CAREER INDABA MAGAZINE
OVERVIEW The U.S. construction equipment sector exports to South Africa from 2011 to 2015 were over 600 percent higher than the next largest African market, Egypt (this sector includes construction, earthmoving, and mining equipment). Overall, regional sector Africa growth since 2013 was relatively flat; regional export performance, however, mirrored overall global developments and have declined sharply since 2015. The challenges in the mining industry, such as high input costs, environmental, health and safety regulations, a fluctuating exchange rate, and logistic inefficiencies have been partially offset in 2020 by the recovery in commodity prices, most notably Platinum Group Metals (PGM) The structural malaise in the mining sector has been aggravated by uncertainty regarding Government intentions on mining rights, and investors remain cautious. However, it is a major supplier of Platinum Group Metals (PGM), coal, iron, manganese, chrome, and nickel. It also has certain Rare Earth Element (REE) deposits and related specialty refining infrastructure. Sub-Sector Best Prospects The South African mining industry is well-developed and sophisticated. Many local equipment and service providers as well as organized events exist to facilitate the distribution of goods or services into the African continent. South Africa remains an important steppingstone to develop that area. U.S. goods and services in the following fields are well represented in South Africa: Software Furnaces Drill Rigs Automation Mining Processing GIS Mapping Communications Systems Materials Extraction and Handling Technology Opportunities Mining and related projects have traditionally been responsible for significant infrastructure development. For example, 2,200 miles of railway line, three new ports and a large amount of bulk handling infrastructure at other ports remain in planning stages of both the South African Government and mining consortia. Increasing the efficiency of material handling systems is high on the agenda of exporters of ores and minerals. Mining contributes about eight percent to the gross domestic product (GDP) of South Africa from a high of 20 percent in the early 1990’s. The industry has been in decline for more than two decades due to structural issues, including: 1) the need for policy certainty; 2) clarity on environmental issues such as the carbon tax; 3) the regulatory framework; 4) infrastructure issues including electricity, ports, and railroads; and 5) security issues. Production and sales in the first quarter of 2021 showed year-on-year growth however, thanks to strong demand from world commodity markets. The Department of Mineral Resources and Energy (DMRE) is working to spur exploration by streamlining the licensing regime to address a backlog of 5,000 exploration license applications in an effort grow South Africa’s share of global exploration dollars from one to five percent in five years. The DMRE issued an RFP for on June 1 for a new online mining system to register mining rights applications. South Africa’s national mineral research organization Mintek is seeking foreign government and private sector investment to help fund the creation of critical minerals processing infrastructure and the development of clean technologies. The most promising proposals center around the development of a processing facility for rare earth elements (REE) sourced from across the Southern Africa region, the production of high-grade battery materials, and the development of a hydrogen fuel cell manufacturing industry. South Africa already provides significant quantities of nine of the 35 critical minerals the U.S. Secretary of the Interior identified 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 vital in hydrogen fuel cell manufacturing Recent mining infrastructure plans include: Saldanha Bay iron and steel ore bulk export hub. Coega Port infrastructure development focused on the creation of a dedicated rail line for the export of manganese from the Northern Cape and the creation of a chorine plant. Further enhanced bulk material handling systems at the port of Richards Bay. Resources Mining Weekly Publication Minerals Council South Africa Exhibitions Mining Indaba 2022 Africa Mining Investment Conference and Exhibition February 2022 CTICC, Cape Town www.miningindaba.com
OVERVIEW In 2020, the broader South African automotive industry’s contribution to the gross domestic product (GDP) stood at 4,9% (2,8% manufacturing and 2,1% retail), down from 6,4% in 2019, reflecting the severe impact of COVID-19 on automotive manufacturing and retail because of the country’s lockdown restrictions during the year. As the largest manufacturing sector in the country’s economy, a substantial 18,7% of value-addition within the domestic manufacturing output was derived from vehicle and automotive component manufacturing activity, continuing to position the industry and its broader value chain as a key player within South Africa’s industrialization landscape. South Africa’s global vehicle production ranking is 22nd with a 0.58% vehicle production market share. The South African automotive industry’s growth strategies have been focused on becoming highly integrated into the global automotive environment on the back of increased foreign direct investment and trade. Under the South African Automotive Masterplan (SAAM) 2021-2035, the objective is to produce 1% of global vehicle production, or 1,4 million vehicles, per annum in South Africa by 2035 which will substantially improve the country’s status and global vehicle production ranking. The automotive industry therefore represents an increasingly important strategic and catalytic role in the overall South African economy by impacting directly on many important economic policy goals, such as contribution to GDP, employment, skills development, economic linkages, technology, and innovation. The South African automotive industry incorporates the manufacture, distribution, servicing, and maintenance of motor vehicles and components. Original equipment manufacturers (OEMs), official dealers, and repair specialists work closely together to provide maintenance and repair services. They cooperate to ensure warranty service, driver safety, environmental protection, spare parts availability, and information about technical improvements. Automotive Policy The Automotive Production Development Program (APDP) replaced the export-oriented Motor Industry Development Program in 2013 with the aim of stimulating local production of automotive components while maintaining the incentives for OEMs to manufacture passenger cars and light commercial vehicles in the country for export and the local market. One of the attractions of South Africa’s automotive policy over the past two decades has been its long-term vision and consistency. The APDP has reinforced policy certainty, which is critical for the industry to make long-term investment decisions. The APDP’s focus is on raising local value addition to enhance the automotive industry’s manufacturing output and export competitiveness. The automotive sector relies heavily on the additional economies of scale provided by exports and competitiveness is critical to its success. The growth in variety of vehicles in South Africa is a direct result of government’s automotive policy regime whereby manufacturers earn duty credits with which they can cost-effectively import other low volume models not manufactured in the country. Imports of automotive products into South Africa remain a function of the success of the APDP, domestic market demand, and currency movements. Under the APDP, the level of imports remains a function of the success of the program, as the benefits can only be used to rebate the import duties on vehicles and eligible automotive components that are imported. Imports of vehicles to complement the domestic market mix, imports of original equipment components not sourced in South Africa, as well as replacement parts imports for a vehicle parc of 12,70 million vehicles at the end of 2020, remained high. Market Trends The global pandemic rocked the world to its very foundations, and ultimately there are no easy solutions to reigniting COVID-19 affected economies, with South Africa no exception to this. The economic scars of the crisis are profound, and the South African economy experienced its deepest economic contraction in a century, with the country’s GDP slumping to -7,0% in 2020. It seems indisputable that the first and further waves of the pandemic, the country’s lockdown restrictions, and whatever will come after that will have a lasting and devastating impact on South Africa’s economy and its automotive industry. What promised to be a high point for the domestic automotive industry in 2020, with the APDP reaching the peak of its eight-year path, was annihilated by the global pandemic. COVID-19 has also resulted in the postponement of the South African automotive industry’s journey to 2035 under the South African Automotive Masterplan (SAAM) by six months, from 1 January 2021 to 1 July 2021. Much of the South African automotive industry’s recovery will depend on the recovery of its main trading partners and the pace at which the lockdown measures are phased out, considering that well over 60% of the country’s vehicle production is exported. In 2020, passenger car imports comprised 75,7%, and light commercial vehicles 15,3% of total light vehicles sold in South Africa. The country’s consumers benefit from access to a wide variety of new models and a highly competitive pricing environment as new vehicle demand in the country is met by a range of imported and domestically manufactured vehicles. Top five countries (in order of import value) of origin for vehicles and automotive component imports into South Africa include: Germany, Thailand, Japan, China, and the USA. The countries of origin for vehicles and automotive components imported into South Africa generally reflect the global linkages with the head offices of parent companies. The notable exceptions amongst the top countries of origin in 2020 were Thailand, where over 80% of imports comprised original equipment components for light commercial vehicles, and China, where over 70% of the imports comprised aftermarket parts. Several top U.S automotive component suppliers are represented in South Africa, including Johnson Controls, Lear, TRW Automotive, Tenneco, Federal Mogul, Delphi, Visteon, and ArvinMeritor, amongst others. All these companies have built strong business links between their South African operations and other international stakeholders. These established business links enhance the potential for mutually beneficial trade between the United States of America and South Africa. Aftermarket The independent aftermarket is responsible for the manufacturing and sales of automotive replacement parts and accessories through independent retailers and repair shops directly to the consumer, rather than to the OEMs themselves. The aftermarket also re-manufactures, distributes, retails, and installs motor vehicle parts and products, other than the original equipment components. The
Overview Pre-Covid-19, the number of South African students studying in the United States increased to 2040 students, placing South Africa 5th in the continent in terms of students studying in the U.S. With 17 percent of the total South African population aged between 17- 24 there is significant potential to increase this number The South African education system is divided as follows: Pre-high school (# of years): 07 (Grade R to Grade 6) High school (# of years): 06 Lower secondary (also known as the “senior phase”) lasts through grade 9 and is mandatory. Students typically begin lower secondary at age 12 or 13. The curriculum for lower secondary school includes the home language, an additional language, mathematics, natural science, social science, technology, economic and management sciences, life orientation, and arts and culture. Students receive 27.5 hours of classroom instruction per week. Upper secondary, also known as further education and training (FET), lasts through grade 12, and is not compulsory. Entry into this phase requires an official record of completion of grade nine. Just as in the intermediate and senior phases, this phase comprises 27.5 classroom hours per week. The Academic year calendar runs from mid-January to early-December. Traditionally the recommended times for U.S. educational institutions to visit are May, July (Private Schools), August (Public Schools), and September. Market Trends The top five receiving states for South African students are New York, California, Massachusetts, Texas, and Pennsylvania. Students in the U.S. by Academic Level Number percent / Change 2017- 2018 Undergraduate – 1156 / +10.6 percent Graduate – 550 / +6 percent Non – Degree – 334 / +13.1 percent Optional Practical Training / -9.1 percent Students in U.S. by U.S. Institution Type / percent Undergraduates in 4 – year institutions / 87 percent Undergraduates in 2 – year institutions / 13 percent Public Institute vs Private Institute 50 percent / 50 percent Resources Universities South Africa (www.universitiessa.ac.za) Council on Higher Education (www.che.ac.za) South African Department of Education (www.education.gov.za) The International Education Association of South Africa [IEASA] (www.ieasa.studysa.co.za) The United States – South Africa Higher Education Network (www.ussahighereducationnetwork.org) For More Information, the U.S. Commercial Service, South Africa, can be contacted via email: Sanjay.Harryparshad@trade.gov, Phone: +27 (0)31 305 7600 X3150, or visit our website at https://www.trade.gov/south-africa/.
Overview Saddled with a triple disease burden – communicable (HIV/AIDS, TB), rising non-communicable (diabetes, cardiovascular disease, hypertension, cancer), and trauma (interpersonal violence, such as gunshot- and stab wounds) – South Africa’s healthcare operates under two systems: the public system, which caters to around 85 percent of the population, constituting roughly 48 percent of total healthcare expenditure with funding from the state (approximately nine percent of GDP); and private healthcare, which looks after 15 percent of the population who can afford medical insurance. Both sectors offer a range of services from primary to more specialized healthcare, but more advanced, high-tech products and elective procedures are more commonly found in the private sector. South Africa is moving toward universal healthcare through a proposed National Health Insurance (NHI) scheme. Through NHI, the government will likely become the main procurer of health goods and services, as well as investing in the public healthcare system to improve infrastructure and access. NHI is being phased in with full implementation envisaged by 2026, but this will depend on funding and political will, among other constraints. The COVID pandemic will also have an impact on a timely NHI roll-out. The healthcare market in South Africa is highly complex and fragmented in terms of real purchasing power. Entry usually requires appointing a reputable and experienced distributor. The public sector is the biggest purchaser of healthcare equipment and supplies, particularly for primary healthcare. Purchasing is devolved to each of the nine provinces that in turn publish their own tender notices, but the National Department of Health also issues tenders for national supply. Severe funding constraints make it difficult for public hospitals to maintain or purchase equipment. For now, the best prospects for advanced technology and equipment remain in the private sector. Hospitals in this sector are dominated by the big four hospital groups – Netcare Limited, Life Healthcare Group, Mediclinic Southern Africa, and the National Hospital Network. There are also a number of independent private hospitals. Around 78 medical schemes are in play in South Africa, 20 of which are open and the rest restricted. Discovery Health remains the largest open medical aid scheme, with an estimated 1.342 million members and 2.795 million beneficiaries (Council for Medical Schemes 2019/2020). All healthcare-related products must be registered with and evaluated by the South African Health Products Regulatory Authority (SAHPRA). All entities involved in the manufacture, distribution, import and export of healthcare products must be licensed by SAHPRA. Only authorized representatives resident in South Africa may apply for registration of products with SAHPRA. South Africa remains the largest pharmaceutical market in Sub-Saharan Africa. Total pharmaceutical expenditure was estimated to be $4.1 billion in 2019 and $3.6 billion in 2020 (2019, Fitch Solutions). Its prescription drug market is valued at approximately $3.0 billion (2019, Fitch Solutions), which equates to 88.7 percent of the total market in value terms but will drop in value due to prevailing market conditions. Should the National Health Insurance plan materialize, there could be rising demand for prescription generic drugs, improved healthcare infrastructure and access, as well as increased local pharmaceutical production of generics. Demand and spend in this sector, particularly as it relates to high value medicines, will likely be tempered, or entirely impeded by the economic recession and COVID-19 pandemic. There will continue to be emphasis placed on HIV/AIDS and TB treatment but over the long-term focus will also shift towards rising chronic disease burden – diabetes, cardiovascular disease, hypertension, and cancer treatments. The market for innovator/patented drugs is estimated at around $1.7 billion (2019, Fitch Solutions), equating to 51 percent of pharmaceutical sales and around 58 percent of prescription drug sales. Growth in this sector will be slower due to the associated high costs. Most innovator drugs are imported with main supply from India, Germany, United States, and France. Generic drugs, valued at $1.3 billion (2019, Fitch Solutions), are likely to see strong growth, both in terms of volume and spend, due to high demand and purchasing preferences (public sector), but also because of increased local production driven by government incentives and policies favoring local content. Over-the-counter-medicines represent the smallest segment of the market ($378 million). This segment is extremely competitive and much of it is driven by local production. South Africa does not produce any Active Pharmaceutical Ingredients (APIs). All medicines, regardless of category (including dietary supplements), are subject to registration and evaluation by the South African Health Products Regulatory Authority (SAHPRA) which is guided by the Medicines And Related Substances Act, 1965: https://www.sahpra.org.za/wp-content/uploads/2020/02/Government_Gazette_Medicines_and_Devices_Act_Jun_2017-1.pdf . Labeling compliance is also addressed in the Act. One of the outcomes of the COVID-19 pandemic and the resulting shortfall in vaccines for Africa is the recognition that South Africa needs to develop its own production hub to manufacture vaccines to mitigate the supply challenges posed by future pandemics. In mid-2021, the WHO announced that it is setting up an mRNA site in South Africa, which will produce COVID vaccines for the region. Digital Health The South African government has indicated that digital healthcare technologies will form an integral part of NHI in that it will strengthen healthcare systems, provide better access for patients, and improve health outcomes. To this end, they have published a National Digital Health Strategy for South Africa 2019-2024, prioritizing The development of a complete electronic record for patients (some form of this already exists) Digitization of healthcare systems business processes An integrated platform and architecture (open source/open architecture) for health sector information to ensure interoperability of existing patient-based information systems Growing health to promote coverage for target population groups. Developing and growing digital health knowledge for implementers and users High data costs, low connectivity density and inadequate ICT infrastructure will need to improve significantly for the successful implementation of the strategy. Adequate funding for this initiative will be key to its proper and timely implementation. Due to the high number of mobile phones, and increasingly, smart phones, several health initiatives, like MomConnect at http://www.health.gov.za/momconnect/ – a public/private partnership, have proven very successful. Opportunities The underdeveloped market offers
Overview Government Intervention: The South African economy has been experiencing frequent bouts of load shedding (the local term for rolling blackouts) which has negatively impacted local industry and economic growth. To tackle this long-standing problem, Mineral Resources and Energy Minister, Gwede Mantashe, outlined plans in September 2020 for a new phase of power-generation procurement, to secure 11,813 MW of extra capacity. However, as the first additional power is unlikely to come on stream until mid-2022, further load-shedding will be required in the short term. President Ramaphosa in a surprise move announced on June 10 the easing of licensing regulations for self-generation of electricity from 1 Megawatt (MW) to 100 MW potentially releasing as much as 5,000 MW or more of renewable energy onto the grid by 2024. The new regulations will come into force in August 2021. Current Status: In South Africa, approximately 85 percent or 42,000 MW, of the nation’s electricity is generated via coal-fired power stations. Despite environmental concerns, coal will continue to provide the majority of South Africa’s power for the next decade, although the share from renewables will grow rapidly. South Africa is the world’s 14th-largest emitter of greenhouse gases and seeks to improve its poor environmental performance. After a sharp fall in 2020 because of the coronavirus (Covid-19) pandemic, energy consumption is expected to recover, with an average annual rate of growth of 0.3 percent over the forecast period (2021-30) according to The Economist’s report in March 2021. The modest pace of expansion will reflect improvements in energy efficiency, as well as continued sluggish growth in the South African economy. State Owned Utility: Eskom, the vertically integrated, state-owned power company, generates approximately 95 percent of electricity used in South Africa, as well as a substantial share of the electricity generated on the African continent. It sells to Botswana, Lesotho, Mozambique, Namibia, eSwatini Zimbabwe. South Africa has an electrification rate that is amongst the highest on the continent, with rural electrification around 66 percent, while electrification in urban areas is approximately 93 percent. Government Intervention: The South African government announced plans to unbundle Eskom into three separate entities responsible for generation, transmission, and distribution. This move was prompted by an urgent need to address the utility’s significant debt levels, which was reported in to have reached ZAR380bn ($26.bn). REIPPPP: Despite Eskom’s debt challenges, South Africa operates a highly successful, Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) for utility-scale transactions. Further, South Africa’s rooftop solar photovoltaic (PV) market has seen significant growth over the past several years with an installed capacity potentially as high as 250 MW. South Africa Integrated Resource Plan (IRP) Policy: The South African Government’s National Development Plan (NDP) is the blueprint for infrastructure development to 2030. The NDP lays out a framework for future power generation in South Africa, while energy policies in South Africa are driven primarily by the Department of Mineral Resources and Energy’s (DMRE) Integrated Resource Plan (IRP). The IRP is DMRE’s estimate of electricity demand growth and what energy generation types should be procured to meet that demand, along with the generation capacity, timing, and cost. The IRP is an electricity infrastructure development plan based on least-cost electricity supply and demand balance, taking into account security of supply and the environment (minimize negative emissions and water usage). After several delays, the Minister of Mineral Resources and Energy finally signed the Integrated Resource Plan (IRP) on October 17, 2019. It covers the period until 2030. The IRP envisages a total addition to electricity capacity of 29,500 MW by 2030, led by renewables (notably 14,400 MW from wind and 6,000 MW from solar photovoltaic). Policy Direction: As a result, the government announced a procurement package in September 2020, which represents a major acceleration of the goals set out in South Africa’s latest Integrated Resource Plan. This was government’s way of trying to respond to the problem of persistent electricity shortages in the country by announcing a new phase of power-generation procurement totalling a projected 11,813 MW. The bulk of the new capacity will be distributed as follows: Renewables (6,800 MW) Gas (3,000 MW) Coal (1,500 MW) Pumped storage (513 MW) All projects will be undertaken by independent power producers (IPPs), with output being sold to Eskom. Ambitiously, the authorities aim for the new capacity to be in place by 2022. Coal Status Update: Coal has traditionally dominated the energy supply sector in South Africa. Presently, about 77 percent of South Africa’s primary energy needs are provided by coal. Over the course of the past decade, Eskom has been developing two new coal-fired power plants, the Medupi and Kusile power stations, both supplying approximately 4,800 MW for a combined capacity of more than 9 GW. Eskom announced on August 2, 2021 the Medupi power plant was finally completed while portions of Kusile remain under construction. The IRP plans to decommission just over 10,000 MW of coal fired power plants by 2030 and replace them with a mixture of renewables and gas. Legal Issues: It was reported in March 2021 that unit 3 of the 4.8GW Kusile coal power plant had started commercial operations, after undergoing various tests and optimization procedures since first being completed in April 2019. The government has also stated that the Kusile power plant is expected to be online by 2023. In December 2020, the Pretoria High Court overturned the environmental approval of the planned 1.2GW Thabametsi coal-fired power plant after successful appeals by environmental groups. This follows arguments that the power plant would have been one of the most polluting power stations in the world. At the same time, the environmental groups are also lobbying for the planned Khanyisa coal power project to also be cancelled. This poses a downside risk for future thermal power projects planned for South Africa. Emissions: South African state-owned utility, Eskom, stated in November 2020 that it was planning to reach carbon neutrality by 2050. This is planned under its Just Energy Transition program, with the aim of moving away from coal power.
Overview This section will cover the agricultural equipment space as well as agricultural commodities. South Africa’s agricultural sector is one of the world’s most diverse, consisting of corporate and private intensive and extensive crop farming systems, including vegetable, fruit, nuts and grain production. The well-developed commercial farming in South Africa is the backbone to the country’s agricultural economy. South African climate ranges from subtropical to Mediterranean, allowing for a multitude of farming opportunities. The country’s biodiversity ensures that products such as grains, fruit and wine are exported and preferred for its exceptional quality. There is a growing demand to improve subsistence farming or informal small scale farming in South Africa. Compared to the rest of Africa, South Africa has by far the most modern, productive and diverse agricultural economy. South Africa has a well-developed agricultural sector, which will stand the country in good stead in the face of continuing uncertainty both economically and in terms of the weather. There are many factors impacting on the industry – including credit ratings downgrade, land reform concerns, volatile exchange rate, ongoing weather concerns and the latest Covid-19 pandemic. There are approximately 32,000 commercial farmers in South Africa, of which between 5,000 and 7,000 produce approximately 80% of agricultural output. Forecasts show that the country’s economic growth will remain under pressure, as consumers continue to tighten their belts because of a contracted economy and higher inflation over the last year. Investment in agriculture is widely recognized as a key precondition in achieving goals related to improving food security, creating jobs, creating wealth, and thereby reducing poverty. There are still notable headwinds moving into 2020 that can affect the farming sector. Weak global growth, domestic in-put costs, aftermath of Covid-19 and policy uncertainty could impact the economy negatively and lead to unintended consequences. As the agricultural sector is largely export driven, it is hedged against the negative impact of a major credit downgrade, but farmers are susceptible to higher borrowing costs, depressed local demand and foreign animal and plant health import approvals. Sub-Sector Best Prospects The best prospects for U.S. suppliers, in South Africa and the region, are: Tractors Combine Harvesters Balers Planters Precision Agriculture Equipment and Technologies Sprayers Irrigation Storage Soil Testing Equipment Spare Parts and Service Facilities Opportunities Despite the current economic downturn, farmers appear to be upbeat about current agriculture conditions. Sporadic rains and prevalent dry weather conditions are a concern issue and present opportunities for no till planting equipment. Companies and farmers have indicated a strong interest in soil sampling equipment. The integration of digital technology into agriculture presents a major opportunity for Sub-Saharan Africa. The emergence of the mobile phone as a popular communication tool, coupled with internet-based solutions, could significantly boost access to financing for agricultural inputs across the value chain. Digitalization, as well as the effective use of fertilizer and seeds, will become increasingly important in unlocking agriculture prospects in Africa. Trending technologies in agriculture include data management, machine learning, artificial intelligence, automation and drone-based applications. Production research and technology, which South Africa needs to invest in, is an area of opportunity for growth in agriculture and in alleviating the vulnerability of crops and livestock. There are very few barriers to bringing new equipment to the South African market. Equipment like planters, sprayers, and tilling equipment enter duty free, provided the exact same product is not manufactured in this market. Most of the precision agriculture equipment such as planters, self-propelled sprayers, and combine harvesters are imported from South America, Europe, and the United States; smaller implements are purchased locally. Known U.S. brands such as Massey Ferguson, John Deere, New Holland, AGCO, and Case IH are well-entrenched and well-known for their quality in this market. South Africa is the platform for “regional expansion,” with excellent opportunities for U.S. business in neighbouring countries such as Zambia, Zimbabwe, Angola, Mozambique and Botswana. Second-hand tractors and equipment are also well-received in these regional markets. South Africa hosts the largest agricultural equipment show on the continent called NAMPO Harvest Day. This outdoor show takes place in May each year and provides an excellent opportunity for U.S. firms to exhibit their equipment and technology. Trade Barriers A lack of direction on land reform is one the issues that farmers are watching closely. The debate on “land expropriation without compensation” has created considerable policy uncertainty and farmers and potential investors are concerned about the protection of private property rights, thus negatively impacting investor confidence. All import and export commercial transactions require commodities on custom declarations to be classified according to an appropriate tariff heading. The tariff classification code is directly linked to the rate of duty payable on that commodity. Classification operates as part of the international Harmonized Commodity and Coding System, under the World Customs Organization (WCO) Harmonized System Convention. Importation of all second-hand goods is subject to import control and an import permit is required. The agricultural sector is in a precarious situation due to its backward and forward linkages with other sectors in the economy. Thus, the South African agricultural sector will suffer from the so-called contagious effect in that what happens to other sectors of the economy will have a bearing on the agricultural sector as a result of Covid-19. Web Resources Exhibitions and Conferences Show: NAMPO Harvest Day Focus: Largest Agriculture Machinery and equipment show in the Southern Hemisphere. Dates: May 11–14, 2021 Venue: Bothaville, Free State, South Africa South African Agricultural Machinery Association (SAAMA) Website: http://www.saama.co.za/
South African IT sector. South Africa has one of the largest information and communications technology (ICT) markets in Africa. It shows technological leadership in the mobile software field, security software as well as electronic banking services. As an increasingly important contributor to South Africa’s GDP, the country’s ICT and electronics sector is both sophisticated and developing. Several international corporates operate subsidiaries from South Africa, including IBM, Unisys, Microsoft, Intel, Systems Application Protocol (SAP), Dell, Novell, and Compaq. It is seen as a regional hub and a supply base for neighboring countries. South Africa’s ICT products and services industry is penetrating the fast-growing African market. South African companies and locally based subsidiaries of international companies have supplied most of the new fixed and wireless telecoms networks established across the continent in recent years. Public Sector. Although the public sector is normally the largest player when it comes to IT spending, the short term sees the expenditure reducing to counteract the increasing debt from the economic downturn and the COVID 19 pandemic. The South African Government’s budget in this sector focuses on key interventions to increase the usage of ICT to facilitate socio-economic justice and inclusion, improve competitiveness and prepare for the 4th / Digital Industrial Revolution. The State Information Technology Agency (SITA) manages the public sector tenders; all IT related procurement should go through this agency. South African Skills Development Program. The Government, via its programs and agencies will embark on an extensive skills development program aimed at training one million young people by 2030 in Robotics, Artificial Intelligence, Coding, Cloud computing and Networking. South Africa has a data protection law called the Protection of Personal Information (POPI) Act that prohibits the transfer of personal information to a third party who is in a foreign country unless such transfer complies with specific guidance outlined in the Act. POPI legislation provided for an Information Regulator (IR), established in 2018, which will investigate and adjudicate complaints of privacy violations on an ad hoc, case-by-case basis. The IR is charged with regulating the protection of digital personal information. The POPI Act came into full effect on July 1, 2021. Private Sector. A big spender in this sector is the banking and financial institutions. As more people join the formal markets this industry is expected to grow in the next ten years. The retail banks are increasing spend to grow their digital platforms and concurrently increasing their online security measures. This will drive innovation in internet banking and more specifically mobile access and mobile money solutions. Private consumption will rise, but the strong growth of smartphones is likely to offset PC and laptop usage. In the short term, the decreasing household purchasing power and the depreciated Rand could also be responsible for tablets outselling notebooks, a less expensive piece of hardware and both outselling PCs. Households effected by the economic downturn will look for cheaper options. It is a strongly regionalized market, due to a lack of inter-city connectivity and infrastructure in parts of the country (rural areas) and it is very price sensitive. However, improvements to network infrastructure and adoption of cloud services and smart infrastructure will see this changing. In the short to medium term, there is a trend towards greater innovation in applications used for HR, payroll, and teleworking software to increase operational efficiencies and flexibility as more people work from home during restricted movement. This might encourage more firms to look at how to decrease capital expenditure and include remote and teleworking strategies to be included in their digital policies. U.S. Companies. Leading U.S. companies such as Microsoft are elevating South Africa into the lead group of countries for new product releases reflecting the growing importance of the market and the region. IBM opened an IBM Cloud Data Centre in Johannesburg in 2016. IBM will provide clients with a complete portfolio of cloud services. This is the result of close collaboration with South African, 100 percent black-owned firm Gijima and Vodacom and is designed to support cloud adoption and customer demand across the continent. This again demonstrates the willingness of foreign companies to invest in this market and use the local skills force to penetrate the market and the region. Amazon Web Services has also opened a data center in Cape Town. CISCO and Dell both have training academies within South Africa to assist with the development of skilled labor within this sector. Sub-Sector Best Prospects The major worldwide trend of moving toward -based systems is one that has gained momentum in South Africa especially with increased improvements in connectivity, decreasing cost and data center infrastructure. The strong entrepreneurial drive within the local IT sector is creating larger demand for cloud-based services. Cloud based services and solutions are seen to offer cheaper, safer alternatives and efficiency gains in operations. Using the cloud is also seen to decrease susceptibility to piracy and cyber threats. Machine-to-machine (M2M) communication and the Internet of Things (IoT) is forecast to grow and is a new development globally and not just in South Africa. With the rollout of fiber and cheaper data costs, opportunities will arise in this sector for connected living. South Africa has a thriving start up and tech market. The South African government via the ICT small, medium, and micro-enterprises (SMME) Development Strategy seeks to accelerate the growth and development in the SMME sector. Government support is given to partnerships for incubation, networking, and capacity building. Software Business software spending may be driven by customer-centric industries such as retail, financial and telecoms, where businesses are recognizing that solutions can be a competitive differentiator. Cloud-based software products are expected to drive growth. This sub-sector is still hampered by piracy and it is estimated by the Business Software Alliance (BSA) that around 35 percent of installed software in SA is illegal. The need for security products is growing with company spends increasing to about 8 percent of the total IT budget. The higher end of South Africa’s software market has matured, and companies are price sensitive and cautious about investing in new
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