Mining, energy, and agriculture are the three most important economic sectors.
The best export prospects in South Africa are in capital goods, while chances exist in a wide range of consumer products, services, and franchising.
South African SOEs such as Eskom (electricity) and Transnet (transportation) have formalized capital investment plans totaling more than R685.5 billion since 2014. However, some major projects are being reviewed due to concerns about good governance, financial viability, and the administration’s radical shift in direction since President Cyril Ramaphosa took office in February 2018 to reduce high national debt levels, which have been exacerbated by the Covid-19 pandemic.
However, the following projects remain promising:
Energy from Renewable Resources
Supplies and equipment for the oil and gas industry
Infrastructure for Transportation
Pollution Control Technology
Healthcare Services and Medical Equipment
Information Technology and Telecommunications
Commodities from Agriculture
South Africa has one of Africa’s most advanced and diverse economies. It is an appealing business destination due to its booming market and accommodating business environment, with a population of about 60 million people. South Africa also acts as a gateway to other southern African countries.
South Africa has a market-oriented agricultural sector that produces all major cereals (excluding rice), oilseeds, deciduous and subtropical fruits, sugar, citrus, wine, and the majority of vegetables. Cattle, dairy, hogs, sheep, and a well-developed poultry and egg business are all examples of livestock production. Slaughtering, processing, and preserving of meat; processing and preserving of fruits and vegetables; dairy products; grain mill products; crushing of oilseeds; prepared animal feeds; sugar refining and cocoa, chocolate, and sugar confectionery, among other food products, are value-added activities in the sector.
In FY2020, the agriculture industry generated around 10% of overall export revenues to South Africa, totaling $10.2 billion. Citrus, wine, table grapes, corn, and apples were the most valuable exports. To mention a few, South Africa exports wool, nuts, sugar, mohair, and pears.
Mining now accounts for approximately 8% of South Africa’s GDP, down from a high of 20% in the early 1990s. For more than two decades, the industry has been declining due to structural issues such as: 1) the need for policy certainty; 2) clarity on environmental issues such as the carbon tax; 3) the regulatory framework; 4) infrastructure issues such as electricity, ports, and railroads; and 5) security concerns. However, production and sales increased year on year in the first quarter of 2021, mainly to strong demand from global commodity markets. The Department of Mineral Resources and Energy (DMRE) is working to encourage exploration by streamlining the licensing regime in order to address a backlog of 5,000 exploration license applications, with the goal of increasing South Africa’s share of global exploration dollars from one to five percent in five years. On June 1, the DMRE released an RFP for a new online mining system to record mining rights applications.
Mintek, South Africa’s national mineral research institution, is looking for foreign government and private sector investment to help support the development of key minerals processing infrastructure and clean technologies. The most promising suggestions revolve around the creation of a processing facility for rare earth elements (REE) supplied from all over Southern Africa, the manufacture of high-grade battery materials, and the establishment of a hydrogen fuel cell manufacturing business. South Africa already supplies significant quantities of nine of the 35 critical minerals identified by the United States Secretary of the Interior as key components of “economically significant applications” in the United States, and the country holds 91 percent of the world’s reserves of platinum group metals (PGMs), which are essential in the manufacture of hydrogen fuel cells.
Energy
The South African economy has been plagued by load shedding (the local word for rolling blackouts), which has harmed local manufacturing and economic growth. To address this long-standing issue, Mineral Resources and Energy Minister Gwede Mantashe announced plans for a new round of power-generation procurement in September 2020, with the goal of securing 11,813 MW of additional capacity.
Current Situation: Coal-fired power plants generate around 85 percent of South Africa’s electricity, or 42,000 MW. Despite environmental concerns, coal will continue to provide the majority of South Africa’s power for the next decade, however renewables will rapidly increase their proportion. South Africa is the 14th-largest producer of greenhouse gases in the world and is working to improve its environmental performance. According to The Economist’s March 2021 report, after a significant drop in 2020 due to the coronavirus (Covid-19) pandemic, energy consumption is predicted to recover, with an average annual rate of growth of 0.3 percent for the forecast period (2021-30). The slow pace of increase will reflect gains in energy efficiency as well as the South African economy’s sustained slow growth.
State-Owned Utility: Eskom, South Africa’s vertically integrated state-owned power utility, generates around 95 percent of the electricity utilized in the country, as well as a significant portion of the electricity generated on the African continent.
What is South Africa known for producing?
South Africa’s agricultural industry is extraordinarily diverse, producing all major cereals (excluding rice), oil seeds, deciduous and subtropical fruits, sugar, citrus, wine, the majority of vegetables, cattle, dairy, pigs, sheep, broilers, ostriches, and eggs.
What is Africa’s most important industry?
Agriculture has always been a dominant industry in Africa.
