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Slower economic growth within South Africa limits future opportunities for companies with strong growth ambition, predominantly during the medium-and long-term. To sustain long-term growth objectives, companies should establish and increase their market presence north of South Africa.
It was recently revealed that the boards of several South African owned companies had approved the payout of dividends due to very few investment opportunities within South Africa. Based on this, innovative South African companies and private investors should, therefore, look at capitalising on the opportunities that are presenting themselves within fast-growing sub-Saharan Africa.
"For most South African companies, an important starting point would be to try and uncover opportunities within Southern Africa," noted James Fungai Maposa, Programme Manager for Industrial Automation, Mining & Manufacturing at Frost & Sullivan. "With the exception of South Africa, most of the region's economies are expected to grow by over 6% per annum during the 2012 to 2020 period."
Self-sufficiency is at the forefront of these economies' long-term growth objectives. In order to achieve these, government have extended an invitation to foreign investors to support the development of these countries' transport, communication, social and port infrastructure. Development of the aforementioned infrastructure improves accessibility and provides a platform for industrial sector companies and investors to explore opportunities within these countries.
"Industries expected to witness strong growth within Southern Africa, during the years 2012 to 2020, include the mining, food processing, beverage manufacture, cement, steel fabrication, and pulp and paper industries," said Maposa. "Although most of the Southern African nations are blessed with an abundance of resources used to manufacture products for the aforementioned industries, capital, and skills and expertise are a major growth limiting factor. "
Countries such as Mozambique, Angola, Zimbabwe, Zambia, Tanzania, the DRC, Namibia and Botswana present significant investment opportunities for South African companies. Examples of South African companies that have succeeded within the Southern African market include Shoprite, Pretoria Portland Cement, Spar and Anglo American.
"With strong, robust, growth forecast for Southern Africa's economy over the next few years, particularly within the region's mining, manufacturing and infrastructure sectors, South African companies should strive to gain first-mover advantage by investing in viable growth opportunities within the region's developing economies," Maposa advised. "Such investments could assist local companies to significantly improve shareholder return during the medium- and long-term."
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