Introduction

South Africa covers an area of 1,219 090 km², with an estimated population of 43 million and shares boundaries with Namibia to the west, Botswana and Zimbabwe to the north, and Mozambique and Swaziland to the east. It has a coastline of about 3000 km with seven ports.

Since 1994, after her first democratic elections, South Africa has emerged as a sophisticated and vibrant investment destination. The unique combination of a highly developed first world infrastructure and a huge emergent market economy, has given rise to a strong entrepreneurial and dynamic investment environment, with many global competitive advantages and opportunities.

Economic growth and development are key priorities for the South African Government. In order to achieve the above objectives the present government adopted a wide range of economic and social policies, which has put South Africa on the economic growth path. Stemming from this process, the government’s primary role is to facilitate access to sustainable economic activity and employment for a better life for all. The processes to achieve this vision would involve attracting higher levels of domestic and foreign investment, increasing market access for South African products domestically and internationally and achieving a fair, efficient and competitive market place for domestic and foreign businesses and consumers. 

During the last decade, the country has had a healthy export growth and has provided a conducive environment for Foreign Direct Investment. The government's success in building a credible economic policy framework has resulted in South Africa receiving investment-grading ratings with a positive outlook from international rating agencies such as Moody's and Standard & Poor's.


Investment Climate

Trading Blocs - In order to gain access to key markets, South Africa negotiated an FTA with the European Union. This came into effect in January 2000 and has been signed, paving the way for creating secure markets for SA-products in the EU. Furthermore, the country’s commitment in promoting South-South co-operation is evidenced in the current FTA negotiations with MERCOSUR countries and India. These agreements will facilitate greater trade with both the East and South America. 

South Africa believes in the collective growth and hence aggressively promoted the concept of African Renaissance and NEPAD. South Africa’s contribution in the creation of SADC economic block and signing of free trade agreement within SADC is the bright 

The Africa Growth and Opportunity Act (AGOA) of USA, allows for duty free and quota-free entry of products from sub-Saharan Africa into the USA, thus boosting the growth in exports.


South Africa – India Relations 

The tireless work of the immortal teachings of Mahatma Gandhi in both South Africa and India and the common struggles of South African and Indian people against colonisation and the creation of non-racial democracies laid the foundation for the dynamic relations that exist between India and South Africa. The two governments are also working together in promoting economic cooperation to harness the many synergies that exist between them.

In 1994, the total Indo-SA bilateral trade was only US$57 million, with SA exports to India alone at US$30 million.  By the end of March 2000, the bilateral trade had surged to US$2.3 billion, with SA exports at US$2.00 billion. In the year 20001-2002 the total trade was US$1.78 billion, with SA exports at US$ 1.43 billion.

Areas of Cooperation - India and South Africa have much to gain from each other in several areas. South Africa is a flourishing market for Indian textiles, fabrics and readymade garments. Indian furnishing fabrics and yarns have high marketing potential. Indian exporters have an advantage in exporting to South Africa, as there are no quota restrictions.

There is great scope for joint venture partnerships in South Africa in the textiles, pharmaceuticals, pharmaceutical formulations, bulk drugs, dyestuffs and dye intermediates markets. In spite of the stiff global competition in the sector, Indian pharmaceuticals products are doing reasonably well. However, there is potential for much higher growth since South African Government is paying high priority to the healthcare sector. 

As far as agricultural products are concerned, rice, tea, spices, tobacco and canned processed foods have a large market in South Africa. In addition, animal feeds and various kinds of seeds also have a sound market in the region. Leather goods, particularly leather jackets, leather gloves, hand bags, purses, belts and leather travel goods, imitation and costume jewellery, and Indian handicrafts also have a good potential.

In the engineering sector, both light and heavy engineering goods have bright opportunities in the region. The major items are machine tools, castings and forgings, automobile parts, hand tools, building hardware, agricultural implements, etc. 

Besides being a principal importer of a large number of Indian consumer and industrial products, South Africa is also a collaborator in several joint ventures. Vast opportunities exist in the area of investment and joint ventures in both countries. 

South Africa can serve as an effective production base for exporting to Sub-Saharan Africa and Latin American countries. India can also take advantage of South Africa’s Customs Union Agreement with its neighbouring countries. India can share with South Africa its experience in ICT, biotechnology, as well as expertise in areas ranging from the services sector including manpower training, hotel, tourism, etc, setting up small and medium units in the field of agro processing, textile, gems & jewellery, etc. 

Indian companies have shown interest in making investment in South Africa in the power intensive industries such as ferrochrome, aluminium and steel due to availability of raw materials and cheap power. Several South African companies have already set up operations in India while some are in the process of doing so. This two-way trend is expected to accelerate in the medium to long-term future. 

Indian companies can take advantage of South Africa’s know-how and technology in coal mining (and washing) technology, steel industry, construction industry, energy generation and manufacturing of power equipment.

India can also source from South Africa a major portion of its requirements in gold and silver, precious and semi-precious stones, inorganic chemicals, coal, coke and briquettes, metaliferrous ores and metal scrap, vegetable oil, fertilizer, etc. India’s imports from South Africa recorded a growth rate of 38.3 percent by touching US$1414.29 million in 2002 against US$1022.18 million in 2001.

For further information, please contact the Economic Office of the South African High Commission:

Telephone: 011 2614 8607 – 10
Fax: 011 2614 8605
Email: saeco@vsnl.com
Website: www.thedti.gov.za  


South Africa Country Data