South Africa has large market potential, well developed infrastructure and a competitive domestic economy. The country’s democracy is also well-established and the rule of law is observed. The country has put into place economic reforms, which have led to macro-economic stability, as well as tax and customs reductions.
South Africa main assets are:
- The business climate is good and state financial management is competent.
- The country enjoys a good-sized and active stock exchange.
- South Africa has shifted from its traditional industries to production and financial services, which are the main contributors to GDP.
- The tourism and retail sectors have great potential.
- The mining sector is a major part of the economy. It is the world’s largest producer of chrome, manganese, platinum, vanadium and vermiculite. It is the second largest producer of ilmenite, palladium, rutile and zirconium. It is the world’s third largest coal exporter. South Africa is also a huge exporter of diamonds and iron ore
- The country also enjoys a strategic geographical location, that makes it an ideal hub to access the sub-Saharan markets.
The economic stability of the country has been weakened by the corruption scandal that hit former President Zuma. In addition, investors are worried by the general orientation of public policies, in particular economic policies, and the issue of structural reforms. Other problems may discourage foreign investors:
- Increased labour strikes in recent years, which rating agencies have warned could further lower South-Africa’s credit rating
- Violence and corruption continue to hinder the economy, while income inequality remains high
- Access to electricity is insufficient because of a lack of investment.
- Lack of high-skilled labour force
- Immigration laws make the employment of foreign workers more complicated.
- Import-export process may be difficult.
- Economy depends on the ore prices and FDI inflows.
- Market entry is very competitive, as the market is very mature.