South Africa, a vibrant and growing economy underpinned by a modern infrastructure and a stable political environment, offers a wide range of business opportunities for companies and investors. Despite the bad press given to Africa, we consider South Africa’s country risk to be low, while the upside potential is significant. This assessment is not just wishful thinking: it is shared by the Ratings Agencies with both Fitch and Standard and Poors giving the country solid ratings.

South African GDP grew by 2.2 % in 2001 to US$113.3 billion, making it the 42nd biggest economy in the world. The population is 43 million and GDP per capita is US$ $6,800, 63rd highest in the world. Although South Africa abounds with investment opportunities, the country attracts a very low level of FDI.

This MBendi overview provides an entry point for businesspeople and investors, both inside and outside South Africa, to access the information and resources they need to identify, research and act on South African opportunities. The drop-down menus at the top of this page; the hypertext links from this text; and our South African Topics page all provide entry points to the extensive information on South Africa located on the MBendi server. The Guide to Exporting from South Africa, provided jointly by MBendi Information Services and Whitehouse & Associates, contains reference materials and tools aimed at increasing South African exporters’ efficiency in reaching global markets.

MBendi’s team of South African professional service providers is available to assist companies to access South African opportunities. We invite you to register as an MBendi user in order to receive our free, twice monthly newsletter, as well as to use facilities on the website and to subscribe to one or more of our other newsletters. We welcome feedback, commentary and case study examples from companies who have experience, both positive and negative, in the South African business arena.

Opportunities:

The South African economy provides a range of opportunities to local and foreign businesspeople, the most important of which are summarised in the table below:

Opportunity	Description
Gateway to Africa	South Africa is well-positioned geographically and has the infrastructure, communication links and support services to enable companies to access mining, oil & gas, tourism and other opportunities, particularly in nearby Mozambique (one of the fastest growing economies in the world), Botswana, Namibia and Angola (on the brink of a boom after an outbreak of peace). Many multinational companies use South Africa as a springboard for their African operations.
Meeting place for the world	Excellent world-class facilities, often located near unique African wildlife, golf and beach resorts with impeccable restaurants and hotels, provide the opportunity to organise conventions and conferences at prices that are difficult to beat anywhere on the globe. State of the art convention centres are located in Johannesburg, Durban and Cape Town, while smaller venues are located throughout the country. Many of the country's hotels have been rated among the best in the world in international surveys.
Exciting market for your goods and services	South Africa has a sophisticated commercial and consumer market. Imports, which accounted for US$ 27, 324 million in 2001, comprise mostly food, fuel and energy and capital goods. The main countries from which South Africa imports goods are the EU and the US.
Your brand in safe hands	Franchises for many of the world leading brands are already in place in South Africa. An alternative route to entering South African markets is to appoint a reputable South African company as a local agent.
An abundance of investment opportunities	Investment opportunities include recreational, commercial and residential property; companies and manufacturing facilities; and bond and equity instruments, which are traded on the JSE Securities Exchange South Africa, which has close links with the London Stock Exchange. Non-South Africans are increasingly investing in properties and wine farms on the Riviera-like coastline near Cape Town and in private game farms and lodges.
Skilled people at your service	South Africa has a pool of skilled professionals and facilities, particularly in the medical, IT and film industries, able to render services competitively worldwide from a base in South Africa where professional staff enjoy a high quality of life. Because South Africa is in the European time zone, has English as the main business language and boasts a mixed European / African heritage, multinational companies are increasingly using South Africans for software development and the manning of call centres.
Rich in resources	South Africa has one of the richest mineral resource bases in the world, allied with a well-developed mining industry which includes world-class mining equipment manufacturers and professional service providers. Changes to the mining legislation are expected to result in increased opportunities for foreign mining companies to enter the industry. The oil refining and pulp and paper industries are well-developed.
Poised for Privatisation	The South African government is expected to privatise a number of parastatals, particularly some subsidiaries of Eskom Enterprises (electrical power and telecommunications), Transnet (transport and telecommunications), CEF (energy) and Telkom (telecommunications), all of which are already expanding into Africa.
Packed with projects	South Africa's construction sector is very active, as visitors to Johannesburg's Sandton business district, for instance, will testify. Projects exist in both the private and public sectors, with major projects including gas pipelines, replacement of railway rolling stock, construction of tourism facilities and spatial developments. At the same time, South African construction companies have surplus capacity which is increasingly deployed in Africa and beyond, bringing low-cost, high-quality skills and experience to bear.
A home away from home for your business	Major companies are increasingly relocating their operations to South Africa in order to take advantage of low-cost, English-speaking South African skilled and unskilled workers. Key examples are the motor manufacturers, software developers and call centre operators. Energy intensive industries, such as mineral beneficiation, are being established in South Africa to take advantage of low electricity costs and proximity to mines.
Products for the world	South African manufacturers produce a wide range of quality products at prices which are, in many instances, competitive despite the transport distance to foreign markets. South African exports were valued at $US xx in 2001. The main destinations for South African products are xx. The country ran a trade surplus of $US -618 million in 2001.
Mix business with pleasure	South Africa's benign climate, together with a unique combination of African game parks, beaches, casinos and golf courses, often located in spectacular settings, provide both investment and recreational opportunities for foreigners. Experience Africa's charm in first-world luxury by extending your business trips to include leisure time. South Africa is increasingly being categorised as a "safe" destination, following the terrorist attacks in the USA and ongoing unrest in the Middle and Near East. A November 2002 UK survey of holiday destinations rated Cape Town the most favoured destination.

Advantages:

Some of the advantages enjoyed by South Africa include:

• a stable, democratic political environment with high level of transparency and an active watchdog press
• a robust economy, with low government debt levels and independent central Reserve Bank and judiciary
• a pool of low-cost skilled and unskilled workers
• a vibrant mixed European / African business and cultural heritage, operating in European time zone, and with English as the predominant business language
• some of the lowest energy costs in the world
• developed mining and manufacturing sectors
• world-class transport, banking and telecommunications infrastructures
• first class hotels, restaurants, golf courses, game parks and resorts
• a pleasant climate, year-round
• a strong emphasis on responsible corporate and, to a lesser extent, political governance
• one of the most progressive constitutions in the world, inter alia protecting property rights and freedom of expression
• a tough approach to bribery and corruption, particularly in the public sector
• preferential access to the two largest economies in the world through AGOA and the EU – South Africa Foreign Trade Agreement
• a no-nonsense tax-collecting body, South African Revenue Services, which has established a reputation as one of the most efficient in the world

Ex-president Nelson Mandela continues to be an inspiration and role model to people and politicians everywhere in the world, while South Africans currently occupy senior positions in major companies and organisations around the globe. TheCape Town University and University of the Witwatersrand were rated among the top 25 universities in the world in a May 2002 FT Survey. Companies of South African origin, such as SAB Miller, BHP-Billiton (mining and oil), Rembrandt (luxury goods), Sappi (pulp and paper), Anglo American / De Beers, Sasol (chemicals) and Thawte (Internet Security), are world leaders in their fields. A Cape Town hotel has been voted top in the world by readers of Conde Naste Magazine. The MBendi website has been acclaimed as being among the best of its kind anywhere on the Internet. South Africa is Africa’s leading economy and South Africa’s President Thabo Mbeki is a driver of the Nepad initiative aimed at bringing economic growth coupled with responsible government to the African continent.

Challenges:

Even Eden has problems. Some of the challenges faced by companies operating in the South African environment:

• government regulation / policy / prevarication, particularly in the areas of immigration, foreign exchange control, affirmative action / empowerment, competition, privatisation and IT regulation. Some of this can be attributed to political and business naivety and inexperience on the part of legislators.
• bureaucratic government procedures
• crime, though serious crime levels are understood to have stabilised and even dropped, whereas other major business centres of the world have reported significant increases in serious crime in recent years to levels that are comparable to those reported in South Africa
• incidence of HIV/ Aids and, in some parts of the country, malaria
• a strong trade union movement which is a partner of the governing ANC party although increasingly at odds with government policy; man hours lost due to union action continue to decline
• geographical distance from Europe, North America and Asia
• a relatively small pool of skilled professionals (though one consequence of affirmative action is the large number of educated, experienced professionals and managers, many of whom now have their own small consultancies and thus first-hand experience of both the corporate / bureaucratic world and the SMME environment)

Full democracy only came to South Africa in 1994, prior to which the majority of the population was excluded from playing a significant role in the business and political arenas. Political and business leaders are increasingly moving from a retrospective, inward focus, to a forward-thinking global player focus.

Although recent events in Zimbabwe are often cited as discouraging investment in South Africa, our view is that there are many checks and balances which would prevent a Zimbabwe-like situation occurring in South Africa. That said, no country can boast that its democratically elected leaders would never, under any circumstances, abuse their power.

Accessing Opportunities:

MBendi’s website facilities are designed for foreign and South African businesspeople to:

• identify business opportunities
• research business opportunities and partners
• access guidelines, regulations and professional advice
• find professional service providers to assist in taking advantage of opportunities
• subscribe to E-mail newsletters to stay abreast of developments in South Africa

As a starting point, we recommend you bookmark our South African Topics page. We also recommend the excellent Guide to Doing Business in South Africa, provided by leading law firm Werksmans Attorneys.