South Africa is a country on the southernmost tip of the African continent, marked by several distinct ecosystems. Inland safari destination Kruger National Park is populated by big game. The Western Cape offers beaches, lush winelands around Stellenbosch and Paarl, craggy cliffs at the Cape of Good Hope, forest and lagoons along the Garden Route, and the city of Cape Town, beneath flat-topped Table Mountain.

South Africa’s real GDP growth was 0.2% in 2019. The pandemic and the containment measures to curb the spread of the virus further damaged the economy. Real GDP contracted by 8.2% in 2020, the result of a decline in construction, transport and communication, manufacturing, and mining. On the demand side, all components declined, with the largest contraction, 32.4%, recorded in investment. The Reserve Bank of South Africa cut the policy rate by a cumulative 300 basis points in 2020, from 6.5% to 3.5%, to support businesses and households affected by the pandemic. Inflation was estimated to decline to 3.4% in 2020, within the reserve bank target of 3%–6%. The budget deficit was estimated to widen significantly to more than 14% of GDP, mainly due to spending pressures to contain the economic impact of the pandemic. The country will, however, record its first current account surplus in 2020, estimated at about 1% of GDP, because of the high price of the gold it exports, a low bill for fuel imports, and increased agricultural exports.

Reasons to invest in South Africa:

  • Africa is on the rise: The African continent is on the cusp of transformative growth, with blossoming entrepreneurship and plenty of opportunities for smart and simple business solutions. Africa is a 1.2bn-person market, a number expected to double over the next 30 years. The continent has been gradually transformed in the past 20 years, and if you haven’t noticed you are not alone. Generally, business leaders tends to overestimate the challenges of doing business in Africa and underestimate the size and potential on the African continent. Thereby not stating that the African markets are easy to do business in, but emphasising that they are worth the effort, and companies not engaged in African markets risk losing out on one of the 21st century’s great growth opportunities.
  • Large economy in Africa: South Africa is the second largest economy on the continent, only exceeded by Nigeria, which has more than three times the population size. Over the past decade, South Africa has experienced rapid change and is ranked by the World Bank as an “upper middle-income country”. Of the more than 400 companies on the continent earning more than $1bn annually, about half are in South Africa. The country is nevertheless highly divided, with a large part of the population living in poverty. The division makes South Africa an interesting economy with possibilities in many segments.  The country have well-developed infrastructure and world-class financial sector to support business activities, and is one of the highest ranking African countries on the ease of doing business index.
  • Growing middleclass: Since the fall of Apartheid South Africa has experienced rapid economic growth, and in recent years South Africa’s black middleclass has expanded. This group’s purchasing power is increasing, and the high and middle-income groups are expected to rise with the country’s economic growth.
  • Gateway to Sub-Saharan Africa: Not only is South Africa itself an important emerging economy, it is also the gateway to Sub-Saharan markets, where its well-developed infrastructure allows for transportation into Africa. The country is a regional leader and a member of the BRICS collaboration. South Africa is a good place to establish a business in the region, and many companies expand their business activities from South Africa to the rest of the region.
  • A green match: The development towards a sustainable future is of high priority in South Africa, and many of the challenges facing South Africa are solvable with Danish technology that ensures sustainability. An example is the South African water sector, which Denmark has supported since the fall of Apartheid in 1994. Today, Danish water companies thrive in the South African market, as Denmark is global leader in water use and efficiency, and deliver solutions that save water and energy.
  • Growing population and insufficient status quo: Currently water and electricity coverage, along with housing, waste management, infrastructure and health care is insufficient to meet the needs of the South African population. The population growth and urbanization in South Africa will amplify current demand in the future, and the gaps hold business opportunities for Danish companies.  

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