Opinion

South Africa: a country open to Spanish firms


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Aerial view of the South African city of Cape Town

Africa is a continent where Spanish firms have always added value and proved that they have the ability to adapt and make their projects exemplary. In my experience, after seven years living on this continent - three in Algeria, two in Egypt and three in South Africa, I can say that Africa is a mosaic that offers positive experiences at both professional and personal levels.

We cannot talk about Africa as a single market, but as a set of many countries where worthwhile markets and opportunities can be found.

Therefore, good advice, support and clear ideas can help companies to succeed on this continent.

In this context, the case of South Africa stands out. Today the country stands in third place among African economies, with a GDP of 295,456 billion dollars (2016)1. Its wealth is not only economic but also cultural: South Africa has a wide diversity of languages, with as many as 11 official ones, and has inherited the inspiration of its historic leader Nelson Mandela.

 

Ramiro Sebastião and Ayshah Jawaid Butt, CaixaBank Relationship Managers in South Africa, and José María Segurola, manager of the CaixaBank representation office in South Africa

The South African economy will continue its recovery in 2018 and 2019 thanks to the significant improvement in the farming and mining sector, the latter due to simultaneous increases in both global demand for minerals and their prices. Even so, this progress will be less than in recent years. The main drag on the rate of business activity is political uncertainty, which will be a negative factor in investment decisions2. The country is striving to make progress towards a more egalitarian, socially committed society; in short, it is a young, dynamic nation looking to the future with a strong focus on education and development.

From a trade point of view, European Union countries are in third place, behind China and the USA3. South Africa exports metals, machinery and transport capital goods to Europe, while it imports cars, chemicals, manufactured goods and oil from the EU. Since 2004, the European Investment Bank (EIB) has supported economic development and activity in South Africa with loans and capital investments worth over 2,500 million euros. The volume of projects approved in the period from 2014 to 2017 comes to 440.9 million euros4.

Among all this trade, Spain takes part as a partner with a solid presence and growing importance.

The renewable energy projects awarded over the last 10 years in South Africa have, together with mining, been the spearhead of the Spanish presence there. The presence of Spanish companies is making a positive contribution to the Sustainable Economic Agreement (2011), the aim of which is to create 300,000 jobs in the next 10 years by investing in the green economy.

There are also success stories of Spanish companies in the country, in the automotive industry, infrastructure, agriculture and fisheries. Spanish firms fit very well into the South African market and show a unique ability to adapt. Infrastructure projects awarded to Spanish firms, an area in which some SMEs have shown exemplary flexibility, are used as an example of business cooperation on other markets.

Taking advantage of the good fit between Spanish and South African business culture represents a major opportunity, and not only because of the country's growing economy

South Africa is also a major market in its own right, and the gateway to the countries of southern Africa. Most of the companies in the region manage their businesses from Johannesburg, the main financial and economic hub of the continent. South Africa has historically been the main investor in all the nearby countries, with profitable trade, especially in the areas of banking, insurance, telecommunications, retail and farming.

There is also an agreement with the Southern African Development Community (SADC), the goals of which are to encourage economic development in the countries in the region through a coordinated policy of aid to the most disadvantaged sectors and the eradication of poverty. The organisation also backs cooperation between its member states in coordinating economic policy and fostering trade. The SADC is currently made up of 15 members: Angola, Botswana, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, the Democratic Republic of the Congo, the Seychelles, South Africa, Swaziland, Tanzania, Zambia and Zimbabwe, and has its official headquarters in Gaborone (Botswana).

South Africa is therefore the jumping-off point for any trading activity or to move into the region. With the aid of good advice and support, moving into South Africa can be the right platform for Spanish businesses to establish operations throughout the southern African region.

 

₁ “The World Bank”- Data 2016: (https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?locations=ZA-NG-EG&name_desc=true)

₂ “CaixaBank Research”

₃ http://www.worldstopexports.com/top-south-african-import-partners/ http://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_113447.pdf

₄”EIB- European Investment Bank”: (http://www.eib.org/attachments/country/eib_in_south_africa_es.pdf // http://www.eib.org/projects/loan/list/index?from=2014&region=7&sector=&to=&country)

 

 

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