The Impact, Profile, and Reputation of South Africa on the African Continent

EY Africa Attractiveness Survey 2015

    • SA is the top destination for FDI projects – the country attracted 121 projects in 2014/15
    • SA was the favourite destination for Chinese projects, securing 34.4% of total Chinese investment on the African continent
    • North Africa rebounds as inflows to Southern Africa falter: Egypt comes second with 71 projects; Morocco comes third with 67 projects
    • The above are actual greenfields investments, and does not account for flows in the financial markets – which – if included will show that SA is the top destination for FDI and financial market activity in Africa
    • Context: Africa’s share of global FDI grew from 3.6% in 2003 to 7,7 in 2012, and the continent more than doubled its share of global FDI flows from 7.8% in 2013 to 17.1% in 2014

01

Global FDI flow indicators on SA: Outbound

EY – Africa Attractiveness Survey (2015)

  • South Africa is the second largest source of FDI into the African continent (53 projects launched in 2014).
  • SA is the leading intra-regional investor in the financial services sector (16 projects launched in 2014.

03

Outbound Investment

  • 2013 budget speech of then minister of Finance, Pravin Gordhan, indicated that during the 2008-2013 period the South African Reserve Bank approved nearly 1000 large investments by South African corporations into 36 African countries
  • NDP underlines critical importance of boosting intra-African trade and integration of regional markets
  • Johannesburg Stock Exchange currently ranked the 19th largest stock exchange in the world by market capitalisation and the largest exchange in Africa
  • Industrial Development Corporation (IDC) has investments in 60 projects across 20 countries that creates a cumulative African investment portfolio of R7.5 billion by March 2014
  • With so many SA and multinational corporates that operate from Joburg into other African markets, the city’s logistical, air, inland port, and related soft infrastructure provides a solid base for corporates to establish regional headquarters.

02

Brand SA Fieldwork Research

THE SA INC SERIES

Rationale:

  • SA’s reputation is shaped by foreign policy; trade interactions as well as a divergent sets of relationships & interests (governmental, non-governmental, and business)

Objectives:

  • Development of framework of analysis that considers all elements of SA’s strategic economic, diplomatic, multilateral, and peace & security engagements on the continent
  • Integrated view of SA’s footprint on the continent for strategic marketing, communications, and reputation management projects

The SA Inc. Project: Fieldwork

  • Cycle 1 – 2014/15: Kenya, Nigeria, Ghana
  • Cycle 2 – 2015/16: Russia, Angola, DRC, Senegal

Brand SA’s Africa strategy: development of SA presence & reputation in select markets/multilateral environments

South Africa In(c) series research reports based on:

  • direct fieldwork studies
  • desktop research

SA Inc. Project: Kenya – South Africa Bilateral Trade

Total Bilateral Trade (2015)

  • Kenya Imports from SA: R 7 778 157 829
  • SA Imports from Kenya: R 214 882 875
  • Total Bilateral Trade: R7 993 040 704

SA Inc. Project: Kenya Key Findings

kenya

Challenges & opportunities for interaction between the countries:

  • SA’s reputational strengths:
  • SA democratic transition, strong institutions
  • Major interest in SA music & culture

SA’s reputational challenges:

  • SA seen as losing competitive edge, & not promoting internal development
  • SA character/personality perceived as imposing & aggressive
  • SA companies losing to local competition due to poor market entry strategies and ‘know it all’ attitudes

SA Inc. Project: Nigeria – South Africa Bilateral Trade

Total Bilateral Trade (2015)

  • Nigeria Imports from SA: R 7 524 647 002
  • SA Imports from Nigeria: R 35 016 713 902
  • Total Bilateral Trade: R 42 541 360 904

Nigeria

SA Inc. Project: Nigeria Key Findings

SA’s reputational strengths:

  • SA highly visible & respected (more than 150 companies active in market)
  • SA’s democratic transition, institutional & infrastructural profile appreciated & referenced as key attractiveness feature
  • Interest in business & investment interactions as well as cultural, music, tourism & related experiences

SA’s reputational challenges:

  • Despite major business & investment footprint, concerns about SA character & business culture
  • With Nigeria’s rebased GDP, SA considered to be losing competitive edge
  • SA character/business persona can be perceived as imposing & aggressive
  • SA co’s losing to local competition due to quick adaptation & learning and not woking with local partners in market entry, maintenance & expansion strategies

SA Inc. Project: Ghana– South Africa Bilateral Trade

  • Ghana Imports from SA: R 4 102 457 867
  • SA Imports from Ghana: R 175 234 249
  • Total Bilateral Trade: R4 277 692 116

Ghana

SA Inc. Project: Ghana Key Findings

SA’s reputational strengths:

  • SA’s corporate governance, managerial, technical, & other expertise
  • Strong people-to-people relations & potential for expansion in creative spheres, e.g. design, music, visual arts
  • SA corporates & their products & services widely known & utilised in market
  • Ghanaians prefer ‘international brands’, incl. those from SA
  • Potential in building deeper social & cultural relations via music, arts, design and cultural diplomacy
  • SA entrepreneurs use Accra as regional base/hub for West African business operations

SA Inc. Project: Angola– South Africa Bilateral Trade

Total Bilateral Trade (2015)

  • Angola Imports from SA: R 8 034 823 695
  • SA Imports from Angola: R 15 372 088 529
  • Total Bilateral Trade: R23 406 912 224

Angola

SA Inc. Project: Angola Key Findings

  • SA and Angola have a ‘bi-polar’ history…
  • Therefore critical that interested parties carefully select expats and South African experts to be deployed in the market
  • Angolans describe themselves as arrogant, and South Africans are also criticised as being arrogant – need for increased cultural contact and building of mutual understanding
  • Understand political & administrative context and “do homework”! Invest adequate resources (time and money) in preparing to enter the market
  • Take time & invest in relationship-building; identify reliable local partner
  • Recognise importance of language and (business) culture, e.g. Portuguese South Africans play a constructive role in several SA corporates in the market
  • Leverage off strong bilateral political relations
  • Approach Angolan government with ‘what can we do for you’ rather than ‘we are great at this and will bring it to you’

SA Inc. Project: DRC– South Africa Bilateral Trade

Total Bilateral Trade (2015)

  • DRC imports from SA: R 11 925 581 263
  • SA Imports from DRC: R 1 145 732 485
  • Total Bilateral Trade: R 13 071 313 748

DRC

SA Inc. Project: DRC Key Findings

    • ‘The Congo is open for business!’ – unlike other markets, former colonial power doesn’t enjoy privileges in terms of exploiting business opportunities
    • Acknowledge local business culture & need for “courting” – relationship-building is key, both with government and business, if one is reap any rewards from engaging in the market.
    • When entering DRC, SA corporates must take caution not to be perceived as arrogant by expecting host to adapt to their ways of doing business
    • Agriculture is key competitive strength – SA recognised for its expertise in sector. Given that DRC only utilises ≈10% of its 80m hectares of arable land, there’s enormous potential for SA to play a role here

South Africa’s Lieutenant General Derrick Mbuyiselo Mgwebi, Force Commander of the UN Organization Stabilization Mission in the DRC (MONUSCO)

  • “The Congo is a big country with a relatively small budget and many priorities”
  • Great expectations, ample opportunities and overwhelming priorities
  • SA to utilise well-established footprint in DRC to promote SA investments

Only one, albeit critical challenge:

  • Political instability and insecurity and continued conflict in the Kivus

SA Inc. Project: Senegal – South Africa Bilateral Trade

  • Senegal imports from SA: R 1 296 609 007
  • SA Imports from Senegal: R 238 916 730
  • Total Bilateral Trade: R1 535 525 737

Senegal

SA Inc. Project: Senegal Key Findings

    • At political, business, art and societal level, Senegal is extremely open to the idea of increased interaction between the countries
    • Relatively low level of knowledge about South Africa, particularly about the country’s development post-1994;
    • Potential for significant linkages such as the twinning of Goree Island and Robben Island

Goree-Island

  • Opportunity to focus on 30 years since the 1987 meeting on Goree island between the ANC and a delegation of Afrikaners
  • Senegal challenges SA to play more pro-active & leading role in promoting Africa’s development
  • Expanded business interaction through increased contact with chambers of commerce, e.g. Dakar Chamber of Commerce
  • Potential for expanded agriculture sector interactions
  • Academic contact and exchange, esp. Universite Du Sine Saloum Elhadj Ibrahima Niass

The SA Inc. Project: Key Findings 2014

  • The Nation Brand concept & marketing strategy depends on stakeholder interactions, and challenges Brand SA to be open to changing domestic and international environments
  • Unique nation brand reputational strengths: culture, music, business sophistication, infrastructure, political management of democratic transitions
  • Challenges: South Africans perceived as imposing, aggressive, and unwilling to listen to local advice
  • SA business to adopt market entry strategies that pay more attention to soft factors, e.g. local business culture
  • Politically, SA seen as progressive, with strong institutions, & democratic credentials.
  • Internal developmental challenges cause for concern, e.g. xenophobia, misplaced perceptions about African expats in SA (esp. Kenya & Nigeria)
  • SA music, art & cultural products well-received & followed, with continued interest in expanded interaction

The SA Inc. Project: Russia / BRICS 2015

Activities and Outputs

  • Fieldwork Russia, July 2015
  • Research Report, The Ufa Declaration and its Implications for the BRICS Brand, published 30 September 2015
  • Dissemination at Roundtable, 30 September 2015
  • Theme: Deepening the relationship between Brazil, Russia, India, China and South Africa

Panellists:

  • Prof Garth Shelton, University of Witwatersrand
  • Ms Catherine Grant-Makokera, Tutwa Consulting
  • Counsellor Eric Sogocio, Head of the BRICS Section, Embassy of Brazil
  • Mr Yaroslav Shishkin, Deputy Head of Economic Section, Embassy of the Russian Federation
  • Mr. Randhir Jaiswal, Consul General of India

‘The Ufa declaration and its implications for the BRICS brand’

Highlights:

  • Successes of BRICS in implementing Summit decisions
  • Implications of increased formalisation/institutionalisation for development of BRICS
  • Development of BRICS reflects positively on global governance capability of the five member states
  • The SA Inc. Project: Publications (2014-2015)
  • A lesson for Brand SA from Nigeria – Be bold, keep it real, and make it quick – a conversation on the art of Nollywood success. 23 August 2014, Brand South Africa

Research Note. By: Dr Petrus de Kock

Researching the Nation Brand – background to the concept, and initial findings from fieldwork in Kenya and Nigeria. 18 September 2014. South Africa In(c) Series

Research Report #1 By: Dr Petrus de Kock

African market entry strategy – learning to listen & listening to learn. 12 December 2014. Brand South Africa Research Note #2. 2014. By: Dr Petrus de Kock

Developing an SA Inc strategy for the Nation Brand, 28 July 2015, Brand South Africa Research Report, By: Dr. Judy Smith-Höhn & Dr Petrus de Kock

The Ufa Declaration and its Implications for the BRICS Brand, 30 September 2015, Brands South Africa Research Note, By: Dr. Petrus de Kock

SA Inc Project: Angola Fieldwork Research Report, 16 November 2015, Brand SA Fieldwork Report, By: Dr. Petrus de Kock & Dr. Judy Smith-Höhn

Prepared by Brand SA Research

Contact:

Dr Petrus de Kock, GM – Research
petrusd@brandsouthafrica.com

Dr Judy Smith-Höhn, Research Manager
judys@brandsouthafrica.com

Leigh-Gail Petersen, Researcher
leigh@brandsouthafrica.com