NGlobal Magazin 01-2010

For the FIFA World Cup all eyes will be on South Africa

Niedersachsen Global www.nglobal.de 56 Initiatives South Africa   The Cup of Good Hope For the FIFA World Cup all eyes will be on South Africa. A chance to present itself as  the up-and-coming business location into which it has turned over the years. South Africa is frequently associated with little more than violence and hunger. Yet the republic is one of the most developed countries on the Southern Afri- can continent. Its infrastructure is very good, its le- gal system functioning and democracy is intact. Also, according to the World Economic Forum, its banking system is safer than that of Switzerland. Little won- der then that South Africa unites almost one third of the whole of Africa’s economic power and that it has attracted numerous investors. Volkswagen and Continental moved there quite some time ago, now Niedersachsen companies including furniture manu- facturer Steinhoff and textile company Daun & Cie. are following suit. 60 billion Euros to be Invested in Infrastructure There will no doubt be plenty of opportunities for in- vestment, also after the World Cup. The country’s fi- nance minister has promised 60 billion euros for the development of harbours, airports and railway lines. Energy supply will be another vital sector. Eskom, the national supplier of energy, is discussing a partial pri- vatisation to enable the construction of new power stations. Prospects for the use of renewable energies will certainly be good, too, given the country’s exten- sive area. Its vastness will make it impossible for all households to be connected to a central electricity network—a niche for decentralized power solutions. South Africa has also aggressively pursued a policy of CO2 reduction, which could lead to the restriction of coal-fired power stations. On the other hand, the country favours the construction of nuclear plants. It is good to bear in mind that when it comes to placing orders the government will give preference to local companies. Private household consumption has in turn tended to be relatively weak. The global economic crisis has meant private households’ debts rising to an average 80 percent of their disposable income. Although the demand for private loans is on the decrease, a rise of individual spending power to the pre-recession level is not expected. With the crisis a new law placing tough- er conditions on consumer loans has come into effect. Other factors hindering investment are the lack of security as well as the requirements imposed by the Black Economic Empowerment scheme. To better integrate black people into the country’s economy, companies, as an example, need to look for black shareholders, managers, employees or suppliers in or- der to meet the quotas set by the government. Representative Office South Africa Mr. Yorck Wurms Po Box 2106 Beacon Bay 5205 / South Africa Phone +27 43 7049 240 Fax +27 43 7350 984 yorck.wurms@edu.ecprov.gov.za South Africa Pop.: 47,6 million GNP: 5,390 m USD Growth: -1.5 %* Inflation: 5.7%* Strengths + politically and economically a heavyweight + great wealth of mineral resources + diversified industrial landscape + strict economic policy Weaknesses - chronic energy crisis - lack of qualified labour - social and political tensions *forecast / Source: Coface Photo: shanediaz120/flickr by Yorck Worms The World Cup will be a brilliant occasion for South Africa to demonstrate that its not so positive image abroad no longer holds true.