South Africa: Investment Opportunities (20110512)

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South Africa: Investment Opportunities (20110512)

  1. 1. Investment Opportunities in South Africa April 14th/15th 2011 1
  2. 2. Presentation Overview  The South Africa’s Economy  The Western Cape’s Economy  Questions and Answers 2
  3. 3. Location of the Western Cape 6 District Municipalities 9 Provinces 1 Country 3
  4. 4. South Africa by Numbers Item Source Number Population Stats SA – Mid-2009 Estimate 49.3 Million Literacy Rate (ages 15+) Human Development Report 2009 88% Unemployment Statistics SA – 2nd Quarter 2010 25.3% Inequality (Gini Index) Human Development report 2009 0.67 Inflation (CPI) Statistics SA – July 2010 3.7% 4
  5. 5. South African Competitiveness Item Rank Emerging Market ranking for global investors (2008:8th) 4 WEF Africa Competitiveness Ranking 2 WEF Enabling Trade Index 72 WEF Global Competitiveness 54 Inward FDI Performance Index 29 WEF World Competitiveness Index (2010-2011) 54 Accountability of private institutions 3 Financial market development 9 Market size 25 Institutions 47 Infrastructure 63 Macroeconomic environment 43 Health and education 129 5
  6. 6. South Africa Tops the BRICS for Ease of Doing Business Country Overall Rank Getting credit Protecting investors South Africa 34 2 10 China 89 61 93 Russia 120 87 93 Brazil 129 87 73 India 133 30 41 Source: World Bank Group, 2010 6
  7. 7. Source: StatsSA, 2010 7 2010q2 2010q1 2009q4 2009q3 2009q2 2009q1 2008q4 GDP growth per quarter, 2005 - 2010 2008q3 2008q2 2008q1 2007q4 Quarter 2007q3 2007q2 2007q1 2006q4A Growing SA Economy 2006q3 2006q2 2006q1 2005q4 2005q3 2005q2 2005q1 8 6 2 0 -2 -6 -8 -4 4 Growth (%) q-o-q
  8. 8. South African Economy in Perspective Relative Size of South Africa GDP vs. Peers, 2009 Hong Kong Ireland 2015 GDP (USDm) Portugal 2009 GDP (USDm) Colombia United Arab Emirates Finland Thailand South Africa Denmark Argentina Iran Greece Venezuela Saudi Arabia 0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 Source: IMF, 2010 8
  9. 9. South Africa to have a new set of Peers by 2015 2009 2015 Rank Rank Rank Country Rank Country Change Change 2009 2015 2009 2015 27 Venezuela 34 20 Belgium 23 28 Greece 36 19 Switzerland 24 29 Iran 26 23 Norway 25 30 Argentina 30 29 Iran 26 31 Denmark 31 24 Austria 27 32 South Africa 28 32 South Africa 28 33 Thailand 29 33 Thailand 29 34 Finland 43 30 Argentina 30 35 UAE 33 31 Denmark 31 36 Colombia 32 36 Colombia 32 37 Portugal 48 35 UAE 33 9 Source: IMF, 2010
  10. 10. Western Cape Outperforms the National Economy GDP Growth per annum, 2000-2008 7 6 5 Growth (%) y-o-y 4 3 2 1 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 RSA Western Cape Source: StatsSA, 2009 ***Regional GDP is released in November of the next year 10
  11. 11. Western Cape Economy in Perspective Relative Size of Western Cape GDP, 2009 (USDm) Costa Rica •  Western Cape USD38.9bn (2008) Uruguay •  Bigger than Lebanon, Kenya, Ethiopia Ethiopia and Uruguay Kenya •  Third fastest growing local economy Uzbekistan in 2008 Lebanon Lithuania Guatemala Western Cape Tunisia Sri Lanka Serbia Azerbaijan Dominican Republic Bulgaria Belarus 20,000 30,000 40,000 50,000 Source: IMF, 2010; Quantec, 2010 11
  12. 12. % Share Finance, Real 23.9 estate & Business 27.7 Services 18.3 Manufacturing 15.1 Wholesale & Retail trade; hotels & restaurants 14.7 14.2 Transport & 9.3 Communication 8.6 10 General government services 8.6 Agriculture, forestry & fishing 4.6 4.8 Community, social and other personal 4.9 4.5 services 3.3 Construction Changing Composition of the Provincial Economy 4.2 Breakdown of the Western Cape Economy – by sector Electricity & Water 1.6 1.5 2000 Mining & Quarrying 2008 0.2 0.712 Source: Quantec, 2010
  13. 13. The Western Cape’s Strengths •  4 Excellent UniversitiesWorld ClassHigher •  UCT’s MBA is the ranked 89 Globally and top in the Southern Hemisphere by Financial Times.Education •  UCT’s Exec. Education is among the world’s top 10 according to Economist Intelligence Unit.Centre forDesign, •  Newsweek ranked Cape Town as one of the 8 most creative cities in the worldCreativity & •  Fast growing ICT, film, design, advertising and media industriesInnovation •  Diverse populationOur people •  Young, trainable workforce •  Predominantly English speakingDynamism & •  Third largest economy in South Africa, consistently outperforming national growth.Stability •  One of the most advanced constitutions in the world. 13
  14. 14. Western Cape Trade Western Cape Trade, 2005-2009 200,000 150,000 100,000 Value (ZARm) 50,000 0 -50,000 -100,000 -150,000 2005 2006 2007 2008 2009 Exports 35,968,993,259 38,123,424,708 47,987,649,929 59,817,460,759 51,931,174,654 Imports 68,457,675,465 102,584,326,215 124,487,787,851 171,116,557,795 116,714,250,805 Trade balance -32,488,682,206 -64,460,901,507 -76,500,137,922 -111,299,097,036 -64,783,076,151 Source: Quantec, 2010 14
  15. 15. Key Western Cape Exports Electronic Value 2009 Tobacco Pearls & Rank Top 10 Exports equipment precious stones (ZARbn) 5% 3% 2% Vegetables, fruit 1 Edible fruit, nuts 10.6 & nut préparations 2 Mineral fuels 9.12 6% Edible fruit, nuts 26% 3 Beverages, spirits & vinegar 6.68 Iron & steel 6% 4 Machinery equipment 2.99 Fish & 5 Fish & crustaceans 2.65 crustaceans 7% 6 Iron & steel 2.54 Vegetables, fruit & nut 7 2.19 preparations Machinery 8 Electronic equipment 1.85 equipment 7% 9 Tobacco 1.29 Mineral fuels Beverages, 22% 10 Pearls & precious stones 0.94 spirits & vinegar 16%Total Exports for 2009 51.93 Source: Quantec, 2010 15
  16. 16. Top Export Markets UK 10.5% Netherlands 8 6% Belgium 3.5% France 2.5% Germany 6.4% US 4.2% China 3.5% UAE 2.3% Angola 2.6% Mozambique 2.9% 16
  17. 17. Western Cape Share of South African Exports Western Cape share of South African Exports Product Value 2009 ZAR % Share 2008 % Share 2009Tobacco and manufactured tobacco substitutes 1 293 539 155 72.9% 85.3%Vegetable plaiting materials, vegetable products 4 773 933 65.9% 83.4%Fish, crustaceans, molluscs, aquatic invertebrate 2 647 065 098 81.2% 82.9%Photographic or cinematographic goods 199 940 512 82.0% 81.6%Meat, fish and seafood food preparations 268 067 029 70.9% 80.7%Edible fruit, nuts, peel of citrus fruit, melons 10 614 498 626 79.0% 78.0%Beverages, spirits and vinegar 6 677 640 496 78.6% 77.7%Bird skin, feathers, artificial flowers, human hair 19 937 130 74.5% 69.5%Vegetable, fruit, nut, food preparations 2 186 641 708 70.5% 66.5%Knitted or crocheted fabric 18 823 193 46.2% 56.4%Lac, gums, resins, vegetable saps and extracts 17 272 873 52.3% 55.7% Source: Quantec, 2010Edible vegetables and certain roots and tubers 220 901 353 49.8% 53.1% 17
  18. 18. Western Cape Share of South African Exports Western Cape share of South African Exports Product % Share of SA Exports Mineral and aerated waters not sweetened or flavoured 67.5% Sparkling grape wine 90.3% Grape wines nes 98.6% Fermented beverages nes (eg cider, perry, mead) 66.2% Spirits obtained by distilling grape wine, grape marc 75.3%Beverages, spirits and Whiskies 91.1% vinegar Vodka 83.4% Liqueurs and cordials 95.5% 77.7% Grapefruit juice 97.9% Juice of any other single citrus fruit 68.4% Pineapple juice 96.7% Tomato juice 60.7% Grape juice (including grape must) 91.1% Apple juice 99.8% Source: Quantec, 2010 18
  19. 19. Western Cape Share of South African Exports Western Cape share of South African Exports Product % Share of SA Exports Pistachio nuts 93.3% Bananas 60.1% Dates 98.2% Oranges, fresh or dried 74.7% Mandarin, clementine & citrus hybrids, fresh or dried 84.0% Grapefruit, fresh or dried 65.9% Edible fruit & nuts Fresh grapes 90.3% 78.0% Apples 90.9% Pears and quinces, fresh 93.6% Apricots 89.2% Cherries 76.9% Peaches and nectarines, 86.3% Plums 92.7% Raspberry, blackberry, mulberry and loganberry 99.7% Source: Quantec, 2010 19
  20. 20. Western Cape Share of South African Exports Western Cape share of South African Exports Product % Share of SA Exports Tuna 94.3% Cod 91.0% Swordfish 100.0% Haddock 99.7% Mackerel 81.9% Fish, crustaceans, Dogfish and other sharks 81.6% molluscs, aquatic Hake 95.9% invertebrates Dried Fish 78.9% 82.9% Smoked fish and fillets 99.4% Lobster 99.2% Octopus 67.9% Snails 99.1% Tuna 94.3% Cod 91.0% Source: Quantec, 2010 20
  21. 21. Western Cape Share of South African Exports Western Cape share of South African Exports Product % Share of SA Exports Women and girls clothing and underwear 76.7% Mens and boys clothing 71.3% Apparel articles Babies garments and clothing accessories 84.2% 48.2% Track suits, ski suits and swimwear 91.2% Panty hose, tights, hosiery 81.6% Flax yarn 99.9%Textile fibres, yarn and Woven fibres of flax 65.8% wovens Manmade filaments 48.7% 89.6% Synthetic filament yarn(not sewing thread) 76.9% Knitted or crocheted fabric 56.4% Cruise ships, excursion boats, ferry boats 70.9%Ships, boats and other Cargo vessels 92.3% floating structures Inflatable pleasure craft 96.2% 85.9% Sailboats 96.4% Tugs and pusher craft 99.7% Source: Quantec, 2010 21
  22. 22. Key Western Cape Imports Mineral fuels Value  2009   74% Rank Top  10  Imports   (ZARbn)   1 Mineral fuels 67.6 2 Machinery & equipment 6.1 3 Electric equipment 3.47 4 Beverages, spirits & vinegar 3.22 Cereals 2% Machinery & 5 Plastics 1.98 equipment 7% 6 Knitted & crotched articles 1.96 Apparel articles Electric 7 Footwear & parts 1.93 2% Plastics equipment 2% 4% 8 Pharmaceutical products 1.6 Pharmaceutical products Knitted & 9 Apparel articles 1.57 2% Beverages, crotched spirits & vinegar Footwear & articles 10 Cereals 1.5 3% parts 2% 2%Total Imports for 2009 171.1 Source: Quantec, 2010 22
  23. 23. Top Import Markets UK 3.5% Netherlands 2.8% Germany 4% US 3.1% China 10.5% India 2.9% Nigeria 7.9% Iran 10.6% Angola 6.7% Saudi Arabia 11.7% 23
  24. 24. Top Sources of FDI into the Western Cape Jan 2009-Sep 2010 25.00% 20.00% 15.00%Share (%) 10.00% 5.00% 0.00% United Netherlan Switzerla Japan Germany Ireland UK Taiwan France Australia Mauritius India Russia States ds nd % Projects 8.57% 8.57% 5.71% 20.00% 20.00% 2.86% 11.43% 5.71% 2.86% 5.71% 2.86% 2.86% 2.86% % Capex 16.73% 15.91% 13.92% 4.17% 3.49% 1.12% 0.89% 0.80% 0.79% 0.65% 0.45% 0.27% 0.07% Source: FDI Intelligence, 2010 24
  25. 25. Breakdown of FDI into the Western Cape Jan 2009 - Sep 2010 60.0% 50.0% 40.0%Share (%) 30.0% 20.0% 10.0% 0.0% Industrial Alternative/ Business Communica Consumer Financial Food & Hotels & Machinery, Software & Transportati Renewable Beverages Healthcare Metals Textiles Services tions Products Services Tobacco Tourism Equipment IT services on energy & Tools % Capex 24.3% 0.3% 2.5% 54.9% 1.4% 1.5% 1.3% 2.7% 0.2% 0.5% 0.1% 5.6% 0.9% 3.7% % Projects 5.7% 2.9% 17.1% 8.6% 2.9% 5.7% 2.9% 2.9% 2.9% 5.7% 2.9% 31.4% 2.9% 5.7% Source: FDI Intelligence, 2010 25
  26. 26. Companies investing in the Western Cape Companies Investing in the Western Cape, Jan 2009 to Aug 2010 Sector Source country Parent company Sector Source country Parent companyAlternative/Renewable Ireland Mainstream Renewable Power Industrial Machinery, Germany Robert Boschenergy UK Wind Prospect Equipment & Tools Japan ToshibaBeverages Switzerland Nestle Metals Russia Pipe Metallurgical France SR Teleperformance UK M & C Saatchi France AD SoftwareBusiness Services Trusted Logic Kwintessential Ltd US Avis Budget Group Germany Beckhoff India CMS Computers Ltd Germany Deutsche Telekom Netherlands 60 Layers of Cake Software & IT servicesCommunications Japan KDDI UK Unboxed Consulting US Stratos Global Mobile Interactive Dialogue CommunicationsConsumer Products US Amazon.com US Yola Mauritius AfrAsia Bank IBMFinancial Services Switzerland deVere & PartnersFood & Tobacco Australia Woolworths Textiles Netherlands Moshi MoshiHealthcare UK African Medical Japan Kawasaki Kisen Kaisha TransportationHotels & Tourism US Hilton Worldwide Taiwan Evergreen Group Source: FDI Intelligence, 2010 26
  27. 27. FDI into the Western Cape Location Determinants for FDI into the Western Cape* Proximity  to   markets  or   Domes&c   customers     Market  Growth   23%   Poten&al     48%   Skilled   workforce   availability     Natural   9%   Resources     4%   Presence  of   Industry   Regula&ons  or   Suppliers  or  JV   Cluster  /  Cri&cal   business   Partners     Mass     climate     6%   4%   6%   Source: FDI Intelligence, 2010 * Based on company surveys 27
  28. 28. M&A in South Africa increase in 2010 by 133%!Cross border deals made > 50%! 28
  29. 29. JSE Listed Companies from the Western Cape3 SA companies rank best in world (AT Kearney Top 40 survey) 29
  30. 30. Foreign Subsidiaries in the Western Cape 30
  31. 31. 31

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