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BUSA PRESENTATION 2006 By Friede Dowie Chief Officer Strategic .ppt

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					                South African
                 Academy of
                 Engineering

South Africa as a Role Player in the Global Business
       and Economic Business Environment



    By Vic Van Vuuren
  Chief Operating Officer
Business Unity South Africa

     4 February 2008
Who is BUSA ?

>   BUSA is the voice of organised
    business at both national and
    international levels in South
    Africa, and proactively and
    dynamically addresses different
    business views.
THE VISION OF BUSA


>   BUSA is a unified and fully representative
    organisation that contributes to a
    vibrant, transforming and growing
    economy in South Africa
The South African Economy

>   Growth of 3% per year 1994-2004
>   Growth of over 4% since 2004 (great
    reaction after 2001-2002 crisis)
>   Inflation target 3-6%
>   Inflation currently over 6% (oil price
    influence)
>   Relatively stable currency since 2002
>   Strong fiscal discipline in government
>   Government budget surplus
>   Current account deficit driven by high
    levels of imports
>   High unemployment at approx 25%
Economic policy
The Government of South Africa demonstrated its
commitment to open markets, privatisation and a
favourable investment climate

Prudent Fiscal Policy has seen the reduction of
government debt and

Macroeconomic stability achieved continues to foster
a positive environment for economic growth

Both monetary and fiscal policy continues to support a
positive investment climate
Some SA’s statistics
                                                South Africa



Population (Million)                                     47.9

GDP (PPP)                                       $ 587 billions

GDP Growth (2006)                                         5%

GDP per capita (US$ at market exchange rates)         13,300

Inflation Rate (CPI)                                    4.9%

Unemployment Rate                                      26.7%

Public Debt (% of GDP)                                 33.2%

Investments (% of GDP)                                 17.1%
Growing Consumer
Market
>   Economic growth lead by consumer demand
>   Greater employment opportunities and more
    people entering the economy
>   This is evidenced by growing tax base
>   Increasing importance of services sector
>   Expanding middle class including through BBBEE
>   Social security provided to over 7 million
    households
>   Interest in luxury and niche products
>   4th fastest growing cell phone market in the
    world
>   Recent slowdown as a result of interest rate
    increases
>   Energy Crisis
>   Infrastructure in regression
South Africa in Africa
                  >   4% of Africa’s
                      surface
                  >   6% of Africa’s
                      Population
                  >   25% 0f Africa’s
                      GDP
                  >   40% of Africa’s
                      Industrial output
                  >   Over 45% of
                      Africa’s minerals
                      production
                  >   50% of Africa’s
                      Purchasing Power
                  >   Over 50% of
                      Africa’s energy
Open Economy

>   Open economy
>   Low barriers to trade in goods and
    services
>   WTO member
>   Preferential market access to key
    trading partners including the US
>   Possible base from which to
    export to third countries
>   Negotiations under way to revise
    free trade agreement with the EU
Infrastructure

>   Government programme to spend
    R400 billion (approx 57 billion USD )
    over next 3-5 years
>   Includes projects for 2010 FIFA World
    Cup such as new stadiums
>   Also includes longer term projects
    such as power generation and
    transport systems
>   Part of ongoing programme that
    includes government’s social
    infrastructure spending
>   New opportunities always emerging
>   In addition high levels of private
    sector infrastructure spending
>   Skills, knowledge, technology and
    financing required
        2006 South African exports




Exports - commodities: gold, diamonds, other metals and minerals, machinery and equipment

Imports - commodities: machinery, foodstuffs and equipment, chemicals, petroleum products,
scientific instruments

      Source: http://en.wikipedia.org/wiki/South_Africa
FDIs
Since 1994, South Africa has continously
provided the right climate to attract significant
Foreign Direct investments.

This environment led to the largest single FDI
into South Africa when Barclays bought a
majority share in local bank Absa Group Limited
in 2005.

Deals between the British based Vodafone and
South Africa's Vodacom have also taken place
in 2006.
Financial overview
Sophisticated financial structure with the JSE
Securities Exchange, a large and active stock
exchange that ranks 18th in the world in terms of
total market capitalisation

Recent evolution:
    JSE’s Shareholder
    composition




The trend of FDIs is also confirmed by the JSE’s evolution!

   Source: http://www.jse.co.za/
Priority Sectors

•   Business Process Outsourcing

•   Tourism

•   Bio-fuels and chemicals

•   Clothing and textiles

•   Mining and mineral beneficiation, Metals and engineering

•   Agriculture and Agro-processing, Forestry and paper

•   White goods sector

•   Creative industries

•   Pharmaceuticals

•   Capital Goods and Energy

•   Telecommunications
Agriculture
accounts for 3.4% of the gross domestic product and 10%
      of total employment

Major crops:

      Citrus and deciduous fruits
      Corn
      Wheat
      Dairy products
      Sugarcane
      Tobacco
      Wine (South Africa is the 5th largest producer worldwide)
      Wool
      Maize

South Africa has many developed irrigation schemes
     and is a net exporter of food.
Mining & Metals

>   South Africa is the world's largest
    producer and exporter of gold and
    platinum and also exports a
    significant amount of coal

>   Another major export is diamonds

>   During 2000, platinum overtook gold
    as South Africa's largest foreign
    exchange earner

>   The value-added processing of
    minerals to produce ferroalloys,
    stainless steels, and similar products
    is a major industry and an important
    growth area
    Telecommunications
The domestic telecommunications infrastructure provides
modern and efficient service to urban areas, including
cellular and internet services. In 1997, Telkom, the South
African telecommunications parastatal, was partly privatised
and entered into a strategic equity partnership with a
consortium of two companies, including SBC (U.S).

In exchange for exclusivity to provide certain services for 5
years, Telkom assumed an obligation to facilitate network
modernisation and expansion into unserved areas.

Four cellular companies provide service to over 20 million
subscribers, with South Africa considered to have the 4th
most advanced mobile telecommunications network
worldwide. The four cellular providers are Vodacom, MTN,
Cell C and Virgin Mobile SA.
     Tourism




In 2006 the number of Total ForeignTourist arrivals
went up to 8,395,833 increasing by 13,9 % in respect
of 2005
                Source: http://www.southafrica.net/satourism/
 Tourism (continued)




Source: http://www.southafrica.net/satourism/
 Cost of doing business in South
 Africa(2006 Ranking)
 >          Overall                           29
 >          Starting a business               57
 >          Dealing with licenses             45
 >          Employing workers                 87
 >          Registering property              69
 >          Getting credit                    33
 >          Protecting investors              9
 >          Paying taxes                      74
 >          Trading across borders            67
 >          Enforcing contracts               43
 >          Closing a business                65


Source: World Bank ranking of 175 countries
 Global Competitiveness Index
 for SA
 >         Overall rank                            44
 >         Basic requirements                      61
 >         Institutions                            39
 >         Infrastructure                          43
 >         Macro economy                           50
 >         Health and primary education            117
 >         Efficiency enhancers                    36
 >         Higher education                        56
 >         Market efficiency                       78
 >         Technological readiness                 46
 >         Innovation and sophistication factors   33
 >         Business sophistication                 36
 >         Innovation                              32


Source: World Economic Forum, 2007
 Global Competitiveness Index
 for SA
 >         Overall rank                            44
 >         Basic requirements                      61
 >         Institutions                            39
 >         Infrastructure                          43
 >         Macro economy                           50
 >         Health and primary education            117
 >         Efficiency enhancers                    36
 >         Higher education                        56
 >         Market efficiency                       78
 >         Technological readiness                 46
 >         Innovation and sophistication factors   33
 >         Business sophistication                 36
 >         Innovation                              32


Source: World Economic Forum, 2007
  THANK YOU!



      Vic Van Vuuren
  Chief Operating Officer
Business Unity South Africa

				
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