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ECONOMIC AND TRADE BACKGROUND

Mozambique

Mozambique is an attractive destination for South African investments.According to the Financial Times (FDI Markets), since 2003 to date, South African investments into Mozambique are estimated at R45billion, the most recent of which was committed in January 2015. The biggest of these include companies such as Mozal, Sasol, SAB, Tongaat Hulett, CNBC Africa, Vodacom and Standard Bank amongst others.Mozambique is South Africa’s second largest export market with trade having increased dramatically over the past five years.

Mozambique is also South Africa’s third largest African export market, absorbing on average R2 billion of South African products per month. It is also KwaZulu-Natal’s third largest African market, demanding R3 billion worth of the province’s merchandise export per annum.

A significant portion of Mozambique’s economic growth is driven by capital-intensive export sectors and foreign investment projects in the mining sector and aluminium smelters, which have also led to growth in the services and construction sectors.The industrial and services sectors contribute 30.9% of GDP and 45.6% of GDP, respectively. Mozambique’s agricultural sector contributes 23.5% to the country’s GDP. This sector employs the majority of the country’s workforce.

 

Swaziland

Swaziland’s importance to South Africa’s trade is remarkable. This country is one of the BLNS (Botswana, Lesotho, Namibia and Swaziland) that together push Africa’s share of South Africa’s total exports from around 19% to nearly 30%. Swaziland’s also has South Africa as its largest trading partner from which it purchases almost 90% of its imports and to which it sells nearly 60% of its exports.Subsistence agriculture employs approximately 70% of the population. Sugar and wood pulp were major foreign exchange earners and sugar is now the main export earner. The manufacturing sector has diversified since the mid-1980s. Mining has declined in importance in recent years with only coal and quarry stone mines remaining active.

Other key sectors that drive the economy of Swaziland are textiles and apparel as well as food and beverage.The main exportable commodities are soft drink concentrates, sugar, wood pulp, cotton yarn, refrigerators, citrus and canned fruit.Swaziland imports motor vehicles, machinery, transport equipment, foodstuffs, petroleum products and chemicals. South African investments in Swaziland since 2003 are an estimated R2.2billion rand.

 

Seychelles

The economic makeup of Seychelles is reportedly 3% agricultural, 14% industrial and 83% services. The country’s main trading partners are Spain,France, India and Italy, with South Africa positioning itself as the fifth largest source market for the Seychellois’ import demand.

While inward FDI flows have been erratic and coincidental with global economic events (peaking at US$239 in 2007 and falling to US$178 in 2013), Seychelles is one of the most successful African stories, with unemployment rate of 1% at the end of 2013! The highest rate of unemployment has recorded is 4.5%, which was experienced in 2009, at the height of the global economic crisis.

The main economic sector if Seychelles in tourism.

 

South Africa

South Africa, and the Province of KwaZulu-Natal, is an open economy. While vigorously attempting to attract investments into the provincial borders, the Province and the country also acknowledge that economic progress in other African countries is economic progress for us all. As such, South African companies have long been active in outward investments to the rest of the African continent.

Unlike in other parts of the world where investment promotion is focused on inward investment, South African companies also focus on outward investments on the African continent.The current World Investment Report (2014) hails South Africa, together with Kenya, as being in the forefront in intra-Africa investment. The most notable feature of this intra-regional investment is that these countries investment mainly in manufacturing and services sectors in their fellow African economies, unlike investments from elsewhere on the globe, which still tend to invest heavily in the extractive sectors – albeit there is significant infrastructure investment that follows this investment, mainly to continue to make it easy to convey the resources.

KwaZulu-Natal is a major role player in both manufacturing, transport and logistics sectors in South Africa with world class infrastructure that supports export led companies. The province enjoys strategic competitive advantage of being a global gateway for trade into Southern Africa and the world. Its’ strategic location and highly developed industrial sector ensures a competitive advantage for investors and exporters. Key subsectors include aluminium, mineral processing, motor vehicle manufacturing, pulp and paper products, chemical and petro-chemicals and food and beverages.

Manufacturing is a major contributing economic sector in KwaZulu-Natal, generating 14.0% of provincial employment and contributing an average of 16.5% to the GDPR between 2009 and 2013. The sector contributed 15.9% to the provincial GDPR in 2013. KwaZulu-Natal’s manufacturing sector is the second largest in the country, making the region an ideal destination to locate manufacturing businesses, whilst enjoying government incentives and support from the well established sector.