German companies are expressing a lot of interest in this year’s international trade fair for construction machinery, building material machines, mining machines and construction vehicles, bauma Africa, in Johannesburg, says International business administration and management company Intergest, which will also participate at the event.
Intergest director Volker Werth states that the company, which has been active in South Africa for ten years, focuses on the effective positioning of German companies in the South African market.
He notes that the company visits Germany regularly and attends informative events, trade fairs and German Chamber of Commerce and business association events.
“The company visited the bauma Trade fair, in Munich, in April, which we found to be a good networking opportunity with companies that will attend the bauma Africa fair in September. We also regularly address German business delegations when they visit South Africa regarding business opportunities in Southern Africa,” he says.
Werth states that Intergest has noticed interest in German companies in virtually all industry sectors in South Africa. Currently, however, the renewable-energy, construction, transportation, including rail and harbour-chemicals, medical and agriculture sectors are showing the most activity, owing to the official infrastructure development programmes launched by government.
“Almost all of our clients are interested in expanding their businesses into the Southern African Development Community (SADC) region, with extensive interest being shown in Mozambique, owing to the mining, energy and transport projects on the cards in that country.
“We find, however, that German companies are cautious and, generally, are slower in arriving at the decision to expand into the SADC territories. Once they [enter the region], though, they are satisfied with the progress of their businesses,” he notes.
Werth explains that there are several challenges that German companies face when entering the SADC market, owing to investment that lags behind the aggressive approach taken by the Chinese when entering African markets.
“Although there is a vast amount of extensive positive media coverage promoting South Africa and the SADC region, investments generally take longer to implement, owing to a fair amount of red tape required to set up a new subsidiary company, especially when dealing with the South African Revenue Service and finalising tax registrations, including value-added tax and income tax,” he says.
Werth adds that immigration law and policy are further hindering faster growth and investment.
“It is simply too cumbersome and takes too long to obtain the required permits from the authorities in South Africa. Black economic empowerment is also a concept that is strange to most investors and they often struggle initially with the complexities of the concept,” he says.
Werth notes that the South African government has done well to establish clear investment programmes, such as the National Infrastructure Plan, which is overseen by the Presiden- tial Infrastructure Coordinating Commission, and many German companies are investing in pro- jects to aid that particular endeavour.
“We receive many queries from potential investors. However, investment incentives, such as tax holiday schemes, which are usually seen in other developing countries seeking foreign investment, are lacking. More should be done to promote South Africa as the springboard for investments into the SADC region,” he notes.
Werth adds that there are 650 German companies represented in South Africa by subsidiaries or branch offices, which are also members of the German Chamber of Commerce. “This number, however, by no means represents all German businesses active in South Africa, which could very well be more than 1 000,” he concludes.