South Africa Strikes North

By Arnold, Guy | African Business, December 1995 | Go to article overview

South Africa Strikes North


Arnold, Guy, African Business


South Africa is focusing both its foreign policy and its trade upon Africa to the north, and with the most sophisticated business infrastructure on the continent, it looks set to take it by storm. Guy Arnold reports on the country's big push northwards.

South Africa can supply goods and services to its neighbours more quickly and more cheaply than virtually any other exporting country. This is the message that the hordes of South African businessmen visiting African countries today are taking with them. The attractions for South Africa of rapid expansion to the north are great, but in its drive to take the economic fight to its erstwhile enemies' camp, South Africa must take care not to crush their smaller, more vulnerable industries. Although its GNP is far larger than those of all the former members of SADC and the members of COMESA (the Common Market of East and Southern African States) combined, memories are long, and it can not afford to throw its weight around too much.

Yet the emphasis on northward investment and trade is not coming only from South Africa itself. Foreign companies see the country as the gateway to the rest of Africa, and they expect to establish their operating bases in Johannesburg for the whole of the Southern African market.

Nissan is currently examining the possibility of expanding its present operations from South Africa to the rest of the continent. It plans to export left-hand drive vehicles into those markets in Africa which drive on the right. Other multinationals regard South Africa as a stepping stone to a wider continental market. Moreover, if South African companies are seen to be moving north, as is now the case, then companies from outside will be encouraged to do the same thing from a base in the Republic.

South Africa has always enjoyed a special position in the four "captive" markets on its periphery: The three old High Commission territories of Botswana, Lesotho and Swaziland, plus Namibia, which only achieved its independence from Pretoria in 1990. It is beyond these countries that South Africa is now beginning to expand at speed. South Africa's penetration of these markets is likely to be easier and more attractive to both sides, if only because traditional external traders, especially from Europe, are at present both wary of Africa as a whole, and more interested in the new opportunities opening up in eastern Europe, the ex-Soviet territories and the Far East. While South Africa is uncompetitive in these markets, it can fill the vacuum in Africa. In certain cases, South African companies are taking over from European and American corporations that have become disillusioned with operating conditions in Africa.

Protea Hotels, for example, which is the continent's premier hotel management group, has taken over management of eight hotels as well as a tour operation and an airport catering service from a British hotel group in Malawi. The same group has taken over management of the US Sheraton group in Botswana. Multichoice of South Africa is now the largest source of pay television channels in 40 countries up to and including Egypt. South African Breweries is expanding fast into neighbouring countries and has recently established operations or partnerships in Angola, Botswana, Tanzania, Zambia, Zimbabwe and the Canary Islands. It has also taken a 70% interest in Mozambique's state owned breweries. Standard Chartered Bank operates in 14 countries outside South Africa and recently purchased Grindlays African business, Barclay's operation in Lesotho and Meridien Bank in Tanzania.

On the march

South African mining companies, in particular, are searching for outlets to the north and have, for example, become involved in gold operations in Ghana and the rehabilitation of Zambia's moribund coal industry. …

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