South africa


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  • Its GDP is almost as big as the rest of the sub-saharan Africa’s 47 countries combined.
  • Black Economic Empowerment (BEE) is a program launched by the South African government to redress the inequalities of Apartheid by giving previously disadvantaged groups (black Africans, Coloureds, Indians and some Chinese[1]--who are SA citizens) economic opportunities previously not available to them. It includes measures such as Employment Equity, skills development, ownership, management, socioeconomic development and preferential procurement.
  • The transport sector has been highlighted by the government as a key contributor to South Africa's competitiveness in global markets. It is increasingly being seen a crucial engine for economic growth and social development.
  • 99.9% digital and includes the latest in fixed-line, wireless and satellite communication, the country has the most developed telecoms network in Africa. South Africa ranked 34th in the world in terms of fixed-line telephony, with over 4.3-million fixed-line connections.   46.4-million mobile users in South Africa, ranking the country 26th in terms of subscriber numbers.
  • SBG: Company:   Sales ($BN) : 16.57; Profits ($BN):  1.55; Assets ($BN):  162.52; Market Value ($BN):  22.08 Sasol: Industry:  Oil & Gas Operations; Sales ($BN):  17.84; Profits ($BN):  1.77, Assets ($BN):  18.73, Market Value ($BN):  23.85 Frist Rand: Industry:  Financial Services Sales ($BN):  10.93 Profits ($BN):  0.90 Assets ($BN):  104.61 Market Value ($BN):  13.67 MTN :Industry:  Telecommunications Services Sales ($BN):  10.96 Profits ($BN):  1.64 Assets ($BN):  18.33 Market Value ($BN):  27.31 Sanlam:Industry:  Financial Services Sales ($BN) : 4.95 Profits ($BN):  0.27 Assets ($BN):  34.04 Market Value ($BN):  6.86
  • South africa

    1. 1. Apurb Sinha Fredric Cruz Executive PGDM (2010-11)
    2. 2. Key Facts <ul><li>10 % of Africa’s population </li></ul><ul><li>45 % of the continent’s gross domestic product (GDP) </li></ul><ul><li>Growing at 5% annually. GDP ranks 20 th in the world. </li></ul><ul><li>Top 10 emerging economy. </li></ul><ul><li>Till 1994 - ruled by white majority. </li></ul><ul><li>In 1986, US imposition of sanctions led many MNCs like AIG and IBM to divest in South Africa. </li></ul><ul><li>Only country in the world that manufactures fuel from coal </li></ul><ul><li>Natural resources: Almost all essential commodities, except petroleum products and bauxite </li></ul>
    3. 3. Key facts <ul><li>In 1994, South Africa accomplished a peaceful transition of power with the black majority party, African National Congress (ANC), taking over power. ANC’s leader Nelson Mandela, a Nobel peace prize laureate, served as its first post-apartheid president. </li></ul><ul><li>Doing business in SA is risky. Managing risk is a challenge. </li></ul><ul><li>Since 1994, South Africa has introduced fundamental and comprehensive changes to its “rules of the game”, unleashing both uncertainties and opportunities </li></ul>
    4. 4. Pillar – 1 Institutions <ul><li>Constitutional democracy with a three-tier system of government and an independent judiciary </li></ul><ul><ul><li>National </li></ul></ul><ul><ul><li>Provincial </li></ul></ul><ul><ul><li>local levels of government </li></ul></ul><ul><li>Political System : General elections every 5 years </li></ul><ul><li>President – head of government </li></ul>
    5. 5. Pillar -1 Institutions <ul><li>IP rights </li></ul><ul><ul><li>Companies and Intellectual Property Registration Office (CIPRO) located in Pretoria </li></ul></ul><ul><ul><li>Registration of business – online registration – 3-7 days to register a name </li></ul></ul><ul><ul><li>Deregistration of business – 3 days – free of cost </li></ul></ul><ul><li>BEE- Black Economic Empowerment </li></ul><ul><ul><li>The companies are rated based on the BEE guidelines which ensures black participation in the company </li></ul></ul>
    6. 6. Pillar 2 - Infrastructure <ul><li>Ports and shipping </li></ul><ul><ul><li>Approximately 96% of the country's exports are conveyed by sea, and the seven commercial ports are the conduits for trade between South Africa and its southern African partners as well as hubs for traffic to and from Europe, Asia, the Americas and the east and west coasts of Africa </li></ul></ul><ul><ul><li>Richard's Bay is the world's largest bulk coal terminal </li></ul></ul><ul><li>Roads </li></ul><ul><ul><li>754 000 kilometres, 9 600km of which are surfaced national roads </li></ul></ul>
    7. 7. Pillar 2 - Infrastructure <ul><li>Railways </li></ul><ul><ul><li>10th longest in the world - connecting with networks in the sub-Saharan region </li></ul></ul><ul><li>Gautrain rapid rail link </li></ul><ul><ul><li>80km rapid rail network connect sJohannesburg, Pretoria and OR Tambo International Airport, easing congestion on the Joburg-Pretoria highway by offering commuters a safe and viable alternative to road travelThe R25-billion project is a public-private partnership between the Gauteng provincial government and Bombelo Concession Company, a Canadian-French-South African consortium </li></ul></ul>Source:
    8. 8. Pillar 2 - Infrastructure <ul><li>Airports and airlines </li></ul><ul><ul><li>Three major international airports in Johannesburg, Cape Town and Durban </li></ul></ul><ul><ul><li>Twenty-one air traffic control centres support operations that cover 145 licensed airports </li></ul></ul><ul><ul><li>More than 50 airlines, making around 230 000 aircraft landings and carrying about 33-million passengers a year, move through South Africa's 10 principal airports </li></ul></ul>
    9. 9. Pillar 2 - Infrastructure <ul><li>Telecommunications </li></ul><ul><ul><li>One of the fastest growing mobile communications markets in the world </li></ul></ul><ul><ul><li>Dominated by multinational companies Vodacom and MTN </li></ul></ul><ul><ul><li>MTN, Vodacom and Neotel are jointly building a 5 000km fibre-optic cable network connecting several major centres across South Africa. The first phase of the cable, linking Gauteng with KwaZulu-Natal, was commissioned in June 2010. </li></ul></ul><ul><ul><li>10% internet penetration </li></ul></ul>Source :
    10. 10. Pillar 3 – Macro Economic Environment Source : South Africa Reserve Bank and Unemployment Rate : 25%
    11. 11. Pillar 3 – Macro Economic Environment <ul><li>South Africa is ranked 63  </li></ul><ul><li>highlights the high budget deficits, high debt and inflation with which many African countries continue to struggle </li></ul><ul><li>GDP composition (2009):  Agriculture and mining  (primary sector)--7%;  industry  (secondary sector)--20%;  services  (tertiary sector)—73% </li></ul><ul><li>South Africa is one of the largest producers of platinum, manganese, gold, and chrome in the world; also significant coal production. </li></ul>Source : South Africa Reserve Bank
    12. 12. Pillar 3 – Macro Economic Environment Source : South Africa Reserve Bank
    13. 13. Pillar 4 Health and Primary education Source : WHO 29% of pregnant women having HIV 37% population in age group 25-35 are HIV+
    14. 14. Pillar 4 Health and Primary education <ul><li>South Africa is ranked 23 rd at 3.60 </li></ul><ul><li>Gross primary school enrolment : 100% </li></ul><ul><li>Gross secondary school enrolment : 97% </li></ul><ul><li>Public spending on education : 17% of govt. spending </li></ul><ul><li>Primary school completion rate : 84% </li></ul><ul><li>Student Teacher Ratio : Primary school 31:1 </li></ul><ul><li>Ratio of girl to boy: 1:1 </li></ul><ul><li>Schools Act of 1996- education is compulsory for all South Africans from the age of seven (grade 1) to age 15, or the completion of grade 9 </li></ul>
    15. 15. Pillar 4 Higher Education and training <ul><li>Ranked 2 nd with a score of 4. </li></ul><ul><li>Young literacy rate (15-24 yrs) : 95% </li></ul><ul><li>Higher education includes grads and post grads </li></ul><ul><li>  24 state-funded tertiary institutions: 11 universities, five universities of technology, and six comprehensive institutions </li></ul><ul><li>weakness showing here is linked to the poor quality of primary educational facilities, and is a critical area to address for future development </li></ul>
    16. 16. Pillar 6 Goods Market efficiency <ul><li>Top Companies as per Fobes </li></ul><ul><ul><li>Standard Bank Group (world rank 177) </li></ul></ul><ul><ul><li>Sasol (298) </li></ul></ul><ul><ul><li>First Rand(305) </li></ul></ul><ul><ul><li>MTN(382) </li></ul></ul><ul><ul><li>Sanlam(823) </li></ul></ul><ul><li>Only 34% of the firm go to banks for finanacing </li></ul>
    17. 17. Pillar 6 Goods Market efficiency <ul><li>Goods market efficiency : 4.62 (best in Africa) </li></ul><ul><li>Almost same to those in countries such as Spain and Chile, and are characterised by strong competition in the market and taxation systems that are conducive to ethical business decisions. </li></ul>
    18. 18. Pillar 7 labor Market efficiency <ul><li>South Africa is ranked 88 </li></ul><ul><li>Country’s innovative potential could be at risk with a university enrolment rate of only 15%, </li></ul><ul><li>This is also due to health issues prevailing </li></ul>
    19. 19. Pillar 8 – Financial Market Development <ul><li>Overall ranking of 24 and Best in Africa </li></ul><ul><li>Banking sector is highly integrated with bond and equity market </li></ul><ul><li>South Africa has eight banks that act as primary dealers in the bond market </li></ul><ul><li>Four big banks are also settlement agents of the Bond Exchange of South Africa, with the South African Reserve Bank as fifth agent </li></ul><ul><li>All banks registered in Sa are monitored by SARB for risk and capitalization </li></ul><ul><li>South Africa relies more on its domestic bond market than on international borrowing </li></ul>
    20. 20. Pillar 8 – Financial Market Development <ul><li>South Africa (JSE) 1 st for its regulation of securities exchanges. </li></ul><ul><li>Listing can be done under :Main Board, AltX, Africa Board and BEEE segment </li></ul><ul><li>JSE Market capitalization : 6633 R bn </li></ul><ul><li>Number of companies listed on JSE : 405(Feb 2011) </li></ul><ul><ul><li>337 on main board and 68 on ALTX </li></ul></ul><ul><ul><li>358 domestic listing and 47 forign listing </li></ul></ul><ul><li>Number of securities listed on JSE : 815 ( Feb 2011) </li></ul>Source ; Weekly equity statistics of JSE
    21. 21. Pillar 9 Technology Readiness <ul><li>Internet users surpasses 5m users </li></ul><ul><li>New under sea cable to help in granting more license </li></ul><ul><li>More SMEs will be able to build their own network </li></ul><ul><li>Nuclear power plant by 2020 </li></ul><ul><li>Big companies like Samsung, Ford and GE are investing in SA </li></ul><ul><ul><li>World class manufacturing facilities </li></ul></ul><ul><ul><li>Training and innovation center </li></ul></ul>
    22. 22. Pillar 10 Market Size <ul><li>Demographics </li></ul><ul><ul><li>Population :49,004,031 </li></ul></ul><ul><ul><li>Age structure 0-14 (28.5%),15-64 yrs (65.8%), 65 +yrs (5.7%) </li></ul></ul><ul><ul><li>Median age: Total:25 yrs, male : 24.7 yrs, female : 25.3 yrs </li></ul></ul><ul><ul><li>Birth rate : 19.48/1000 </li></ul></ul><ul><ul><li>Death rate :17.09/1000 </li></ul></ul><ul><ul><li>Urbanization: 62% @ 1.2% annual rate of change </li></ul></ul><ul><ul><li>Sex ratio: approx 1 </li></ul></ul><ul><ul><li>Life expectancy Total: 49.33 yrs, Male50.24 yrs, Female : 48.39 years </li></ul></ul>
    23. 23. Pillar 10 Market Size <ul><ul><li>degree of risk:  intermediate  </li></ul></ul><ul><ul><li>food or waterborne diseases:  bacterial diarrhea, hepatitis A, and typhoid fever  </li></ul></ul><ul><ul><li>water contact disease:  schistosomiasis (2009) </li></ul></ul><ul><li>Global companies in south africa </li></ul><ul><ul><li>Acer, Alcatel, Barclays Bank, BMW, Britannia Biscuits, Cisco, EDS,GE, Hertz, Johnson Control, Levi Struss, Singapore airlines, Vodafone, Volkswagen </li></ul></ul><ul><li>Market : Economy ranked as a upper-middle income economy by the World Bank </li></ul>
    24. 24. Pillar 11 Business sophistication <ul><li>South Africa is maintaining its strong showing in world rankings, with a number of recent international reports supporting the country's strengths as an investment destination. </li></ul><ul><li>South Africa remains the highest ranked country in sub-Saharan Africa, with what the World Economic Forum describes as &quot;a very stable performance” </li></ul><ul><li>South Africa ranks 34th in the World Bank and International Finance Corporation's Doing Business 2011 report, an annual survey of the time, cost and hassle involved in doing business in 181 countries around the world. </li></ul>Source:
    25. 25. Pillar 11 Business sophistication Doing Business 2011 Rank Doing Business 2010 Rank Change in Rank 34 32 -2 Topic Rankings DB 2011 Rank DB 2010 Rank Starting a Business 75 66 Dealing with Construction Permits 52 52 Registering Property 91 87 Getting Credit 2 2 Protecting Investors 10 10 Paying Taxes 24 23 Trading Across Borders 149 148 Enforcing Contracts 85 86 Closing a Business 74 77
    26. 26. Pillar 11 Business sophistication <ul><li>Strategic Alliances </li></ul><ul><ul><li>First National Bank + PayPal = Introduction of PayPal Services in South African Market </li></ul></ul><ul><ul><li>Vodacom + Nedbank = M-Pesa South Africa ( mobile commerce) </li></ul></ul><ul><li>The close corporation (CC) is a more simplified and flexible business entity than a company </li></ul><ul><li>R&D 0.92%of gross domestic product (GDP) in 2009 and target of 1.5% of GDP by 2014 </li></ul>
    27. 27. Pillar 12 Innovations <ul><li>South Africa had adopted technology quite early and had marvelous contribution to health care advancement, eco safety, mobile technology and even to cricket. </li></ul><ul><li>Some of those well noted inventions are CT Scan, oil from coal refinery, the first heart transplant and Speed Gun - the device that accurately measures the speed and angles of speeding objects such as cricket and tennis balls </li></ul><ul><li>And with the advancement of economy, technology is still the heart of business innovation that fuels inclusive growth </li></ul>Source:
    28. 28. Pillar 12 Innovations <ul><li>Webbox -The internet on your TV: As part of its push to bridge the digital divide in South Africa, mobile operator Vodacom has launched the WebBox, an innovative device developed specifically for emerging markets that turns a standard television set into an internet portal. </li></ul><ul><li>Moblie money transations: With the advent of various m-commerce models like mobile money and mobile banking, access to and the facilitation of financial transactions and financial information has become a method and means of business for African entrepreneurs. </li></ul>Source: