South Africa’s presence in the rest of Africa has to be seen in the dual context of its relative economic
size and sophistication, together with the insolation the country endured through the apartheid years.
The South African economy contributes 19% to the total African economy, one-third of sub-Saharan
Africa’s and nearly two-thirds of the Southern African Development Community (SADC) gross
domestic product (GDP).
Trade, projects and investment are closely linked to many facets of South Africa’s expansion into
the region, a factor that has assisted many South African companies in entering new markets. Much
of the project work and related trade flows are linked to large capital investments in key sectors of
the host countries’ economies by South African based multinational companies.
South Africa’s traditional isolation from the rest of the continent is belied by the fact that in the
Southern African Customs Union (SACU), the country has had a decades old presence in virtually
every sector of those economies. In addition, these countries account for the bulk of investment by
South African businesses in the rest of the continent, by numbers of investments.
This scenario is changing fairly quickly as key South African companies expand into markets further
afield, notably the greater Southern and East Africa region, and more recently into West Africa.
North African activity is less pronounced.
South Africa is now the key investor in the rest of Africa, according to the United Nations Conference
on Trade and Development (UNCTAD), with investments of roughly US$1.4bn per year in the last
South African companies have often been at the forefront of investing in markets that have opened
up to the global economy, in a variety of sectors, notably financial services, information communication
technology (ICT), retail and mining, where South Africa has key strengths.
Investment in the ‘new economy’ sectors such as ICT and financial services has tended to follow
economic liberalisation, whilst investment in the ‘old economy’ of mining, retail and related industries
has followed a less predictable path, with investment often despite, rather than because of the
Services sectors are becoming a larger part of the South African presence, although are far more
difficult to track. Outside of the large financial, ICT, retail and mining services sectors, there are new
sectors emerging such as the oil industry services cluster in Cape Town, advertising, franchising,
architectural design, education and management contracts. Again, these draw in a variety of other
South African companies and interests into the region.
South African state owned enterprises have become a key link in the development of the continent,
whether in their own right or as levers for private sector development and investment in other markets
Broadly speaking, South African investment in the region has competed with investment from the
host countries as well as from ex-colonial powers, Europe in general, the USA, and more recently
emerging global economic powers such as Brazil, China, Canada, Australia and India.
On balance, South Africa’s activity in the region appears to be neither of the two extremes,
that of a partner or a dominator. Companies operating in other African markets, more often
than not, are basing investment or project decisions on the merits of each case, and more
importantly the desire of the host country to attract foreign direct investment into the country.
South Africa should thus be seen in terms of the global dynamic – not in the region to either
rescue it or dominate it, but rather to become part of the increasingly intertwined regional
and global fabric.