South Africa is the second largest economy in Africa, behind Nigeria. South Africa accounts for 24 percent of Africa’s GDP , and it is ranked as an upper-middle-income economy by the World Bank – one of only four such countries in Africa. The country is rich in natural resources and is a leading producer of platinum, gold, chromium and iron. From 2002 to 2008, South Africa grew at an average of 4.5 percent year-on-year, its fastest expansion since the establishment of democracy in 1994.
However, in 2013 and 2014 the growth rate was 2.2% and 1.5% respectively. The World Bank expect the growth to slow to 0.7% in 2016 and 2017.
Despite the downturn in the economy, Innovation Norways office in South Africa experiences many opportunities for Norwegian companies in the market in a wide variety of sectors from financial to technology and consumer goods. Below we have listed some of these areas:
The Energy Sector
South Africa’s energy sector is critical to its economy, as the country relies heavily on its large-scale, energy-intensive coal mining industry. South Africa has limited proven reserves of oil and natural gas and uses its large coal deposits to meet most of its energy needs. South Africa is in 2015 again experiencing serious energy constraints which are an impediment to economic growth and is a major inconvenience to everyone in the country, particularly in the electricity sector. The energy sector is expected to play a central role in fuelling the country’s economic growth and development.
Water and Waste
Future water availability is one of the biggest threats facing people and business in South Africa. South Africa has an ageing water infrastructure and is in the throws of a water crisis. With the prevalence of climate change, these sorts of events will occur more frequently. The effects of climate change will manifest as longer and more frequent and more intense periods of drought and flooding. South Africa will need to plan for periods of drought and manage water availability and accessibility carefully.
Research and development has grown five fold during last decade. Some interesting facts are that South Africa is hosting one of the world’s largest telescopes, and it was a South African company who pioneered the first electric car. The South African information and communication technologies sector is well established and sophisticated. The largest and most advanced in Africa, the local IT industry is characterised by technology leadership, particularly in the field of mobile software and electronic banking services. There is a thriving tech accelerator scene in Cape Town. Testing and piloting systems and applications are growing businesses in South Africa, with the diversity of the local market, first world know-how in business and a developing country environment making it an ideal test lab for new innovations.
As the wealth increases so does the need for sophisticated banking services. South Africa offers the most advanced financial services sector in Africa and are attracting many international financial institutions. South Africa’s financial services sector is backed by a sound regulatory and legal framework.
Agriculture and Fisheries
The agriculture, forestry and fisheries sectors are crucial to South Africa’s socio-economic development. As a natural resource, the fisheries sector is also recognised as a potential area for economic growth. The mandate for fisheries management includes fresh water and inland fisheries, as well as aquaculture.
However, the future of these sectors depends on critical issues such as climate change, population growth, skills shortages, changes in consumer needs and shifts in the global economy and related markets.
South Africa has a 3 000km coastline and features include a major shipping route. More than 90% of South Africa’s trade is by sea, yet the maritime industry has potential for substantial development and growth. Areas of interest include ship building and repair, regional service hub for equipment suppliers.
South Africa’s government recognized that they must make sure that education and research in South Africa’s maritime sector have to be a priority to benefit the economy. In order for the maritime sector to develop and eventually grow, the country need to focus and invest in the necessary skills and training. There is large potential for increased cooperation between South African and Norwegian companies within the maritime sector.
In the above, we have tried to give a little taste of where there may be opportunities for Norwegian companies. There are many more both sectors and niches not described in this article ie. Seafood, medicine, mineral extraction and design to mention a few, in which we believe there are opportunities for Norwegian companies.
Lastly, South Africa is not only an important emerging economy in its own right – it is also a key gateway to sub-Saharan Africa .
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