World Trade - April 2009 - (Page 44) REGION: SOUTH AFRICA Striking Gold in South Africa While mining and minerals remain one of the top industries, other sectors too are proving a treasure trove for U.S. companies. BY LARA L. SOWINSKI S outh Africa’s ranking as a leading producer of precious metals such as gold and platinum as well as diamonds has long been the backbone of the country’s economy. And while mining and minerals remain a top industry, numerous other sectors are gaining prominence, which translates to a wealth of opportunity for U.S. companies. According to Craig Allen, Senior Commercial Officer with the U.S. Commercial Service in Johannesburg, South Africa, there is substantial investment from the U.S. in South Africa and approximately 700 companies have a presence in the country. “The automotive sector is very big—Ford, GM, Chrysler—they’re all here,” he says. November’s trade statistics revealed just how important the sector is, as automotive (cars and parts) emerged as the number one export sector to the U.S., particularly for BMW and Mercedes, which exports South African-made cars to the left-hand drive market, especially the U.S. The IT sector is also making sizeable strides. A recent study commissioned by Cisco Systems and conducted by South African research firm World Wide Worx found that the country’s Internet user base experienced its highest rate of growth last year since 2001, increasing 12.5 percent to 4.5 million users. Perhaps even more important, a new undersea fiber-optic cable, which will become operational later this year, will increase South Africa’s international bandwidth forty-fold and dramatically change the Internet landscape throughout the country. Meanwhile, the country’s customs agency, infrastructure, currency, and participation in major trade blocs, makes it easy for U.S. companies to trade goods and services. The Southern Africa Customs Union (SACU), established in 1910, is the oldest customs union in the world. Member nations include Botswana, Lesotho, Namibia, South Africa, and Swaziland. “It’s essentially a single market,” explains Allen, who also stresses that the infrastructure is very good throughout SACU, as Botswana and Namibia are fairly wealthy countries. Navigating SACU, and South Africa in particular, is perhaps easier than newcomers to the market might expect. And, Allen is quick to dispel myths about South Africa’s capabilities. “I think people underestimate the service and trade facilitation industries here, whether it’s marketing or banking, logistics, warehousing, and even retail. These industries are superb and efficient, although not always inexpensive,” acknowledges Allen. Moving product by ocean typically takes about one month door-to-door from the U.S., while airfreight averages about one week. “We don’t have dedicated air freighters coming into South Africa yet, most of it’s belly cargo. But on the ocean side, there’s quite a bit of traffic coming into Africa from the U.S. East Coast and Gulf ports. At the same time, all the major express companies (UPS, FedEx, DHL, TNT) have a significant presence in South Africa and are growing rapidly throughout the region.” Allen is optimistic about South Africa’s future role in the global trade arena, despite the current challenges. Aside from SACU, South Africa is also a member of the 15-nation Southern African Development Community (SADC). Allen says that this trade bloc hasn’t been quite as effective as most people had General Motors Corporation 44 WORLD TRADE APRIL 2009
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