Investing into South Africa Investment Environment Opportunities 1

Investing into South Africa Investment Environment & Opportunities 1

South Africa at a glance • Area 1, 22 million km 2 • Population 53 m (estimate) • Head of the State: President Jacob Zuma • 11 Official languages with English the business language • Total GDP: 2014 US$ 350. 09 million) • GDP 2014 per capita: US$ 6. 086 • Real GDP Growth: 1. 3% (2015) • Inflation (CPI): 5, 23% (2015 annual average) • Main Exports; minerals & mineral products, precious metals & metal products, chemical & food products, automotives & components. • Main trading partners: China, USA, Japan Germany, India & the UK.

South Africa’s Sovereign Ratings (May 2014) Rating Agency South Africa’s Rating Standard & Poors BBB- Moody’s Baa 2 Fitch Ratings BBB- Source: Trading Economics 3

SADC Free Trade Agreement provides access to 200 Million + Consumers Future FTA with SADC, COMESA & EAC (26 countries) with a market of 700 million + Consumers 4

• Market of 600 million consumers! • South Africa already has distribution channels in most of these countries. 5

SOUTH AFRICAN ECONOMY YEAR 1994 THEN 2004 IN 2014 GDP R 482 bn US$ 60 bn R 1 374 bn US$ 171 bn R 3 800 bn US$ 350, 09 bn Merchandise exports (billions) R 69, 8 US$ 8. 7 R 281, 8 US$ 35, 2 R 988, 2 US$ 84, 3 GDP Growth 3, 2% 4, 6% 1, 5 % Source: SARB • Open economy • Sound business case for investment and profit • Gateway to Africa and markets of more than 200 Million consumers

South Africa’s leading Import Partners (2014) Import Country US Dollars Billion China 15. 5 Germany 10. 0 Saudi Arabia 7. 1 United States of America 6. 6 Nigeria 5. 1 India 4. 6 Japan 3. 8 United Kingdom 3. 3 7

South Africa’s leading Export Partners (2014) Export Country US Dollars Billion China 8. 6 United States of America 6. 4 Japan 4. 8 Botswana 4. 7 Namibia 4. 5 Germany 4. 2 India 3. 7 United Kingdom 3. 4 8

SOUTH AFRICA – A CONDUCIVE ENVIRONMENT World Economic Forum’s Global Competitiveness Index (2014/15) shows that South Africa is: • • • # 2 accountability of of private institutions # 1 in the strength of auditing and reporting standards # 3 in the efficacy of corporate boards # 3 in the protection of minority shareholders’ interests # 2 in the regulation of securities exchanges # 1 in financing through local equity market # 2 the availability of financial services # 8 in the soundness of banks # 14 in the strength of investor protection # 14 in the quality of air transport infrastructure #1 Overall highest ranking in the sub – Sahara Africa 49 th overall ranking out of 149 countries and # 3 of all the BRICS economies

Current Economic Relations • Bilateral Trade volume in 2015 was $ 1, 1 billion • Turkey’s export to South Africa totalled $ 583 million • Turkey’s imports from South Africa totalled $ 544 million • The trade balance was slightly in Turkey’s favour in 2015 10

Turkey South Africa Trade 2015 Turkish Exports to SA Turkish Imports from SA SA Export SA Import 660 700 640 600 620 500 600 400 580 300 560 540 200 520 100 500 0 2011 2012 2013 2014 2015 480 2011 2012 2013 11 2014 2015

Economic Relations: Investment • Two way flow of investment between the countries • Turkey has invested through medium and large business expansion: Growth of current business to SA or Relocation to SA, various attractive reasons • South Africa investment in Turkey, largely big company acquisition: Naspers 100% purchase of Markofoni Mondi Paper, 13 production plants in Turkey • SAB Miller 24% purchase of Efes Brewery (1, 9 Billion US $) • Met. Air purchased of Mutlu Automotive Batteries (175 million US $) 12

Economic Relations: Investment cont. • Large acquisition investments by South African companies resulted in investment imbalance toward South Africa, particularly EFES deal with SAB Miller and MUTLU Purchase • BUT Arçelik recently purchased Defy in South Africa for $ 320 - 340 million. Both brand production capacity, making South Africa Arçelik’s 2 nd biggest centre after Turkey. • DHT Consortium recently purchased Cape Iron and Steel Corporation for $ 150 million - $ 50 million incentive from SA government • This investment with some other potential investments in the pipeline may even the investment imbalance that exists.

SOUTH AFRICA- GLOBAL PERSPECTIVE 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 one of the world’s 26 industrialised nations & 27 th largest economy The country is also regarded as the gateway to Africa. South Africa has the 2 nd largest economy on the African continent, accounting for approximately 25% of the continent’s GDP. The JSE Securities Exchange is Africa’s largest and most developed Securities Exchange and one of the world’s top 20 exchanges. South African economy is the most diversified African economy

Why South Africa for FDI? • South Africa offers the returns without the high risk! • South Africa has the most diversified economy in Africa offering multiple investment opportunities to the savvy investor • That African investments tend to be in capital intensive one product economies; the energy sector in Angola and Nigeria • The FDI is mostly concentrated in the telecommunications sector in 2014. • The country is the third largest in capital FDI recipient in Africa, after Nigeria and Mozambique, and the largest FDI provider. • Globally, South Africa ranks 15 th among the most attractive economies for transnational companies for 2013 -2014

Why South Africa for FDI? 16

South Africa’s FDI Composition 17

INVESTMENT INCENTIVES * These are a few possible options on incentives; more options can be found at www. dti. gov. za or the Embassy

New Policy Instruments to Attract Investment SPECIAL ECONOMIC ZONES: 1. Industrial Development Zones (considered as part of the Customs Territory of South Africa) ORT 2. Free Port Customs Territory of South Africa 3. . Free Trade Port RCB 4. Sector Specific Zones SB Customs Services Secured Enterprises Area Industry & Service Area One Stop Center EL Coega IDZ

SOUTH AFRICA’S INVESTMENT ENVIRONMENT Abundant natural resources Excellent transport & logistical infrastructure Political & economic stability with sound macro-economic management Competitive sectors/industries World class Skills financial availability South Africa today is one of the most sophisticated and promising emerging system markets globally, mainly because of … Favourable cost of doing business

Sector Information Finance to explore investment opportunities in SA Facilitating direct Government support in the form of: - information on investing in SA and the Business Environment - detailed investment Incentives - investment facilitation - after care – ongoing contact Contact Details • • • SOUTH AFRICAN INVESTMENT SERVICES South African Embassy: 0312 405 6861 Economic Office: 0312 405 6863 Website: www. southafrica. org. tr / www. thedti. gov. za E-mail: passmoorj@dirco. gov. za / onacaks@dirco. gov. za Postal Address: Filistin Sokak, 27 GOP, Cankaya Ankara 06700

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