A sustained period of economic growth in South Africa presented an abundance of opportunities for Australian businesses, particularly in engineering, agriculture, and infrastructure development, according to Australian high commissioner to South Africa.
A sustained period of economic growth in South Africa presented an abundance of opportunities for Australian businesses, particularly in engineering, agriculture, and infrastructure development, according to Australian high commissioner to South Africa.
But Philip Green, who spoke last week at the WA Business News Meet the Ambassadors breakfast, said it was important those looking to do business in the republic were aware of the deep-seated economic and social issues.
Trade between South Africa and Australia had grown by about 9 per cent trend growth during the past five years, he said.
In 2005, exports to South Africa were $1.9 billion while imports were $1.5 billion.
“South Africa is going through its longest period of sustainable economic growth,” Mr Green told his breakfast audience. “As part of President Mbeki’s state of the nation address this year, he announced 380 billion rand [$A70 billion] would be spent over the next three years in addressing infrastructure shortages in the country.
“So for those [Australian businesses] in engineering I think there are major opportunities over the next three years and beyond.”
South Africa’s broad industrial development plans may also provide bountiful prospects, according to Mr Green, with the Coega industrial development zone, situated 20 kilometres east of the city of Port Elizabeth, a potential drawcard for a number of Australian companies.
“It is a greenfield site where transport nodes are being developed at a cost of eight billion rand [$A2 billion] and it is an extremely bold industrial development,” he said.
“Those [Australian businesses] involved in the aluminum industry, which is almost certainly going to be a part of the development, or in power supply will most certainly do well.”
Mr Green also highlighted the agricultural sector as a key market for Australian business.
“From wool to grains, meat and wine, South Africa’s agricultural output is strong although overall their technical capacity is not up to Australia’s and [any Australian business] involved in agriculture has the potential to make good inroads,” he said.
“South Africa is currently going through a massive consumer boom at the moment and those selling consumer goods to South Africa will do well.”
South Africa’s major strengths include mining and the motor vehicle industry, with the latter contributing 40 per cent of exports to Australia.
“The car industry is actually larger in South Africa than the gold mining industry and therefore has a stronger growth curve,” Mr Green said.
There are inherent problems in the South African economy, however, including an unemployment rate of 25 per cent and unbalanced wealth distribution.
Also, HIV/Aids was having a major effect on the country, with more than five million South Africans estimated to be infected with the disease.
On a governmental level, Mr Green said, securing work permits was a potential area of concern.
On a more positive note, black economic empowerment was a movement Mr Green said was an essential part of South African society going forward.
“Bringing more black South Africans into wealth is a vital part of the country’s future prosperity,” he said.