber construction – use of timber in construction
    •   Processing of soya-based products                                                                                       •   Carbon capture and storage
                                                                   •   Supply of skills development programmes for                                                                            •   Manufacturing of Engineered Wood and Orientated
    •   Grain sorghum production, malt industry development                                                                     •   Coal ash beneficiation (cementitious input material
                                                                       aquaculture                                                                                                                Strength Board (OSB)
    •   Processing of organic, vegan/vegetarian products,                                                                           production)
        dehydrated foods                                           •   Supply of veterinarian services                                                                                        •   Bio-refinery and transformative technologies
                                                                                                                                •   Coal ash for acid mine drainage neutralisation
    •   Walnut farming and processing                              •   Supply of feed for aquaculture                                                                                         •   Technical training (chemical engineers, technicians and
                                                                                                                                •   Supply of technologies aimed at enhancing
    •   Expansion of dairy, bakery, confectionery production       •   Local feed production                                                                                                      artisans)
    •   Meat processing, including ostrich meat                    •   Supply of water purification and filtration technology                                                                 •   Supply of wood processing equipment
                                                                                                                                •   Downstream manufacturing (foundries and mini-mills)
    •   Indigenous plant growing on a commercial scale                                                                                                                                        •   Supply of pulp and paper manufacturing equipment
                                                                   •   Spat breeding                                            •   Nuclear fuel fabrication
    •   Extracting high-value additives, nutraceuticals
                                                                   •   Processing and canning of fish and seafood                                                                             •   R&D for packaging design/development
    •   Non-edible oil processing                                                                                               •   Establishment of smelters and downstream production
    •   Commercial planting of indigenous flowers                  •   Supply of logistics services.                                                                                          •   Manufacturing of school and office furniture.
                                                                                                                                •   Production of titanium dioxide pigments
    •   Production of crops for feedstock into biofuels
                                                                                                                                •   Development of linkages to the global energy storage
                                                                                                                                    value chain
    •   Wool production, and processing and manufacturing of
                                                                                                                                •   Value chain development for catalysts and fuel cell
        wool-based textiles
    •   Artemisinin and respective ingredients for anti-malaria
        medicaments                                                                                                             •   Development of ferrochrome production capacity
    •   Flax production.                                                                                                        •   Jewellery manufacturing.

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5       SOUTH AFRICA INVESTOR ROADMAP                                                                                                                                                           Sector Overviews & Opportunities


                                                                             Automotive, Yellow Metals and
         Leather, Footwear, Clothing and Textiles                                                                                                           Rail
                                                                                   Heavy Vehicles
    The South African Clothing, Textile, Footwear and Leather
                                                                 South Africa is home to Africa’s most advanced automotive     South Africa’s railway network, the largest on the continent,
    (CTFL) manufacturing industry is well developed and
                                                                 industry. Seven major OEMs with operations in the country     is the domain of state-owned Transnet Freight Rail and
    ranges from the production of synthetic and natural inputs
                                                                 produce more than 50% of all vehicles produced in             the Passenger Rail Agency of South Africa (PRASA). Over
    to final clothing and shoes.
                                                                 Africa. In 2018, over 550 000 vehicles were registered in     the last five years, about 220 million tonnes of freight were
    Approximately 4 500 formal companies of various sizes        the country, more than anywhere else on the continent.        transported by rail per year, accounting for approximately
    are involved in the CTFL manufacturing sector. The local     With approximately 370 000 passenger vehicles sold per        25% of overall freight movements in South Africa.
    manufacturing industry is mainly concentrated within two     year, South Africa accounts for more than 40% of Africa’s
                                                                                                                               Over the past six years, Transnet’s capital investments
    coastal regions, KwaZulu-Natal and Western Cape, as well     passenger vehicle market.
                                                                                                                               averaged R30bn per year. In the next 30 years, Transnet
    as in Gauteng. The Eastern Cape is an emerging hub in the
                                                                 In 2017-18, the major vehicle manufacturers recorded          plans to invest R167bn into rail infrastructure and R283bn
    sector, thanks to its world leading mohair production.
                                                                 more than US$1bn in capital expenditure. Investments in       in rolling stock infrastructure. In addition, PRASA intends to
    Household spending on clothing and footwear is expected      capacity expansion will increase the demand for inputs        procure 1 200 new trains consisting of up to
    to increase by approximately 25% to R125bn in the next       including parts and components.                               7 224 rolling stock over a 20-year period, providing major
    three years.                                                                                                               stimulus to the sector.
                                                                 The South African Automotive Masterplan (SAAM) 2035,
                                                                 provides a clear vision and direction for South Africa’s
                                                                 automotive industry. The well-developed SAAM contributes
    Opportunities                                                                                                              Opportunities
                                                                 to the attractiveness and competitiveness of local industry
    •   Spinning, weaving and finishing of textiles              by offering incentives and support to OEMs and suppliers.     •   Railway parts and components

    •   Knitted and crocheted fabrics and articles                                                                             •   Advanced materials and composites

    •   Manufacturing of wearing apparel                         Opportunities                                                 •   Smart signalling and operations automation

    •   Dressing and dying of fur                                •   Engines, radiators, filters                               •   Bulk cars and dedicated rolling fleets

    •   Leather skins and hides beneficiation                    •   Air conditioning/climate control systems                  •   Refurbishment and maintenance services

    •   Leather seat cover manufacturing for the automotive      •   Alarms and tracking devices                               •   Security equipment
                                                                 •   Axles and transmission shafts                             •   Route design and network planning services
    •   Manufacturing of protective clothing for hazardous
                                                                 •   Body parts and panels                                     •   Automatic/smart fare collection systems
        industrial environments (e.g. mining and chemicals
        industry)                                                •   Catalytic converters, silencers, exhaust systems and      •   Rolling stock depot design services
                                                                     components                                                    Train station re-design and upgrade services.
    •   Manufacturing of school uniforms                                                                                       •

                                                                 •   Seats and related parts, seatbelts, leather covers
    •   Manufacturing of uniforms for military and law
        enforcement                                              •   Suspension and shock absorbers, springs and other
                                                                     related parts
    •   Manufacturing of work-wear.
                                                                 •   Steering wheels, columns and boxes

                                                                 •   Ignitions, starting equipment, gauges and instrument

                                                                 •   Lighting equipment

                                                                 •   Wiring harnesses, instrument panels, vehicle interiors,
                                                                     electronic drive components and parts.

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5       SOUTH AFRICA INVESTOR ROADMAP                                                                                                                                                                          Sector Overviews & Opportunities

                  Manufacturing (cont.)                                                                                                       Advanced Manufacturing

                            Cosmetics                                                 Metals Fabrication                              Pharmaceuticals and Medical Devices                              Chemicals and Advanced Materials

    In 2018, the sector recorded close to US$3.2bn in revenue      South Africa’s metals fabrication sector is the most         South Africa’s pharmaceutical and medical device sectors       South Africa is home to Africa’s most advanced and
    making it Africa’s largest market for cosmetics and            advanced and diverse metals fabrication sector in Africa.    are the largest and most advanced in sub-Saharan Africa.       largest chemicals sector, valued at about US$25bn. It is
    personal care products. Local household spending on            The industry has major spill-over effects as top steel       Pharmaceutical and medical device sales both have more         estimated to be four times and thirteen times larger than
    personal care products is expected to grow by 25% over         consuming industries including mining, construction,         than doubled in the last 10 years and are expected to reach    the chemicals markets of Nigeria and Egypt, respectively.
    the next five years.                                           automotive, cables and structural steel contribute about     R48bn and R19bn, respectively in 2019.
                                                                                                                                                                                               The country’s chemicals industry is highly mature
                                                                   15% to the country’s economy.
    South Africa has strong research and development (R&D)                                                                      The country has advanced manufacturing capabilities,           and diverse, spanning fuel and plastics fabrication to
    capabilities, and companies have in particular invested        Local content requirements of various sectors, and strong    including biotechnology manufacturing facilities. In           pharmaceuticals, and supplies a wide range of industries.
    in R&D capabilities related to African hair and skin care      demand in the automotive and infrastructure sector are       addition, South Africa has strong R&D capabilities in the      The sector has a fully-integrated value chain that includes
    products. Local expertise present opportunities for            expected to drive the demand for metals fabrication going    medical industry.                                              the production of raw materials, intermediate products
    manufacturers to supply the global multi-billion dollar        forward.                                                                                                                    and final chemical products. Given South Africa’s leading
                                                                                                                                South Africa is the only Southern African Development
    African hair and skin care market.                                                                                                                                                         expertise in coal-to-liquid technology, its coal deposits
                                                                   Metal producers can draw from a sizeable domestic pool       Community (SADC) member country that meets the
                                                                                                                                                                                               present key inputs for the chemicals industry.
    South Africans have become more inclined to consuming          of raw material reserves including iron ore and manganese.   World Health Organization’s Good Manufacturing Practice
    organic skin and hair products, with close to one-quarter      South Africa is the largest producer of manganese in         standards. This positions South Africa as a gateway            South Africa has developed advanced capabilities for
    claiming that natural, organic or environmentally-friendly     the world and holds more than 70% of global identified       to the Southern African market for manufacturers of            the production of emerging materials including advanced
    considerations influence their purchasing decisions. The       manganese reserves.                                          pharmaceutical products.                                       carbon materials and biodegradable materials.
    country’s high bio-diversity and unique floral kingdom offer
                                                                                                                                It is forecasted that pharmaceutical sales will increase
    great opportunities to producers of organic products.
                                                                                                                                by about 40% in the next five years. This is partly driven
                                                                   Opportunities                                                                                                               Opportunities
                                                                                                                                by the increase in lifestyle-related diseases including
                                                                   •   Manufacturing and supply of railway tracks, slipways,    hypertension, obesity and diabetes. The demand for             •   Manufacturing of:
                                                                       locomotives and components                               generic drugs has risen rapidly in recent years, due to            • organic, mineral or chemical fertilisers and nitrogen
    •   Fragrance-free and high quality fragrance products for                                                                  policy-led preferences and the domestic antiretroviral (ARV)         compounds
                                                                   •   Manufacturing and supply of structural steel
        distinct niche segments                                                                                                 treatment programme.                                               • polymers including polyethylene used in packaging,
                                                                   •   Manufacturing and supply of pumps and valves for the                                                                          bags and injection moulding applications
    •   Personal care products for the male market                                                                              Opportunities
                                                                       water distribution sector                                                                                                   • painting and coating (including for automotive industry)
                                                                                                                                •Manufacturing and supply of medicinal drugs for
    •   Development and production of ethnic skin and hair                                                                                                                                         • organic surface active agents
                                                                   •   Manufacturing and supply of sheet metal and stainless     diseases such as HIV/AIDS, malaria, tuberculosis,
        products                                                                                                                                                                                   • biodegradable materials
                                                                       steel for automotive industry                             diabetes and other lifestyle diseases
                                                                                                                                                                                                   • bio-composites
    •   Supply of quality affordable beauty products                                                                                Development and manufacturing of active
                                                                   •   Scrap metal recycling.                                   •
                                                                                                                                                                                                   • prepared binders for foundry moulds or cores
    •   Manufacturing of cosmetic products, packaging and                                                                           pharmaceutical ingredients                                     • proteins and peptones
        distribution across retail stores                                                                                       •   Development and manufacturing of generics                      • polypropylene and polyvinyl chloride beneficiation

    •   Production of ingredients that comply with international                                                                •   Supply of tele-medical applications                            • composite materials, including bio-composites

        market requirements in the production of organic or                                                                     •   Supply of niche pharmaceuticals such as alternative            • titanium oxide pigments

        natural cosmetics products                                                                                                  healing methods                                                • speciality and fine chemicals

                                                                                                                                •   Manufacturing of biological-based drugs and bio-               • primary polyacetals/polyethers
    •   Production of multifunctional products with a focus upon                                                                                                                                   • nitrites and nitrates
        wellness                                                                                                                                                                                   • carbon fibres
                                                                                                                                •   Manufacturing of medical consumables
    •   Safety testing of cosmetic products produced locally.                                                                                                                                      • engineering plastics - polyamides
                                                                                                                                •   Development and supply of innovative medical
                                                                                                                                                                                                   • Fluorspar beneficiation for production of
                                                                                                                                •   Servicing and maintenance of medical devices
                                                                                                                                                                                                   • Silica sand beneficiation for production of fibre glass.
                                                                                                                                •   Biotechnology and nanotechnology
                                                                                                                                •   Manufacturing and processing of cannabis oil.

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