Sunday 25 February 2018

It's always a good time for Irish businesses to sell in South Africa

Fred Klinkenberg of Enterprise Ireland
Fred Klinkenberg of Enterprise Ireland

Fred Klinkenberg

Africa is one of the fastest-developing regions in the world, with a growing middle class. Its €1.8trn economy is equal to that of India, and its population of 1.2 billion is set to double by 2050.

South Africa has recently been eclipsed by Nigeria as the largest economy in Africa, but it remains the economic capital and a springboard to neighbouring countries.

It is well-connected farther afield with traditional links to several European countries, and it attracts a lot of investment interest from China and India.

It is the only African member of the G20, and is a member also of the Southern African Development Community (SADC) which aims to harmonise currencies, payment systems and financial regulation.

The financial capital, Johannesburg, accounts for 7pc of the continent's economy and 34pc of South Africa's €300bn GDP.

The Johannesburg Stock Exchange is the 19th largest in the world by market capitalisation - higher even than Singapore's.

Ireland has a long-established relationship with Africa. In South Africa, the connection dates back more than a century. During the Boer war, 30,000 Irish soldiers fought on the British side. At the same time, 3,000 Irishmen fought with the Boers. If they were around now, they would no doubt be delighted to discover that South Africa is one of the three cheapest places in the world to buy a beer.

Many streets in Johannesburg are named after Irish towns and cities, and, in fact, today more than 30,000 South Africans hold Irish passports.

The late South African government minister Kader Asmal was Ireland-based during his years as an anti-apartheid campaigner. He qualified as a barrister in Dublin and was a law lecturer at Trinity College for 27 years.

The first draft of the South African Bill of Rights was produced in Dublin, and it later became the cornerstone for the South African constitution.

Ireland is seen in South Africa as a high-quality European source for products and services and a great rugby nation - sometimes.

Doing business can be somewhat bureaucratic, with relatively long decision-making times, but South Africa is nonetheless a compatible market for Irish exporters.

English is the business language and the country shares the same time zone as Ireland. Given the limited local supply base, it is very much open for Irish offerings.

Look no farther than Johannesburg, Cape Town and Durban for nationwide penetration, since the country boasts an efficient distribution infrastructure that also supports sales throughout the southern African region. The World Bank's 2016 Logistics Performance Index ranks South Africa 20th out of 160 countries for ease of shipping.

South Africa also boasts a strong regulatory and legal framework for competition, copyright, patents, trademarks and maritime policy, all of which meet international norms.

The economy is currently subdued, but it has underlying strengths. South Africa recovered from the 2008 global crash within a year and recorded growth averaging around 2.5pc for a number of years afterwards.

Drivers for growth include mineral wealth, urbanisation, telecommunications, increased inter-Africa trade and upward social mobility, with consequent higher disposable incomes.

More than 200 Enterprise Ireland clients export here, including Kerry Foods, QK Meats and Mainstream Renewables. Our smaller clients sell a variety of products and services from dog food to banking technology, post office platform systems, mobile applications and computer literacy services. In total, we had more than 450 clients active in Sub-Saharan Africa, exporting €460m last year.

The country's high-growth sectors include fintech, aviation, healthcare, advanced agriculture and international education. This presents significant opportunities for Irish universities, trade schools and computer literacy providers, all of whom should consider stepping up their marketing and service provision here.

For Irish businesses seeking rapid growth potential in a largely greenfield market, South Africa is undoubtedly worth thinking about - over a cold beer, perhaps.

Fred Klinkenberg is Enterprise Ireland's country manager for South Africa

Sunday Indo Business

Promoted Links

Promoted Links

Business Newsletter

Read the leading stories from the world of Business.

Also in Business