EU-based companies eye SADC investment opportunities
Some major multinational conglomerates of the European Union (EU) are looking to invest in southern Africa as there will be increasing growth and investment opportunities in the foreseeable future, according to Stefan Sakoschek, regional director of the European Chamber of Commerce and Industry in Southern Africa.
Sakoschek was one of the keynote speakers at the Limpopo International Investment Conference in Carousel, Hammanskraal, outside Pretoria. He saud that the EU was the Southern African Development Community’s (SADC) largest trading partner, and it sees Africa as an important investment opportunity, being home to seven of the world’s top 10 growing economies in 2015.
According to UN estimates, the region’s GDP is expected to grow by 30% in the next five years, and in the next 35 years, the continent will account for more than half of the world’s population growth.
“There is competition for foreign direct investment in South Africa. Most EU companies are looking for investment opportunities in southern Africa because there will be growth in the SADC,” Sakoschek told investors attending the conference, which included British, Dutch and French representatives.
“Limpopo has more potential for growth in the region than any [other] province. We appreciate the efforts of Limpopo Economic Development Agency in organising the investment conference and giving us an opportunity to tell our own story about investment in southern Africa. We will assist entrepreneurs in Limpopo to get funding for their projects and equipment, including [advice on] how to invest in the export and import business in the region.
“We have BMW and Renault here. Europe is committed to Limpopo, South Africa and the entire SADC region … building good relations between the southern African region and the EU is key for us. We have to control our imports before we can industrialise South Africa and we want local suppliers to work with and interact with government in order to invest and do business in South Africa,” said Sakoschek.
The EU Chamber of Commerce and Industry of Southern Africa is a member-driven, non-profit, fee-based organisation representing European businesses in Southern Africa. It was established in May 2015, after 24 months of consultation, and is the voice of 80% of foreign direct investments in South Africa, representing 2 000 companies and 500 000 employees.
Members of the chamber include multinational conglomerates such as Mercedes Benz, Alstom, ThyssenKrupp, Osram, Philips, Pepperl+Fuchs, Solvay, Bureau Veritas, Bosch, Oryx, Endemol Shine, Necotrans, Johnson Matthey, G4S, and Intertek. Recognised by the European Commission, the chamber’s primary objective is to advocate for EU companies in the SADC region.
“Our role is to support EU-based companies in advocating towards an attractive investment and business climate in South Africa through policies that duly acknowledge the essential role of responsible foreign direct investment to the sustainable and inclusive growth of South Africa,” said Sakoschek.
“We are also here to bring together and co-ordinate EU member states, bilateral chambers and EU companies on jointly identified topics with a view to developing a EU-wide approach and advocacy.”
According to the chamber, the EU is the SADC Economic Partnership Agreement Group’s largest trading partner, with South Africa accounting for the largest amount of EU imports from and EU exports to the region, such as vehicles, electrical equipment, pharmaceuticals and processed food.
Trade between the EU and South Africa is governed by the Trade, Development and Co-operation Agreement between the EU and SA. Most of the Southern African Customs Union members have aligned their import regime to this trade agreement. As the main point of entry into southern Africa, Customs Union duties are mainly collected by South Africa, which then redistributes to the other members according to an agreement formula.
Diamonds constitute to the dominant share of SADC exports to the EU, while natural products from the region include beef from Botswana and fish from Namibia. South Africa’s exports to the EU range from fruit to platinum and from manufactured goods to wine; on the agricultural front, it remains the biggest trading partner.
Despite trade concerns from within the EU about Citrus Black Spot on some fruit, citrus exports from South Africa to the EU grew 22% in 2015. South Africa’s citrus industry is valued at R10-billion. So valuable is the EU as a client (accounting for about 40% of citrus fruit exports) that South Africa has, according to the recent media reports, spent close to R1-billion on solving the black spot fungus issue.
A new entrant to the export market is the GOGO Group, located in the Loskop Valley, where intensive citrus cultivation takes place. Exports will be sent to the US through the parent company EKM Exports.
The Zebediela Citrus Estate has been bought by the Bjatlhadi Community with the support of the Limpopo Economic Development Programme, and the focus has shifted from bulk supply to producing smaller, consumer-friendly quantities.
On the transportation front, the Dutch are currently looking at airport development opportunities throughout the SADC region through the Netherlands Aerospace Group. The African aircraft maintenance repair and overhaul market is valued at $2.2-billion, which is 4% of global demand. This is projected to increase to $4-billion by 2024, growing by 6.1 % per year, while the average global growth is expected to increase by just 3.8% per annum.