This document provides an overview of South Africa's economy and investment environment. It notes that South Africa has a highly developed economy and infrastructure, and is the largest economy in Africa. Key sectors for investment include mining, tourism, manufacturing, agro-processing, and financial services. The country has competitive costs and a skilled workforce. The economy is expected to grow steadily in the coming years, supported by public and private investment.

1. SOUTH AFRICA’S INVESTMENT ENVIRONMENT TRADE AND INVESTMENT SOUTH AFRICA A division of the Department of Trade and Industry November 2005 SOUTH AFRICA’S INVESTMENT ENVIRONMENT TRADE AND INVESTMENT SOUTH AFRICA A division of the Department of Trade and Industry Minnesota, MN July 2008

2. Area 1,219, 090 km 2 Population 44,8m Currency R1 = 100 cents Time GMT + 2 hrs Head of the State: President Thabo M Mbeki 11 Official languages with English the business language Total GDP: 2007 R1 993 bn (US$ 283 bn) GDP 2007 per capita: R 41 066 (US$ 5 825) Real GDP Growth: 5,1 (2007) Inflation (CPIX): 6.5 % (annual 2007 average) Exports: Minerals, diamonds, metals and metal products, food products & automotive components. Main trading partners: Germany, USA, China, Japan & the UK. South Africa at a glance

3. SADC and South Africa

4. South African Economy Source: SARB 14,5% (Dec’07) 12% 15,75% Prime Rate 6,5% 4,3% 9% (CPI) Inflation (CPIX) 23,05% 26,5% 20% Unemployment 5,1 % 3,7% 3,2% GDP Growth Not available yet 20,8% 21,8% Total Foreign Debt / GDP R495,8 US$ 70 R 281,8 US$ 43,6 R 69, 8 Merchandise exports (billions) R 41 066 US$ 5 825 R 29 422 US$ 4 561 R 12 507 GDP per capita R 1 993 US$ 283 R 1 374 US$ 213 R 482 GDP (billions) 2007 2004 1994

5. South Africa’s investment environment South Africa today is one of the most sophisticated and promising emerging markets globally, mainly because of … Economic stability & sound macro-economic management Competitive sectors/industries Favourable cost of doing business Skills availability World class financial system Excellent transport & logistical infrastructure Abundant natural resources

6. South Africa is one of the most sophisticated and promising emerging markets , offering a unique combination of highly developed first world economic infrastructure with a vibrant emerging market economy. South Africa is one of the world’s 26 industrialised nations. The country is also regarded as the gateway to Africa . South Africa has the largest economy on the African continent , accounting for approximately 25% of the continent’s GDP. According to the World Bank, South Africa ranked 28th in the world for the ease of doing business in 2006. The JSE Securities Exchange is Africa’s largest and most developed Securities Exchange and one of the world’s top 20 exchanges . South Africa from a global perspective

7. South Africa remains the world’s top producer of minerals such as gold, platinum, rhodium, chrome, manganese and vanadium. South Africa holds 80% of global manganese reserves, 72% of chrome, 88% of platinum-group metals (PGMs), 40% of gold and 27% of vanadium. Unit labour costs in South Africa are significantly lower than those of many other emerging markets. South Africa scored well in various categories according to the 2006 World Competitiveness Yearbook (61 countries ranked): Ranked 6 th in the world in terms of price stability; Our fiscal policy was ranked in 11 th place; 24 th position in terms of management practices (business efficiency); 31 st place in terms of attractiveness for foreign direct investment. South Africa from a global perspective

8. Upbeat outlook for the SA economy , as we project strong GDP growth averaging 5% p.a. over the next 5 years . Strong domestic demand , with robust consumer spending and a rapid increase in fixed investment should underpin the expected higher growth trajectory. Despite the recent interest rate increases, we forecast a much shallower interest rate cycle in a low inflation environment . Recent increase in interest rates should result in a moderate reduction in the growth of private consumption expenditure (particularly on durable and semi-durable goods , which tend to be rather sensitive to interest rate levels). The multi-billion rand capital expenditure program by state owned enterprises , the build-up to the 2010 Soccer World Cup and increased government infrastructure spending will underpin a robust public sector fixed investment growth. SA economic outlook

9. GDP of SA cities and SSA countries Compiled from SA Cities Network, 2006; World Bank, 2006 ©US 2007 2 15.2 Tshwane/Pta 7 36 18.7 Sudan 3 3 18.5 Cape Town 4 3.2 16.5 eThekwini 5 33 16.1 Kenya 6 15 14.4 Angola 8 2.2 11.7 Ekurhuleni 11 16 13.0 Cameroon 10 18 13.6 Ivory Coast 9 3.5 30 Johannesburg 2 129 55.3 Nigeria 1 Population (m) GDP ($bn)

10. Strengths of South Africa’s provinces • Western Cape: Tourism Agro-processing Biotechnology Petrochemicals Clothing and textiles Fishing Northern Cape: Agro-industries Transport and storage Mining and beneficiation North West: Agro-processing Bio-fuels Leather products Mining Limpopo: Food processing Agri-business Mining Fertilisers and pesticides Energy Mpumalanga: Tourism Mining (Coal) Forestry Agriculture Agro-processing Gauteng: Financial and business services ICT Pharmaceuticals Food and beverages Mining Free State: Agriculture Agro-processing Machinery and equipment Mining and beneficiation Eastern Cape: Agriculture and forestry Aquaculture Automotive Clothing and textiles Leather and leather products KwaZulu-Natal: Aluminium Automotive Petrochemicals Wood and wood products Tourism Clothing and textiles

11. STRATEGIC GEOGRAPHIC POSITION TO GLOBAL SHIPPING ROUTES

12. Investment Opportunities Source: DTI/TISA Hotels and self-catering holiday resorts, Adventure-, Eco-, Sport- Conference- and cultural tourism, gaming, infrastructure development, leisure complexes and world class golf courses, h arbour & waterfront developments,transfrontier conservation areas, cruise liners & transportation. Tourism Manufacturing of: automotive electronics, microchips and telecommunication equipment. Electro Technical Call Centres, Back Office Processing and Shared Corporate Services. Enterprise solutions viz. fleet management, knowledge management, asset management solutions. Business Process Outsourcing & IT Enabled Services Titanium Beneficiation Initiative,Fluorochemicals Expansion Initiative,Polypropylene Conversion. Restructuring of State Owned Chemical Enterprises. Chemicals and Allied Industries Interiors, Engine Parts/Components, Electronic, Drive Train Components, Body Parts, Aluminum Components and Diesel particulate filters. Automotives Fisheries and Aquaculture, Floriculture, Fruit and Vegetable Processing Plants, Juices, Meat Processing, Wine Production, Confectionery, Indigenous teas and Natural Fibres. Agro-processing Sub-sector Sector

13. Investment Opportunities Aerospace: Rotor and fixed wing aviation equipment and services, Helicopters and aircraft components, Aviation training services for African airlines, IDZ at Johannesburg International Airport, warehousing for aircraft parts. Rail: Rolling stock and services for the domestic market, estimated R7 billion Gautrain which includes infrastructure development and rolling stock, Rail infrastructure of the African continent through NEPAD and Rehabilitation of low density rail line. Marine: Development of boat yards and wet docks/floating docks, Joint ventures with local shipyards, manufacture of boats, yachts, catamarans and fleet racing boats, custom-made vessels (tugs) and training schools. Aerospace, Rail and Marine Aluminum smelter capacity, Capital equipment: machine tool manufacturing and petrochemical equipment, downstream processing and value-adding of iron, carbon steel, aluminum, platinum group metals and gold, ferro-alloys, gold and stainless steel. Mining and metal based industries Manufacturing of Industrial Textiles using Polyester Production of other natural fibre textiles such as flax Wool and mohair production – downstream opportunities for yarns, knitwear and fabric. Footwear – manufacturing of leather uppers. Clothing, Textiles, Leather and Footwear Sub-sector Sector

14. Investment Opportunities Source: DTI/TISA Film studios and post production facilities. Co-production ventures. Distribution infrastructure Film Re-capitalisation of: Forgings & Castings Boilers Tool dies & moulds Expansion & export development Pumps, valves, material handling & straddle crane carriers Mechanised mining New investments in: Turbine assembly Production of turbine components Machine tool manufacturing Capital Equipment Sub-sector Sector

15. the dti’s Investment Services Sector Information Finance to explore investment opportunities in SA Facilitating direct Government support in the form of: - information on investing in SA and the Business Environment - detailed investment Incentives - investment facilitation - after care – ongoing contact

16. the dti Call Centre: 0861 843 384 the dti Switchboard: +27 12 394 0000 Investment Promotion: +27 12 394 1333/1339 Website: www.thedti.gov.za E-mail: [email_address] Postal Address: Private Bag X 84 Pretoria 0001 South Africa the dti’s Contact Details

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