Selling to South Africa
Finding the energy
Earlier this year, the South African Minister of Public Enterprises Barbara Hogan conceded that ESKOM, South Africa’s government-owned energy provider could no longer supply the total electricity needed to power the burgeoning economy. The recent disclosure was in response to current power cuts in South Africa that have affected mining activities. The South African government has now initiated an independent power producers’ framework, which will enable ESKOM to purchase power from businesses building generators and power stations, as well as from suppliers outside South Africa.
Prior to the announcement, the Government of South Africa initiated a largescale US$56.8 billion infrastructure development plan through to 2010, targeted at the upcoming 2010 FIFA World Cup and the electricity shortages. Now that the government has opened a new platform for independent power producers, Australian energy-generating firms with aspirations of exporting to Africa could start with more stable opportunities in its energy sector, from coal, renewables or alternative sources.
Security and staffing
It is widely acknowledged that South Africa has one of the highest crime rates in the world although the government has taken concrete steps to stem the tide of criminal and violent activities in the country. Its initiatives comprise of a number of crime prevention programs including mass recruitment of law enforcement personnel in preparation for the FIFA World Cup, targeting a 7-10 percent annual reduction in serious crimes. This year will surely be the ultimate barometer to measure the success or failure of this security target.
The South African government is also firmly committed to promoting Black Economic Empowerment (BEE). New Australian investors need to have plans to include training black workers at all levels of their company and working with other BEE companies. These conditions are pre-requisites for companies that aspire to do business in South Africa.
A lesser-known barrier is that labour unrest is a persistent problem in South Africa’s workplaces. Around 30 percent of the formal workforce is unionised. Through the Congress of South African Trade Unions, trade unions have a strong political voice in South Africa.
Time to invest
The business process outsourcing and offshoring (BPO&O) industry is one of South Africa’s fastest growing economic sectors. The call centre sub-sector alone has been growing at about eight percent per annum over the past four years and currently employs about 54,000 call centre agents. Most activity occurs within the call centre and back office processing spheres, with more than 70 service providers serving both local and offshore customers. South Africa is fast on the tail of East Asia for BPO&O international market share.
BPO&O investment opportunities include call centres, back office processing, shared corporate services, and enterprise solutions in service lines such as fleet management, knowledge management and asset management. Generally, South Africa’s investment climate is considered friendly. The banking system, infrastructure—barring the energy sector—and legal system are at or close to advanced economy standards. This creates an enabling environment for Australians to further invest in a G20 member African country with an OECD-like investment protection.
As always, Australians are most welcomed to the Rainbow Nation. Enjoy the celebration of Africa’s humanity.
—Frank Aneke is the principal of OctoberFirst Consulting (www.octoberfirst.com.au) an investment communication firm and Africa specialist, particularly forging business and investment relationships between Asia-Pacific nations and emerging African economies. OctoberFirst is a member of the NSW Business Chamber.
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