Why Invest In South Africa?
The South Africa of today is one of the most sophisticated and promising emerging markets globally. The unique combination of a highly developed first-world economic infrastructure and a huge emergent market economy has given rise to a strong entrepreneurial and dynamic investment environment.South Africa is the economic powerhouse of the African continent, with a Gross Domestic Product (GDP) of R1.9 trillion (US$283bn) – four times that of its Southern African neighbors, and comprising 30% of the entire GDP of Africa.
The World Economic Forum’s Global Competitiveness Report 2008/09 of the World Economic Forum, ranked South Africa 45th out of 134 global nations. South Africa’s GDP grew at a healthy 5.2 % in 2007 and a lower 3.1% in 2008, due to the impact of the global economic crisis. South Africa is one of the most sophisticated and promising emerging markets, offering a unique combination of highly-developed first world economic infrastructure, with a vibrant emerging market economy. South Africa is also one of the highest ranking developing economies and surpasses countries such as Hungary, Italy, Brazil and Thailand. The country leads the continent in industrial output (40% of Africa’s total output) and mineral production (45% of total mineral production) and generates most of Africa’s electricity (over 50%).
The Cost Of Doing Business In South Africa
The cost of doing business in South Africa compares favourably to other emerging world markets. According to an annual World Bank study, titled the Ease of Doing Business, South Africa ranks 32nd out of 181 of the economies surveyed in 2009 for ease of doing business. The country boasts the lowest electricity prices in the world and despite looming challenges in this sector, doubling its electricity price will still place the country as the cheapest provider. South Africa’s labor costs are significantly lower than those of other key emerging markets. It also has a favourable corporate tax rate compared to other emerging markets. The costs for labor, land, rental, human resources, transportation and general living expenses do, however, vary from province to province.
Financial Instructure
South Africa is one of the world’s favourite emerging markets, offering investors sophisticated financial infrastructures and exceptional investment opportunities. The South African Reserve Bank (SARB) oversees the banking services industry in South Africa. The non-banking financial services industry is governed by the Financial Service Board (FSB). South Africa has the following principle financial service markets:
- JSE Securities Exchange South Africa (JSE);
- South African Futures Exchange (Safex);
- Bond Exchange of South Africa (BESA); and
- Alternative Exchange (Altx)
The JSE is governed and licensed externally by the Stock Exchange Control Act of 1985. The Safex and BESA markets are governed by the Financial Marketers Control Act of 1989. The markets are self-regulated internally.
Transport And Logistics Infrastructure
South Africa boasts one of the most modern and extensive transport infrastructures in Africa. This infrastructure plays a crucial role in the country’s economy and is depended on by many neighboring states. The government recently announced large-scale upgrading of the country’s infrastructure, as well as investment in new infrastructure. Transnet, a state-owned enterprise, is South Africa’s main transport operator and the holding company for Spoornet (rail transport), Autonet (road transport), Petronet (liquid petroleum), Portnet (port authority) and Fast Forwards (container shipments). The national airline carrier, South African Airways (SAA), is an incorporated public company owned by the South African government. The airline serves more than 700 destinations globally and carries more than 7 million passengers a year.
What To Invest In South Africa
The easiest way to invest in the whole South African stock market is to invest in a broad market index. This can be done at low cost by using ETFs.On the South African stock market you’ll find 1 index which is tracked by ETFs.Alternatively, you may invest in indices on Africa.For an investment in the South African stock market, there is 1 index available which is tracked by 1 ETF. On the MSCI South Africa Capped index there is 1 ETF. The total expense ratio (TER) of ETFs on these indices is around 0.65% p.a.
