Investment incentives in south africa by emanuel baisire
-
Upload
emanuel-baisire -
Category
Investor Relations
-
view
201 -
download
1
description
Transcript of Investment incentives in south africa by emanuel baisire
11
Investment Incentives in South AfricaInvestment Incentives in South Africaby: Emanuel Baisireby: Emanuel Baisire
George Mason UniversityGeorge Mason University
22
Investment Incentives in South AfricaInvestment Incentives in South Africa
South Africa Key Facts:•Area: 1.2 million sq. km. (470,462 sq. mi.),Germany, France and Italy
•Population: 46.6 Million (2004)
•GDP: $213 Billion (2004)
•Real GDP growth rate (2004): 3.7%.
•GDP per capita (2004): $3,480
•Exports: US $ 45.9 Billion (2004)
•Imports: US $ 41.6 Billion (2004)
•Inflation: 4,3% (2004)
•Unemployment ( September 2004): 27.8%.
• S. Africa accounts for 38% total Sub- Sahara Africa GDP
33
Economic policyEconomic policyPromoting equity with growthPromoting equity with growth
Growth, Employment and Redistribution Strategy
Liberalisation of exchange controls- no controls on foreigners
Inflation targeting to stabilise key price movements
Black Economic Empowerment
Small Business Development
Geographic spread of economic activities
Investment Incentives in South AfricaInvestment Incentives in South Africa
44
Economic overviewEconomic overviewComponents of GDPComponents of GDP
Agri. forestry & fishing
3%
Mining & quarrying
7%
Manufacturing18%
Construction3%
Electr. gas & water3%
Trade & accomm.
13%
Transport & com.10%
Financial & bus.serv.
20%
Community & personal serv.
23%
Source: SARB
Investment Incentives in South AfricaInvestment Incentives in South AfricaUnlike, other developing nations , 65% of S. Africa’s GDP (Sector) is in Service sector and 21% in Agriculture and Mining sector
55
South Africa identified key economic sectors to act as the engine for economic growthSouth Africa identified key economic sectors to act as the engine for economic growth
• Automotive
• Agro-processing
• Chemicals
• Clothing and Textiles
• Marine, Rail and Aerospace
• Tourism
• Minerals, Metals and Capital Equipment
Investment Incentives in South AfricaInvestment Incentives in South Africa
66
The South African Investment EnvironmentThe South African Investment EnvironmentFinancing InvestmentsFinancing Investments
Small and Medium Enterprise Development Programme (SMEDP)
Critical Infrastructure Fund (CIP) Skills Support Programme (SSP) Industrial Development Zones (IDZ) Medium and long term insurance Export finance for capital goods and projects Foreign investment guarantees (FIS) Export and Investment Financial Assistance Scheme (EIFAS) Marketing Support
Investment Incentives
77
The South African Investment EnvironmentThe South African Investment EnvironmentFinancing InvestmentsFinancing Investments
Offerings for investors
•Investment advisory services
•Information on specific investment opportunities
•Financial contribution for investors to visit potential companies and sites in South Africa
•Removing obstacles for investors
•Information and advice on investment incentives
•After-care
Offerings for exporters
•Export information and advice Market information
•Export information and advice Market information
•Financial assistance for exporters to conduct market research
•Financial contribution for exporters to market their products abroad
•Logistics support: removing export bottlenecks
•Matching South African companies with foreign buyers
88
The South African Investment EnvironmentThe South African Investment Environment
52.15
47.39
43.140.14
4.32
0
10
20
30
40
50
60
1999 2000 2001 2002 2003
Source: World Investment Report 2004
FDI Inflow In U.S $ Billion
FDI: Investments in South Africa (US $ Billion)
Foreign Investment levels remain below average of other emerging markets despite improved macroeconomic conditions and modern infrastructures
99
The South African Investment EnvironmentThe South African Investment Environment
Source: SARB
43 2 1 1 1
25
0
5
10
15
20
25
30
UK
U.S
Ger
man
y
Net
herla
nd
Mal
aysi
a
Sw
itzer
land
Fran
ce
FDI Stock in South Africa by Country of Origin in 2003
US $ Billion
U.K. Is the dominant source of FDI ,while the U.S. is the largest portfolio investor in South Africa
1010
Investment Incentives in South AfricaInvestment Incentives in South Africa
Types of FDI into South Africa in 2002US$M
Mergers and Acquisitions 774.7
Business Expansion 570.10
New (Greenfield) 413.82
Intention to Invest expressed by company 339.50
Investment 15.50
Source: BusinessMap online South Africa FDI database
Investment in South Africa tend to be resource-seeking( food-processing and mining) and market-seeking (Telecom and services) in nature
1111
Investment Incentives in South AfricaInvestment Incentives in South Africa
Trade Relations
Solidifying relations with traditional markets
– EU-SA: A free trade agreement between the European Union and SA for specified products . EU to eliminate tariffs on 95% of S.Africa Imports in a 10 year period, S. Africa to eliminate tariffs on 86% of EU imports in a 12 year period.
– AGOA: Duty-free and quota-free access to US market for apparel and a range of non-apparel products. S. Africa AGOA exports increased to $1.8 Billion in 2004.
Non traditional markets– Brazil– Asia
Regional Strategy– SADC: Trade agreement with SADC member in 1999, and implementation began in 2000. Provide duty-free treatment for 85% of trade by 2008 and 100% by 2012. – Africa: S. African firms have invested heavily in many African states. E.g $ 1.1 billion in Mauritius, $1.4 billion in Nigeria, $ 605 M in Uganda etc.
South Africa has managed to respond positively to Globalization after several years of South Africa has managed to respond positively to Globalization after several years of sanctions due to apartheid.sanctions due to apartheid.
1212
The South African Investment EnvironmentThe South African Investment Environment
Stagnant Market: S. Africa’s low average growth rate of 3% have discouraged potential Investors in mass production projects
Regional Instability: Political turmoil in Zimbabwe and civil conflicts in Africa makes foreign Investors to perceive S. Africa as risky
High Crime Rate: Raises the cost of doing business i.e. High Insurance cost, security cost e.t.c.
Labor Policy: S. Africa’ s labor is over-regulated and inflexible which is a constraint to investment
HIV/AIDS: S. Africa is one of the countries most hit by HIV, with 5 million HIV infected population, 20% of the 15-49 year (Work-force) is infected .
Challenges:
1313
Soccer World Cup 2010Soccer World Cup 2010
Thank you