BUSINESS BRIEF: for our full 8 page brief recently updated, click here.

Southern Africa is not a traditional trading location for most American companies. It is, though, one of the best intermediate sized markets for American firms to investigate. South Africa’s GDP is $280 billion, in Purchasing Power Parity measurements about double that. South Africa has a stable democracy, well managed economy, an educated workforce, and a highly developed infrastructure. English is language of business and popular entertainment. South Africa and most neighboring countries have a good transparency rating and legal and administrative environments similar to the USA. These factors allow businesspeople to transact deals with a minimum of cultural and administrative hurdles. Similar situations exist in Botswana, Namibia, Mauritius and other fast developing countries in the region.

Recently, South Africa has been encountering some of the fastest growth it has ever seen. Business and consumer confidence as well as the stock market were at record highs. The currency, the rand, is at a record high versus the US dollar in purchasing parity terms. Inflation is low, government spending is well managed. By January 2006 the Johannesburg Stock Exchange had risen to record levels. In USD terms, the JSE rose 40% in 2005, indicating a high degree of domestic and international investment confidence in the country.

The economic outlook for South Africa and the region as a whole is excellent. There are issues which South Africa is coming to terms with: the historical legacy of Apartheid, HIV/AIDS, high crime and a lack of skills and education in many key industrial sectors. Critical issues are dealt with and managed, and the country has the resources to deal with them over time. South Africa has elements that define it as both a developing and developed market – a factor which benefits American companies coming into the market. The region is a fast adopter of high tech imports. American exporters are well advised to look carefully at this market which allows them to compete favorably with domestic and international competition.

SOUTH AFRICAN ECONOMY AND BEST PROSPECTS

South Africa entered the world as a resource rich country. It has almost 80% of the world’s platinum reserves and about half of the world’s known gold reserves. Aluminum, vanadium, iron and steel are also important mineral related industries. Agriculture has always been important and South Africa is a net food exporter and member of the Cairns Group of agricultural producing countries. Manufacturing has grown to the point where automotive parts and assembly are now nearly 8% of the total economy. Although a high currency mitigates against labor-intensive exports, high value added export sectors such as chemicals, instrumentation, aerospace and aviation as well as consulting services are all doing well. South Africa’s overall economy is 70% service related, a statistic that is similar to the USA. Many advisors consider South Africa to be the best managed developing country in the world – offering immense potential for sales of commercial and consumer goods for exporters.

Opportunities exist but are not limited to the following sectors:

Agricultural equipment and processing machinery
Automotive parts and line technology
Consumer / household / sporting goods
Engineering and consultancy services in construction, waste management
Information technologies and services
Industrial and processing equipment machinery
Medical equipment
Power generation and supply
Safety and Security products and systems
Transport logistics networks port/road/rail

SELECTED SUCCESS STORIES ACROSS MARKETS

These stories are indicative of recent successes made through our office:

Mining Refinery Goods Sale: Pennsylvania company: $2.1 million sale of lined steel piping. This product is now being used for acid flows in platinum refining. Our office assisted with tariff specifics and ratings to allow the firm to be more competitive in the tender process, and ultimately be successful, against domestic and European competition.

Small Machinery/Equipment Sale: Pennsylvania company: newspaper press knives. This highly specialized product benefits the millions of newspapers published daily in the region. Our office located the distributor for this product.

Public Facilities: New York company: public washroom facilities and equipment. Our office helped locate a new distributor for this firm in the region.

Consumer Goods: Indiana company: swimming pool water chemical testers. South Africa has over 500,000 residential swimming pools. Our office assisted this firm to locate a new distributor with ongoing sales.

Agriculture Related: Pennsylvania company: Over $500,000 sale of electrical insect killing devices for the cattle industry. Southern Africa has about 5,000 cattle farms, these products kill insects, relieving stress to allow cows to increase milk production.

Education/Conferencing: Indiana company: projector screens and projector room systems. This firm reported sales to a firm in Mauritius relating to our market research. Mauritius has a growing conference industry with over 90 world class hotels on the island. Our office located the Mauritian distributor for this firm.

Automotive Components: Ohio company: headlights manufacturer. South Africa had a domestic vehicle sales growth of 29% in 2005. Both new vehicles sales and new OEM exported vehicles have risen substantially in the past decade. South Africa is home to most of the large American, European and Japanese OEM automobile manufacturers with new factory infrastructure being announcedOhio company: spillage drums. This firm reported its first sale of $35,000 to a South African company in November 2005. An additional order of $40,000 was placed for March 2006 delivery.

Mining Equipment: Ohio company: makes laboratory sieves for the mining industry. An initial sale was made to a South African company. Additional sales were made a year later.

Small Machinery/Equipment: Ohio company: makes high pressure water hydraulic valves and systems used in the de-scaling process of metals. A distributorship agreement was signed with a South African company in 2005.