South Africa: Ripe for opportunity on a continental scale

South Africa: Ripe for opportunity on a continental scale

South Africa is a resource-rich economy that also represents a land of opportunity for Canadian businesses — and not just for the large players. Small- and medium-sized enterprises will find plenty of opportunity in South Africa, and indeed on the African continent as a whole.

“Life is rough for resource-dependent economies these days,” explains Peter Hall, chief economist at Export Development Canada (EDC). “But those who used the good times to structure themselves well for the long term are still full of promise, and South Africa definitely [makes] the list.”

To that end, EDC officially launched a representation in Africa last week by opening a permanent office in Johannesburg, South Africa, to help Canadian companies take advantage of business opportunities in that country and as a base for work across Africa.

JV Driver is one such Canadian company that views the African continent as one of opportunity.

“Africa has been a learning experience,” said Business Development Director Richard Jones. “We started looking at projects there 18 months ago. It’s slow — we all know that. Politics change and the agenda can change frequently, so it’s challenging. You take two steps forward and one step back, but it’s a case of having the stamina to stay the course and believe in what you’re doing.”

He said Africa fits what his company is trying to do in terms of large infrastructure projects. “There is growth,” he said. “There’s also competition and the risk is greater, but hopefully the rewards match that and through appropriate oversight you can manage your risk as you go along.”

JV Driver, a heavy industrial and infrastructure construction company, is currently working on a USD $110 million project to build an inland container terminal for Ghana’s Ports and Harbour Authority. It is also in negotiations to build a new regional airport in Tanzania, and it is looking at opportunities in Uganda and Botswana.

Small- and medium-sized Canadian companies such as JV Driver are looking to access the supply chains of Africa with the support of EDC’s existing network and the new on-the-ground office, co-located with the Canadian High Commission to South Africa. And some companies based in southern Africa — such as MTN, a multinational mobile telecommunications company — are large enough that they have operations all over the world.

“So that access might not be limited to South Africa or Africa itself — it could extend globally,” said Mairead Lavery, Senior Vice-President of Business Development at EDC. “We’ll be working hard to connect the dots. We’ll be looking at what large and medium African companies need to buy, and figuring out how that matches what Canadians have to sell. We’ll be looking at the role EDC can play in making meaningful introductions and offering financing to the African countries to buy Canadian.”

In the past five years, EDC has helped facilitate USD $7.4 billion in business between African and Canadian companies, said Jean-Bernard Ruggieri, Chief Representative for Africa at EDC, in his speech at the opening of the new offices in Johannesburg. “Tonight, we want to let you know that in the next five years, we’d like to move that to USD $10 billion.”

JV Driver has already benefitted from EDC’s on-the-ground services in Africa.
“We’ve had a very good experience with building relationships with EDC,” Richard Jones said. “They’re working closely with us and we want to keep doing business together.”

EDC’s Johannesburg office plans to develop relationships with major South African companies which control supply chains that expand throughout the sub-Saharan region. Economies such as those of Ghana, Nigeria and Kenya, as well as markets with near-term potential, such as Angola, Botswana, Cameroon, Gabon and Tanzania, will also be focuses, Lavery said.

Sectors where the needs of African companies match Canadian expertise include the extractive sectors (mining, oil and gas, and resources), infrastructure (roads and port engineering), telecommunications, clean technology, transportation, and agriculture. Emerging sectors include light manufacturing and healthcare and life sciences.

Economist Peter Hall is bullish on South Africa because he feels it positioned itself well “to capture future waves of growth.” He notes that the latest World Economic Forum’s Global Competitiveness Index ranks South Africa 49th of 140 countries and in financial market development, South Africa ranks 12th in the world, just behind Luxembourg. The report also says the country is home to Africa’s largest commercial banks, hosts more than 40 per cent of African’s publicly listed companies, and is the most innovative and sophisticated business environment in Africa, 36th worldwide.

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