SOUTH AFRICA

Country Analysis

SUBMITTED TO:
PROF. R SUGANT
ASST.PROFESSOR, MARKETING
SDMIMD

SUBMITTED BY- GROUP 5, SECTION B

MEMBERS:
BISHAL GUHA-14036
GULLIET RAJU-14060
MOHD.RAFATH- 14082
PRIYA SINGH- 14110
SACHIN HONNAVAR-14129
SIDDHARTH HEGDE-14152
VARKALESH J-14173
Contents
Macro-economic Data ............................................................................................................................ 2
Macroeconomic indicators ................................................................................................................. 2
Demographics ......................................................................................................................................... 3
Environmental Analysis – Political, Economic, Legal & Socio-Cultural ................................................... 5
Natural Resources ................................................................................................................................... 7
Infrastructure .......................................................................................................................................... 8
Brief Industry Analysis............................................................................................................................. 9
Automotive Industry ........................................................................................................................... 9
Mining & Minerals .............................................................................................................................. 9
ICT & Electronics ............................................................................................................................... 10
Chemical Industries ........................................................................................................................... 10
Financial Sector ................................................................................................................................. 10
Agriculture ........................................................................................................................................ 10
SWOT Analysis....................................................................................................................................... 11
Recommendations ................................................................................................................................ 12
Reference .............................................................................................................................................. 12

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Macro-economic Data
South Africa is a developing country with population of 52.98 Mn as of 2013 with current GDP
of $350.6 Bn. The labour unrest in South Africa that marked 2012 improved in 2013, proving
to be less violent but more widespread, and it significantly affected output in the automotive
and agricultural sectors. Unemployment and labour relations continue to pose challenges for
the country. Unemployment remains high at 25.2% overall, and 64.8% for young people
between the ages of15 and 24. The government’s newly launched employment tax incentive
aims to address this challenge by encouraging private sector absorption of youth by subsidising
the salaries of newly recruited workers aged between 18 and 29. However, the overall labour
market remains constrained and labour unrest continued to reduce South Africa’s output in
2013, especially in agriculture and manufacturing. Furthermore, output potential is constrained
by a skills shortage, and calls are being made for further investment and reform of the poorly
performing education system.

Broadly, the South African economy remained within the Reserve Bank’s (SARB) target
inflation range of 3%-6%, estimated at 5.7% in 2013. The Automotive Production
Development Plan (APDP) that came into force in January 2013 is aimed at encouraging new
investments in the industry, promoting use of local components and boosting annual production
to 1.2 million vehicles by 2020. Both South Africa’s retail sector and its financial services
industry are the most sophisticated on the continent and both have a significant regional
presence

Macroeconomic indicators

2012 2013 2014 2015

Real GDP growth 2.5 1.9 2.7 3.0

Real GDP per capita growth 1.7 1.2 2.0 2.3

CPI inflation 5.7 5.7 5.7 5.3

Budget balance % GDP -4.2 -4.1 -4.1 -3.9

Current account balance % GDP -5.2 -6.5 -6.4 -6.4

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Demographics
Demographics are the quantifiable statistics of a given population. Demographics are also used
to identify the study of quantifiable subsets within a given population which characterize that
population at a specific point in time.

Population
The last national census of the South African population was carried out in 2011. In 2014, the
estimate is 53.1 million, but because of other nations outpacing South Africa’s growth rate, this
would drop the nation to 25th place for being the most populous.

Current population - 51, 790, 913

Current male population - 25, 661, 863 (49.5%)

Current female population - 26, 129, 050 (50.5%)

Age Structure
The age structure of a population is the distribution of people among various ages. Age of
South Africa is divided as follows

1. 0-14 years: 28.3% (male 6,859,518/female 6,815,185)

2. 15-24 years: 20.2% (male 4,914,394/female 4,866,121)
3. 25-54 years: 38.2% (male 9,543,746/female 8,923,605)
4. 55-64 years: 7.1% (male 1,470,282/female 1,950,499)
5. 65 years and over: 6.3% (male 1,205,657/female 1,826,638)

Dependency Ratio
In economics, geography and demography the dependency ratio is an age-population ratio of
those typically not in the labour force. In South Africa the total dependency ratio is 53.9%
where youth dependency ratio is 45.2% and elderly dependency ratio is 8.7%.

Birth rate
The birth rate is the total number of births per 1,000 of a population in a year. The rate of births
in a population is calculated in several ways: live births from a universal registration system
for births, deaths, and marriages; population counts from a census, and estimation through
specialized demographic techniques..

In South Africa the birth rate is 18.94 birth/1,000 in a year

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Mortality rate
Mortality rate is a measure of the number of deaths (in general, or due to a specific cause) in a
population, scaled to the size of that population, per unit of time. Mortality rate is typically
expressed in units of deaths per 1,000 individuals per year.

In South Africa mortality rate is 17.49 deaths/1,000 population.

Infant Mortality rate

Infant mortality is the death of a child less than one year of age. Childhood mortality is the
death of a child before the child's fifth birthday

In South Africa it is

Male: 45.25 deaths/1,000 live births

Female: 37.9 deaths/1,000 live births

Total: 41.61 deaths/1,000 live births

Sex Ratio
Sex ratio is the ratio of males to females in a population. The human sex ratio is of particular
interest to anthropologists and demographers.

In South Africa the sex ratio is as follows:

At birth: 1.02 male(s)/female

Total population: 0.99 male(s)/female

Total Fertility Rate

The total fertility rate (TFR), sometimes also called the fertility rate, population is the average
number of children that would be born to a woman over her lifetime.

The total fertility rate in South Africa is 2.23 children born/woman

Literacy Rate
Literacy is the ability to read and write. Literacy encompasses a complex set of abilities to
understand and use the dominant symbol systems of a culture for personal and community
development.

In South Africa 93% of the population can read and write.

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Total population: 93%

Male: 93.9%

Female: 92.2%

Environmental Analysis – Political, Economic, Legal & Socio-Cultural

The South African economy is one of the stable economies on the African continent. The
economy is expected to experience good growth and reach $500.1 billion by 2018. South
Africa’s economy was affected by the global financial crisis, but recovered after achieving
significant economic growth due to strong its commodity market and higher domestic demand.

While much of the world were facing financial meltdown, South Africa has managed to
withstand on its own feet – largely due to its prudent fiscal and monetary policies. The country
is politically stable and has a well-capitalised banking system, abundant natural resources, well
developed regulatory systems as well as research and development capabilities, and an
established manufacturing base.

Ranked by the World Bank as an “upper middle-income country”, South Africa is the largest
economy in Africa – and it remains rich with promise. With a world-class and progressive legal
framework, South African legislation governing commerce, labour and maritime issues is
particularly strong, and laws on competition policy, copyright, patents, trademarks and disputes
conform to international norms and standards. The country's modern infrastructure supports
the efficient distribution of goods throughout the southern African region.

The economy has a marked duality, with a sophisticated financial and industrial economy
having grown alongside an underdeveloped informal economy. South Africa’s success in
reforming its economic policies is probably best reflected by its GDP figures, which reflected
an unprecedented 62 quarters of uninterrupted economic growth between 1993 and 2007, when
GDP rose by 5.1%. With South Africa’s increased integration into the global market, there was
no escaping the impact of the 2008-09 global economic crisis, and GDP contracted to 3.1%.
While the economy continues to grow - driven largely by domestic consumption – growth is at
a slower rate than previously forecast. It is projected to grow at 2.7% in 2013, 3.5% in 2014
and 3.8% in 2015.

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According to figures from the National Treasury total government spending will reach R1.1-
trillion in 2013. This represents a doubling in expenditure since 2002/3 in real terms. To ensure
that there is a similar improvement in service-delivery outcomes, the government is putting in
measures to strengthen the efficiency of public spending and to root out corruption.
Under its inflation-targeting policy, implemented by the South African Reserve Bank (SARB),
prices have been fairly steady. In January 2013, the annual consumer inflation rate was 5.4%,
dipping from December 2012's 5.7%. Stable and low inflation protects living standards,
especially of working families and low-income households.

South Africa has a diverse economy, with key sectors roughly contributing to GDP* as follows:
 Agriculture: 2.2%
 Mining: 10%
 Manufacturing: 12.3%
 Electricity and water: 2.6%
 Construction: 3.9%
 Wholesale, retail and motor trade: 16.2%
 Transport, storage and communication: 9%
 Finance, real estate and business services: 21.2%
 Government services: 16.7%
 Personal services: 5.9%
The country's outlook is affected both by national concerns, such as unrest in and pressure on
the mining industry, as well as international sluggishness, with Europe as one of South Africa’s
chief export destinations.
However, trade and industrial policies encourage local firms to explore new areas of growth
based on improved competitiveness. China, India and Brazil offer significant opportunities.
Infrastructure, mining, finance and retail developments across Africa are helping to fuel a
growth trajectory in which South Africa can participate.

The culture of South Africa is known for its ethnic and cultural diversity. The South African
black majority still has a substantial number of rural inhabitants who lead largely impoverished
lives. It is among these people, however, that cultural traditions survive most strongly; as blacks
have become increasingly urbanised and westernised, aspects of traditional culture have
declined. Urban blacks usually speak English or Afrikaans in addition to their native tongue.

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Natural Resources
Africa holds a huge proportion of the world’s natural resources. It is a leading mining country
and it is renowned for its mineral resources, which make up a large portion of the world’s
reserves. South Africa’s mineral reserves are one of the most valuable in the world. The country
is one of the leading producers and exporters of chromite ore, gold, and diamonds.

Gold

With South Africa’s economy built on gold and diamond mining, the sector is an important
foreign exchange earner, with gold accounting for more than one-third of exports.
The gold exports are worth billions of dollars. The country has about 50% of the global gold
reserves. Most of the gold is exported to various countries making it one of the natural
resources that has made a big impact to the world. This mineral was discovered in the late
1800s and has grown to become one of the most important industries for the country and the
world.

Diamonds

The country is synonymous with diamonds, which were discovered in the 1800s. South Africa
is a leading diamonds producer and exporter. There are several diamond mines in the country
and it exports millions of carats every year. The country supplies diamonds to established
jewellery shops in various parts of the world including New York.

Ferrochrome

South Africa is among the top ferrochrome producers in the world. The country exports it raw
to different nations. The country has invested in the most advanced production equipment and
this has allowed it to rival some of the other leading producers such as China.

Platinum

South Africa has more than 80% of the globe’s platinum reserves. This has helped to make its
platinum mining industry one of the most successful. South Africa and Russia produce about
90% of the world’s platinum.

Vanadium

Vanadium is considered one o the most abundant elements in the world. South Africa produces
about 23% of the world’s vanadium. It is the third leading producer and exporter of this mineral
after China and Russia. Most of the vanadium is required for steel production. High grade

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vanadium pentoxide for the international market is produced by the Vanchem plant.
Ferrovanadium is also produced for the local and export market by Vanchem.

Coal

Around 77% of South Africa's energy needs are directly derived from coal and 92% of coal
consumed on the African continent is mined in South Africa.

Infrastructure
Ports and shipping

Major shipping lanes pass along the South African coastline in the south Atlantic and Indian
oceans. Approximately 96% of the country's exports are conveyed by sea, and the eight
commercial ports are the conduits for trade between South Africa and its southern African
partners as well as hubs for traffic to and from Europe, Asia, the Americas and the east and
west coasts of Africa. The commercial ports are: Richards Bay and Durban in KwaZulu-
Natal; East London, Port Elizabeth and the Port of Ngqura in the Eastern Cape; and Mossel
Bay, Cape Town and Saldanha in the Western Cape.

Roads

South Africa's total road network is about 747000km, the longest network of roads of any
African country. The drive from Musina on South Africa's northern border to Cape Town in
the south is a 2000km journey on well-maintained roads. Sanral is responsible for the country's
network of national roads, which cover around 16200km. There are about 185000km of
provincial roads, and the municipal network totals around 66000km, according to the SA
Institute of Civil Engineering.

Railways

South Africa has an extensive rail network – the 14th longest in the world – connecting with
networks in the sub-Saharan region. The country's rail infrastructure, which connects the ports
with the rest of South Africa, represents about 80% of Africa's total. The rail network is
managed by the Department of Public Enterprises via Transnet. Transnet Freight Rail is the
largest railroad and heavy haulier in southern Africa, with about 21000km of rail network, of
which about 1500km are heavy haul lines. Just over 8 200km of the lines are electrified. Around
2.2-million people travel by train every day in South Africa. Metrorail commuter services can

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be found in Cape Town, the Eastern Cape Province, Durban, and greater Johannesburg and
Pretoria, focusing mainly on poorer South Africans.

Airports

South Africa's 10 airports handle more than 98% of the country's commercial traffic, with 200
000 aircraft landings and 10-million departing passengers annually. State-owned Airports
Company of South Africa (Acsa) is responsible for managing the country's airports and
improving productivity of its airports. Other airports include Lanseria (Midrand), Gateway
(Polokwane), Nelspruit and Kruger (Mpumalanga).

Dams

South Africa has over 500 government owned dams. The dams are spread across all nine
provinces and can be seen to range in storage capacity from a volume of 5500 million cubic
metres of water down to 0.2 million cubic metres of water. Currently, South Africa uses about
10200 million cubic metres of water from our various major dams per year. This amount is
about 20% of the total mean run-off volume of water South Africa receives per annum.

Energy

With abundant coal supplies, South Africa meets around 77% of its energyneeds through coal.
While it is largely used to generate electricity, a significant amount is channelled to synthetic
fuel and petrochemical operations. Around 28% of coal production is exported

Brief Industry Analysis

Automotive Industry
Many of the major multinational firms use South Africa to source components and assemble
vehicles for the local and international markets. The sector is one of South Africa’s most
important, contributing at least 6% to the country’s GDP. In 2010, 271 000 vehicles were
exported. More than 28 000 people are directly employed in automotive manufacturing.
Vehicle manufacturers such as BMW, Ford (incorporating Mazda), General Motors, Mercedes
Benz, Nissan, Renault, Toyota and Volkswagen have production plants in South Africa

Mining & Minerals

South Africa is a world leader in mining. The country is famous for its abundance of mineral
resources, accounting for a significant proportion of world production and reserves, and South

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African mining companies are key players in the global industry Overall, the country is
estimated to have the world’s fifth-largest mining sector in terms of GDP value. South Africa
is also a world leader of new technologies, such as a ground-breaking process that converts
low-grade superfine iron ore into high- quality iron units.

ICT & Electronics

The South African information and communication technologies (ICT) sector is well
established and sophisticated. South African companies are world leaders in pre-payment,
revenue management and fraud prevention systems, and in the manufacture of set-top boxes,
all exported successfully to the rest of the world. With a network that is 99.9% digital and
includes the latest in wireless and satellite communication, the country has the most developed
telecom network in Africa.

Chemical Industries
South Africa's chemical industry, the largest of its kind in Africa, is highly complex and widely
diverse, spanning fuel and plastics fabrication to pharmaceuticals. It is of substantial
significance to the South African economy, and a key component of the country's industrial
base. It employs around 200 000 people. South Africa is among the most cost-effective
producers of ethylene and propylene in the world, thanks to abundant access to low-grade coal
and leading-edge process technology.

Financial Sector
South Africa's financial services sector, backed by a sound regulatory and legal framework, is
sophisticated, boasting dozens of domestic and foreign institutions providing a full range of
services – commercial, retail and merchant banking, mortgage lending, insurance and
investment. The South African banking system is well developed and effectively regulated,
comprising a central bank – the South African Reserve Bank .Investment and merchant
banking remains the most competitive front in the industry, while the country's "big five" banks
– Absa, FNB, Standard Bank, Nedbank and newcomer Capitec – dominate the retail market

Agriculture
South Africa has a dual agricultural economy, with both well-developed commercial farming
and more subsistence-based production in the deep rural areas. biodiversity, together with a
coastline 3 000 kilometres long and served by eight commercial ports, favours the cultivation
of a highly diverse range of marine and agricultural products, from deciduous, citrus and

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subtropical fruit to grain, wool, cut flowers, livestock and game. While 12% of South Africa's
land can be used for crop production, only 22% of this is high-potential arable land. The
greatest limitation is the availability of water, with uneven and unreliable rainfall. Around 1.3-
million hectares are under irrigation, and around 50% of South Africa's water is used for
agriculture. Aquaculture (fish farming) is regarded as priority sector, largely because of its
potential for job creation as it scales up to meet increasing domestic demand

SWOT Analysis
Strengths
 Regime & Regulatory wise more evolved
 Level of Corruption is low - Second least corrupt country in African Continent
 Modern Infrastructure
 Median Age is 17 years ( Strong Labour Force)
 Large English speaking population
 Strategic Population

Weakness
 Inadequate Technology
 High Taxation level
 High Unemployment
 Lack of Capital management- Citizens feel entitled to increased pays
 High Education Costs

Opportunities
 Online Selling
 Transhipment point
 Renewable Source of Energy
 Large Young labour Force

Threats
 Racism
 Coastal Area
 Crime in Big cities

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Recommendations

There is lot of Scope for Indian Pharmaceutical industry in South Africa. The tropical climate
of Africa makes the continent hotbed for infectious diseases particularly Malaria, Tuberculosis
and AIDS. Outbreak of Polio, Cholera, yellow fever, measles, hepatitis and tetanus are also
frequent. It is also estimated that pharma markets revenue are going to increase 13.8% CAGR.

To penetrate the market, foreign pharmaceutical companies must bolster their distribution
channels by entering strategic partnerships with local, trustworthy stakeholders. They will also
need to address the loopholes in the supply chain and distribution channels to ensure product
availability and prevent the distribution of counterfeit drugs.

For this reason, we suggest Acquiring the existing drug industry by wholly acquiring them.
This will not only help get their customer base but also help them have a strong supply chain
and distribution network

Reference
http://www.mediaclubsouthafrica.com/africa/37-economy/economy-bg/111-sa-economy-key-
sectors

http://www.southafrica.info/business/economy/sectors/

http://en.wikipedia.org/wiki/South_Africa

http://data.worldbank.org/country/south-africa

http://www.eia.gov/countries/cab.cfm?fips=SF

http://www.brandsouthafrica.com/research-analysis

http://www.southafrica.info/business/economy/econoverview.htm#.VIQK0zGUeAU#ixzz3LCIwIcQo

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