SA still provides lion's share of investment in Africa

Posted On Thursday, 03 July 2003 02:00 Published by eProp Commercial Property News
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Analysts believe companies have been given impetus by the easing of exchange control regulations.










SA is now the largest source of foreign direct investment into Africa, far
outstripping the US, UK, and France.
SA firms have invested an annual average of $1,4bn since 1991, with
impressive profit margins.
Across all sectors, leading JSE listed companies are heading north and Africa
is increasingly accounting for a larger share of their assets, profit and
According to research analysts Liquid Africa, the continent offers SA firms
high growth opportunities and impressive profit margins.
Liquid Africa expects that investment by SA corporations in other African
countries will continue to accelerate, particularly as leading companies
gain a better grasp of the risks and rewards entailed.
It believes that the impetus for SA companies to invest elsewhere on the
African continent came from the easing of exchange control regulations which
now permit an investment of up to R2bn per project in Africa compared with
R500m in any other region.
In addition, the Development Bank of Southern Africa and the
 are showing an increasing appetite for African risk.

SA's economic interests in Africa are also rising because of the sharp
increase in exports to the region. Over the past three years these have
risen by 59%.
"Many African trading partners have opted to source SA manufactured goods
over European sources owing to competitive costs, particularly in transport,
price and comparable quality," Liquid Africa reports.
SA mainly exports manufactured goods to the continent such as machinery,
chemicals, mineral products, base metals, transport equipment and prepared
While SA still has a substantial trade surplus with the continent, imports
are up by 133% over the past three years.
Trade with Nigeria is the fastest growing on the continent and at its
current growth rate, the country could become SA's largest trading partners
in the next five years.
SA trade remains highly concentrated with the top 10 countries on the
continent for SA goods accounting for 85% of total export value.
Despite the economic downturn in Zimbabwe, it still tops the list of SA's
African trading partners, closely followed by Mozambique and Zambia. Outside
of the southern African region, Nigeria and Kenya are the main destinations
for SA exports to African countries.
SA mining and construction companies pioneered the trek north but are now
being followed by a wide range of companies. Financial services,
telecommunications, consumer goods, health-care, media, and retail companies
are now displaying an interest in the continent, says Liquid Africa.
And African operations of major JSE-listed companies are on average showing
better or similar returns than domestic operations.
"Over the past three years, the MTN Group has exhibited one of the most
aggressive nonresourcebased Africa expansion programmes. The rest of Africa
now accounts for one third of MTN's annual turnover and its assets," Liquid
Africa said.
The research company says the macroeconomic environment in Africa is
diverse, but promising. Although there are wide contrasts from country to
country, African economies on average grow faster than the SA economy,
albeit off a lower base.
African currencies are known to be volatile and tend to depreciate over time
against major international currencies.
This materially affects the operating performances of companies with revenue
denominated in the local currency.
But the single most important factor affecting success in Africa is
politics, says Liquid Africa.
"The political scene is often the single most important driver of African
countries economic future and fortunes. Their political leaders have
generally been in office for a long time''.

Last modified on Thursday, 17 April 2014 11:39

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