15 October 2009
South Africa has been identified as a key emerging market for global investors, moving up to fourth position in a new survey conducted by the Economist Intelligence Unit for UK Trade & Investment, the British government’s international business development agency.
Addressing an emerging markets forum hosted by the Economist Intelligence Unit on Wednesday, UK Secretary of State Lord Mandelson revealed the findings of the report, which examined global business attitudes to emerging markets in light of the global downturn.
UK business ‘must look abroad’
Commissioned by UK Trade & Investment, the “Survive and Prosper: emerging markets in the global recession” report gives fresh insights into the opportunities and longer-term strategic importance offered by emerging economies.
“Businesses should be strategic about their exports and plan for the long term,” Mandelson said. “Many emerging markets are outperforming developed economies, and are expected to grow strongly for years to come.
“The global recession was a wake-up call for companies to diversify their export base and seek out new opportunities in the emerging world,” Mandelson said. “We are encouraging UK business to look abroad and find new business in these exciting new markets.”
Emerging markets outperform developed countries
The report, based on a survey of more than 540 high-level business executives across 19 business sectors, found that emerging market economies, on the back of the continued high growth and market size of China and India, had outperformed those of developed countries in 2009.
The report found 60 percent of companies surveyed expected to derive more than 20 percent of their total revenues from emerging markets in five years’ time – almost double the current figure of 31%.
According to the report, political risk (including the risk of nationalisation and expropriation) was cited by 50 percent of survey respondents as the greatest government-related obstacle to doing business in emerging markets.
‘Share in SA construction boom’
In the equivalent report by the Economist Intelligence Unit in 2008, titled “Tomorrow’s Markets”, South Africa was ranked eighth in a top 10 list of “new wave” investment markets.
The latest report – in which South Africa moves up to fourth position – is part of a wider push by UK Trade & Investment to raise awareness about the potential trade and investment opportunities for British companies in high-growth markets.
It follows the release on Friday of another UK Trade & Investment report, titled “Building South Africa: opportunities for the UK construction sector”, which highlights opportunities stemming from the South African government’s multi-billion rand infrastructure development plans.
“South Africa is a fast growth economy with infrastructure plans to match,” UK Trade & Investment CEO Andrew Cahn said in a statement on Friday. “With investment opportunities in both private and public sectors, coupled with a severe skills shortage, now is the time for UK companies to take advantage of the construction boom.”
‘Gain a foothold in sub-Saharan Africa’
Cahn said South Africa’s infrastructure spending plan was set to accelerate the annual growth of the economy by between 4.5% and 6%.
“Its ambitious plans for mass transport, water projects, prisons, hospital and prison upgrades provide plenty of opportunities for UK companies,” Cahn said.
“This investment, and events like the 2010 football World Cup, are acting as a catalyst for growth in the private construction sector. Opportunities include hotel and residential development as well as urban regeneration projects.
“By establishing a business in South Africa, UK companies can gain a foothold into sub-Saharan Africa.”
Several UK companies are already actively involved in major infrastructure projects for South Africa, including Bombardier Transportation UK Ltd, which is providing the new train fleet for the Gautrain project, and Mott MacDonald, which is involved in state logistics company Transnet’s rail and port expansion programme.
UK Trade & Investment’s presence in South Africa “is stronger than ever, with 34 staff based in Johannesburg, Cape Town and Durban to support these opportunities and expansions,” the agency said on Friday.
South African Press Association (Sapa), with additional reporting by SAinfo