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doing business in South Africa

Friday 18 April, 2014

The Greater New York Chamber of Commerce in conjunction with the South African Consulate General hosted “Doing Business in South Africa” @ the South African consulate.

Consul General George Monyeymangene introduced Simon Barber, the US country manager for Brand South Africa, which promotes the country of South Africa as a brand. He works with stakeholders both inside & outside of government to craft a value proposition for South Africa.  South Africa is celebrating 20 years since it’s 1st open & free election.  The South African brand is embodied by Madiba, or Nelson Mandela, who exudes the essence of Ubuntu, among other things, looking out for the collective good.  In the last 20 years:

  • GDP has grown from $136B to $335B
  • inflation has fallen from 14% to 6%
  • employment has grown from 9M to 14M
  • reserves have risen from $4B to $50B
  • the LSM (Living Standard Measure) has increased from 13M to 23.5M
  • electricity has gone from serving 58% to 95% of the population
  • water grew from being available to 61% to 73% of South Africans.

Additionally, South Africa has:

  • politically stable democracy
  • free media
  • independent central bank
  • high tax compliance.

According to the World Enterprise Fund Global Competitiveness Index, South Africa ranks:

  • #1 in auditing standards
  • #1 in securities regulations
  • #2 in financial services
  • #3 in banking
  • #3 in minority shareholders

On the down side, it ranks

  • #120 as a favorite
  • #116 in terms of imposing a burden.

Former treasury minister Trevor Manuel agreed with & adopted a National Development Plan written by Goldman Sachs.

The keynote address was offered by Frank Savage, Wall St. financier & CEO of Savage Holdings, who offered the perspective of an institutional investor.  He was early to enter South Africa in 1994 when he created a $125M fund there which earned 39.4% ROE.  He met Nelson Mandela with US Secretary of Commerce Ron Brown.  Although income inequality, education, & unemployment are problems, he remains optimistic.  The African National Congress has selected Ramiposa, a successful entrepreneur, which brings the party credibility & speaks volumes about their intentions.  The government has responded well to the Goldman Sachs report.  It’s well-balanced, but tough.  They must focus on difficult social problems.  Only15% participates in the formal economy, which leaves growth on the table.  All of Africa needs South Africa to reach it’s potential.  Civil unrest & instability can’t happen.  They need to rededicate themselves to their original principles & ideals.  He feels comfortable investing in South Africa.  Foreign Direct Investment magazine named South Africa the country of the future.

Q&A

  • South Africa will aim to protect it’s unique culture.
  • A free trade agreement is bringing together a market of 600M in Africa.
  • There is a plan to establish, promote, & implement Special Export Zones.
  • The ANC is not all powerful, as there are 3 tiers & power is shared among them.  It’s power is evolving & maturing as competitors are moving out of the ANC.
  • Infrastructure development is the driver of economic development.  The Infrastructure Coordinating Committee seeks to plot it’s future.
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