Nov 04, 2011
Investment options across SA’s bordersBack
Bloemfontein|DURBAN|GABORONE|Johannesburg|Newcastle|Africa|Education|Industrial|System|Africa|Botswana|Lesotho|South Africa|United States|Energy|Global Competitiveness|Donald Mackay|Infrastructure|Proximity
© Reuse this
Investing in South Africa, which is ranked ninety-seventh out of 139 countries on the Global Competitiveness Index, comes with a rather comprehensive set of challenges. South Africa’s so-called strike season, a severely challenged education system and institutional hurdles provide just some of the narrow alleyways investors need to navigate. What options do investors have?
I keep wondering why we are not seeing more manufacturers simply relocating their businesses to Botswana or Lesotho. Gabarone is a mere three-hour drive from Johannesburg, making it closer than Durban, and Lesotho is actually inside our borders – not far from Bloemfontein. They certainly do have a few interesting things going for them besides their proximity to South Africa. One of these is their considerably more investment-friendly labour laws. Further, they are both members of the Southern African Customs Union (Sacu). The Sacu agreement allows goods to move freely, and most importantly, duty free, between all Sacu countries.
This means that, if an investor was to relo- cate a clothing factory from Newcastle to, say, Lesotho or Botswana, he or she could still sell items of clothing produced in Botswana or Lesotho in South Africa and not be subjected to the 45% duty on clothing that is currently in place. Further, the same investor will have even better access to certain global markets through better Generalised System of Prefer- ences rates, as well as better access to the US market through the African Growth and Opportunity Act (Agoa). Both Botswana and Lesotho qualify for special treatment under Agoa’s ‘special rule for apparel’, whereas South Africa does not.
Once you start exploring the options, the discussion takes a few interesting turns. The annual cost of labour unrest in rand terms and work hours and work days lost, along with the militancy, violence and damage to property (often caused by totally unrelated parties or private individuals) now associated with labour action in South Africa is significant.
Our well-organised labour movement has also cottoned on to the concept of ‘sympathy strikes’, crippling complete economic sectors or geographical areas not even directly affected by the industrial action at the centre of the dispute.
Yes, these countries may lack some of the skills we have, but people can be taught and a workforce that is actually working, and not striking, tends to learn faster. I have no doubt that these countries would welcome skilled professionals and infrastructure can be upgraded to meet the needs of industry.
This is almost the main reason for the exist- ence of organisations like the World Bank. A healthy growth injection will provide our neighbouring countries with a growing tax base and, while it may certainly take a while before energy- and infrastructure-intensive heavy industry finds its way to the out- skirts of Gaborone, more entrepreneurial small and medium-sized enter- prises, which are known to be the most prolific job creators, may make the journey over the Limpopo river a lot sooner.
Yet, with everything considered, why are we not seeing queues at the borders, with South African investors rushing to take advantage of these opportunities? Perhaps it is ignorance or prejudice, or simply fear of the unknown. But if we keep making life so difficult for the businesses within our borders, these options will, at some point, become more attractive. Sooner or later, companies will have had enough of the unnecessary cost and inefficiencies of doing business in South Africa and will look more seriously at our neighbours. The success stories will follow and the trend may not be all that easily reversed.
Edited by: Martin Zhuwakinyu© Reuse this Comment Guidelines (150 word limit)
Other Pieter du Plessis & Donald Mackay News
Updated 43 minutes ago E-tolling Gauteng's highways has failed and the system falls short of its intentions, the Opposition to Urban Tolling Alliance (Outa) said on Tuesday. "This system is falling far short of its intentions and targets," Outa chairperson Wayne Duvenage told public...
Updated 2 hours 56 minutes ago Fuel cell products provider Ballard Power Systems has appointed Randall MacEwen as president and CEO, effective October 6, replacing John Sheridan, who is retiring after serving as the company’s president and CEO since 2006. Sheridan would continue to serve as an...
Updated 3 hours ago Sub-Saharan Africa’s digital revolution was not set to get under way – it had already started, Ericsson VP for strategy, marketing and communication Tumi Sekhukhune told delegates at the Southern Africa Telecommunication Network and Application Conference...
Recent Research Reports
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
Real Economy Insight: Road and Rail 2014 (PDF Report)
This six-page brief covers key developments in the road and rail industries over the past 12 months, including details of South Africa’s road and rail network and prospects for both sectors.
This Week's Magazine
South African State-owned defence industrial group Denel has announced its fourth consecutive year of profits. The group's results for the financial year 2013/2014 were recently announced at its head office in Centurion, south of Pretoria. Revenues grew by 17%, net...
There is little opportunity for JSE-listed infrastructure company Group Five to grow shareholder value in the domestic market, says CEO Mike Upton. He says value can still be found in the private sector, in the renewable and industrial power sector, as well as in...
The National Association of Automobile Manufacturers of South Africa (Naamsa) has announced the event dates of the 2015 Johannesburg International Motor Show (JIMS). The event will take place from October 14 to October 25, 2015, at the Johannesburg Expo Centre, Nasrec.
UK engineering support services provider Babcock is set to deliver the largest order of global truck manufacturer DAF’s truck tractors in Southern Africa to bulk carrier road-based logistics company Ngululu Bulk Carriers (NBC), with 133 trucks to be delivered in...
Digital radio communications in the African local government space can open up the world, but have many challenges to overcome, notes integration and migration of legacy radio communications infrastructure with digital mobile radio company Emcom Wireless head of...