South Africa at a glance

• Area 1,22 million km2

• Population 55.91 million

• Head of the State: President Jacob Zuma

• 11 Official languages with English the business language

• Total GDP: 2016 R4 277 bn (US$ 290,78 bn)

• GDP 2016 per capita: R76 498 (US$ 5 201)

• Real GDP Growth: 0.3% (2016)

• Inflation (CPI): 6,4% (2016 annual average)

• Main Exports: minerals & mineral products, precious

metals & metal products, machinery & electronics, vehicles and

& transport equipments

• Main trading partners: China, USA, Japan, Germany,

India .

South African Economy

• South Africa positioned as a manufacturing centre of excellence

• Diversified Industrial sectors

• Open economy

• Sound business case for investment and profit

• Gateway to Africa and markets of more than 200 Million consumers

• Africa is the next big story after China and India

Source: SARB, STATS SA, OFX, SARS

YEAR 1994 THEN 2004 IN 2016

GDP (billions) R 482

US$ 60

R 1 374

US$ 171

R 4 277

US$ 290.78

Merchandise exports

(billions)

R 69, 8

US$ 8.7

R 281,8

US$ 35.2

R1 100

US$ 74.79

GDP Growth 3,2% 4,6% 0,3 %

South African Trade 2016

Export Partners R bn Import Partners R bn

1. China 100,2 1. China 199,0

2. Germany 82,0 2. Germany 129,6

3. USA 80,6 3. USA 72,8

4. Botswana 54,6 4. India 45,6

5. Namibia 52,0 5. Saudi Arabia 41,7

Bilateral Trade (2016)

• SA exports to Portugal: R2.05 bn

• SA imports from Portugal: R3.05 bn

• Trade deficit : R1.00 bn

Bilateral Trade – Trend

2012

(RANDS)

2013

(RANDS)

2014

(RANDS)

2015

(RANDS)

2016

(RANDS)

2017 (Jan-July)

(RANDS)

Exports to

Portugal

690 945

762

1 200 358

299

1 476 050

492

R 1 610 097

099

R 2 049 982

246

R 1 348 874

771

Imports

from

Portugal

1 295 608

812

2 114 379

756

2 150

830 181

R 2 568 909

135

R 3 053 531

820

R 1 984 787

281

SA Exports (2016)

Product Value in R million

Vegetables 749.3

Live animals 464.7

Mineral Products 212.8

Vehicles aircraft & vessels 207.0

Plastics & Rubber 131.8

Chemicals 106.8

Machinery 77.5

SA IMPORTS (2016)

Product Value in R million

Vehicles aircraft & vessels 778.7

Machinery 651.1

Textiles 234.9

Plastics & Rubber 227.8

Products Iron & Steel 199.7

Prepared foodstuffs 195.3

Equipment Components 155.2

Market Potential

• Prepared foodstuffs incl. fish

• Automotive, transport equipment and components

• Agro-processing

• Textiles (threads and fibres)

Global Export Platform – Market Access

Arrangements

• South Africa – European Union (EU) Trade, Development

and Co-operation Agreement (TDCA) and Economic

Partnership Agreement (EPA)

• Southern African Development Community (SADC) FTA

• T-FTA SADC-EAC-COMESA

• Southern African Customs Union (SACU) - European Free

Trade Association (EFTA) FTA

• USA Africa Growth and Opportunity Act (AGOA)

SONA 2015

Resolving the Energy challenge

Revitalizing Agriculture & the

Agro-processing value chain

Advancing Beneficiation/adding value to our mineral wealth

More effective implementation of a higher impact Industrial Policy Action Plan

Encouraging private sector Investment

Moderating Workplace conflict

Unlocking the potential of SMME’s, Cooperatives and Township & Rural

enterprises

State reform and boosting the role of state-owned companies, ICT

infrastructure/broadband roll out, water, sanitation and transport infrastructure

Operation Phakisa aimed at growing the ocean economy & other sectors

Government Priorities

Government Priorities to stimulate growth

Priority Sectors For FDI

13

• Advanced Manufacturing

• Nanotechnology

• Metals

• Mining & Beneficiation

• Biofuels

• Agribusiness

• Automotives & Components

• Capital Equipment

• Precision engineering

• Aerospace

• Film production

• Tourism

• Oil & Gas

• Boat Building

• ICT and electronics

• BPO (Business Processing &

Outsourcing) and Call Centres

• Chemicals & Biochemicals

• Plastics & Composites

• (Bio) Pharmaceuticals & Medical

Devices

• Leather and footwear

• Forestry products & Furniture

• Energy and Renewables

• Infrastructure Development

• Waste Management

• Energy Efficiency & Cleaner

Technology

Electronics

Opportunities for investment

• Public Procurement is one of the key strategic levers for industrial development

objectives in the NGP and IPAP.

• The revised Preferential Procurement Policy Framework Act (PPPFA)

Regulations, which came into effect on 7 Dec 2011, empower the dti to

designate industries – within Electronics, the following areas have been

designated:

Project Local Content

Set-top boxes 30%

Residential Electricity meters 50%

Power and Telecom cables90%

Electronics

Localisation Opportunities

• Mobile devices: Laptops, Tablets & Smartphones, televisions

• Vaccine Refrigerators

• Smoke Detectors

• Fridge Compressors

• 2 way radios

• White Goods: Strategy under development

• Electricity/Power related products such as Transformers

• Localisation of radar systems

• Creation of regional value chains to manufacture components,

display panels and finished products

Pharmaceuticals and Medical Devices

Opportunities for investment• Key opportunities for growing the pharmaceutical and medical devices

sectors include:

─ Expanding the range of generics manufactured in South Africa,

taking advantage of the “Patent Cliff” (pharmaceuticals with global

sales US$ 200 billion losing patent protection in 2013-2014-2015)

─ Starting the domestic manufacture of advanced generic biological

medicines, including the newly off-patent oncology and anti-auto

immune diseases products, under licence and/or with foreign

investors.

─ Expanding regional co-operation and exports of medical products to

SADC and the rest of Africa.

Continued…

─ Medical Devices: low hanging fruit – refurbishment of existing and

single-use devices

─ Possible designation of medical textiles

─ API (Active Pharmaceutical Ingredient) manufacture – list of 200

chemicals from DoH

─ Manufacture of medical diagnostics

─ Manufacture of vaccines and biologics

─ Investment in R&D – clinical trials in SA due to diverse patient

populations in SA

The Green Economy Accord

• The Green Economy Accord – signed in 2011: Identifies various priority

areas including

➢ Rollout of 1 million solar-water heating systems

➢ Increasing investment in the green economy through public and

private investors (including the Industrial Development Corporation)

➢ Procurement of renewable energy as part of energy generation plan

➢ Promotion of biofuels for vehicles

➢ Promoting energy efficiency across the economy

➢ Waste management and recycling

➢ Reducing carbon-emissions on the road – a shift to rail for freight-transport

➢ Economic development in the green economy – promote localisation,

youth employment, cooperatives and skills development

Green Economy Subsectors

• Renewable energy: wind, solar, biogas, biomass - focus on manufacturing of components

• Waste Management and Waste to Energy

• Energy efficiency and demand management initiatives

• Biofuels – gas to energy

19

Renewable Energy• REIPPP has led to investment of more than ZAR 100bn (approximately

US$10bn) in the first three rounds of the programme.

• In the Climatscope 2014 report released by Bloomberg New Energy, SA was

ranked third, after China and Brasil, for investment in clean energy, accounting

for more than 90% of these investments in Sub-Saharan Africa

• South African REIPPP won the 2013 Green Infrastructure Project of the Year

Award at the 6th Global Infrastructure Leadership Conference

• Local content requirements incentivises local manufacturing

• Investors include Jinko Solar, ILB Helios, Art Solar (all PV), DCD Dorbyl, GRI,

Resolux (all wind energy), SMA (inverters)

REIPPP Investment And Local Content

Round 1 Round 2 Round 3 Round 4(excl. 13

projects from

round 4.5)

MW

remaining

capacity

Approved bids 28 19 17 13

Value of

approved

projects

US$3.2bn US$2bn US$2.4bn US$1,6bn

Local content

valueUS$0.8bn US$0.8bn US$1.1bn US$0.7bn

Local content %

(average for all

technologies)

23.7% 46.85% 47,2% 49,2%

MW Approved 1 415.6 1 044 1 456 1121 1488

Department of Energy

Investing into South Africa’s Automotive Industry

The Automotive Industry is the largest manufacturing sectorin the SA economy and contributed 7,4% of SA GDP in 2016.

Projected vehicle production in 2020 is around 1 millionwhich will result in an industry’s contribution to SA GDP toaround 10%.

BMW committed R6bn in 2017 in Rosslyn plant to produceX3 models

MBSA invested R200m in the production of AMG modelsand further R467m in the C Class sedan & C350 models

FORD SA followed suit by expanding their operations

Auto industry contribution to SA GDP

23

2014 2015 2016% change

2016 / 2015

Africa 61 839 42 234 21 564 -48.9%

Europe 116 077 173 805 195 764 +12.6%

North America 48 408 54 000 52 430 -2.9%

Asia 33 520 34 306 47 616 +38.8%

Australasia 14 610 22 948 22 735 -0.9%

South America 2 482 6 554 4 750 -27,5%

Changing Composition of SA Vehicle exports by major regions

2014 – 2016

Source: NAAMSA, AIEC, Lightstone Auto 24

Automotive component exports

2012 - 2016

Source: AIEC, SARS

2012 2013 2014 2015 2016

Total (R billion)

39.9 42.2 45.7 49.6 53.0

1. Germany 31.20% 28.60% 27.40% 27.60% 28.07%

2. USA 10.70% 8.80% 10.30% 13.10% 11.78%

3. Namibia n/a 4.89% 5.83% 5.62% 5.28%

4. Spain 3.20% 3.70% 4.30% 4.50% 4.51%

5. UK 5.40% 5.80% 6.30% 5.30% 4.15%

6. Thailand 2.20% 2.60% 2.20% 3.30% 4.01%

Other 47.30% 45.61% 43.67% 40.58% 42.19%

Component manufactured in South Africa

Engine, Transmission and Body Parts

Brakes, Wheels, Shock absorbers

Suspension, Exhausts, Windscreens

Electrical, Batteries & Filters

Interiors

INCENTIVE SCHEMES

CLUSTER INCENTIVE SCHEME

MANUFACTURING

INVESTMENT

•12i Tax Incentive

• Automotive Incentive Scheme (AIS)

• People-carrier Automotive Investment Scheme (P-AIS)

COMPETITIVENESS

INVESTMENT

•Manufacturing Competitiveness Enhancement Programme

(MCEP)

• Export Marketing & Investment Assistance (EMIA)

•Capital Projects Feasibility Programme (CPFP)

SERVICES

INVESTMENT

•Film & Television Production

• Business Process Services (BPS)

BROADENING

PARTICIPATION

•Black Business Supplier Development

Programme (BBSDP)

• Co-operative Incentive Scheme (CIS)

• Incubator Support Programme (ISP)

INFRASTRUCTURE

INVESTMENT

• Critical Infrastructure Programme (CIP)

INVESTING IN SOUTH AFRICA

Coega IDZ

East London IDZ

Richards Bay IDZ

OR Tambo International Airport (licensed)

Dube trade Port IDZ

Saldanha Bay IDZ

Contact:

Jacob Moatshe

Tel: +49 30 220 73171

Cell: + 49 172 906 4917

Email: Moatshe@suedafrika.org

REASONS TO INVEST IN SOUTH AFRICA – WORLD COMPETITIVENESS RANKINGS 2016

# 1 - Strength of auditing and reporting standards

#2 – Regulation of securities exchange

#3 – Protection of minority shareholders’ interests

#3 – Efficacy of corporate boards

#1 – Financing through local equity market

#6 – Availability of financial services

#8 – Soundness of Banks

#14 - Strength of investor protection

#14 – Quality of air transport infrastructure

#73 Overall ranking out of 189 countries and

#2 in Ease of doing business among BRICS countries in 2016

Top Investors

Trade and Investment South Africa (TISA) is the National investment promotion agency of South Africa offering a one-stop-shop approach to investing in South Africa

2014 UNCTAD winner for excellence in promoting Foreign Direct investment (FDI) projects to advance sustainable development

South Africa was ranked third in the world for investment in clean energy, according to Climatscope 2014 report released by Bloomberg New Energy finance

SA was voted overall winner for Africa by the Financial Times for the best destination for 2013 and 2014

In May 2013, AIM award for facilitating the second-best investment project (pharmaceutical sector)

2014 – Winner at AIM for sustainable development