ACCESSIBILITY & MARKET ACCESS

Discover Cape Town’s ever growing trade links 

The influence of globalization has fundamentally altered the way that countries integrate into the global economy. This is now primarily achieved through trade and agreements with each other. It’s no surprise that South Africa has strengthened regional economic integration to achieve more balanced trading relations on a continental and global scale.

To this purpose, South Africa is a proud member of the Southern Africa Development Community (SADC), the Trade Development and Cooperation Agreement (TDCA) and the Southern African Customs Union (SACU), among other agreements. Being strategically located at the tip of the African continent, South Africa is fast-becoming a key investment location, both for the commercial opportunities within its borders and the potential it offers as a gateway to Africa – a market of some 1-billion (and growing) people.

Cape Town & African Markets 

The Western Cape has advantageous access to world markets through preferential trade agreements between South Africa and other major players, such as Europe and the United States. However, Cape Town has leveraged this to create excellent trade links with the rest of Africa. This has gone a long way in strengthening Cape Town’s status as a business hub for the continent as a whole.

Exports to Africa 

Cape Town and the Western Cape’s exports to the rest of Africa totalled USD3.4bn in 2017, increasing by 5.3% during the year while imports grew by 12.3% reaching a cost of USD2.8bn. This means that Africa is the largest destination region for Western Cape exports, followed by Europe.

The largest exports to Africa were:

• Refined petroleum oil (USD558.98m)
• Flat-rolled iron (USD185m)
• Tobacco (USD122m)

The largest growth in exports were:

• Refined petroleum oils (81%)
• Packaging goods (57%)

The largest growth in exports were:

• Refined petroleum oils (81%)
• Packaging goods (57%)

The largest growth in imports were:

• Beer
• Scents used in manufacturing
• Petroleum gases

Cape Town Companies Investing in Africa 

Africa is the Western Cape’s largest global destination region for outward FDI both in terms of projects (54%) and Capex (54%), between 2008 and September 2018. This was followed by Western Europe accounting for 17% of projects and 17% Capex.

Over the past 10 years, outward FDI from Cape Town had an annual average growth of 95% in terms of Capex and 54% in terms of projects (FDIMarkets, 2018). In fact, up to 79% of all outward FDI from Cape Town into Africa (in terms of projects) were in the following industries:

• Food & beverages sector
• Software & IT sector
• Financial & business services sector
• Consumer products sector

The largest investing companies for outward FDI from the province by number of projects were:

• Shoprite (27)
• Pick n Pay (10)
• Carrick Wealth (9)
• Naspers (9)
• The Foschini Group (7)
• Woolworths (7).

These companies made up 55% of outward African investment from the province from 2008 to September 2018. In terms of Capex, the largest sectors for outward FDI from Cape Town into Africa over the last decade were:

• Real estate (ZAR17bn)
• Consumer products (ZAR8.3bn)
• Food & tobacco (ZAR7.7bn)

This Capex investment accounted for a combined 72%. The largest investing companies by Capex were:

• Shoprite
• Novare Equity Partners
• Woolworths
• The Foschini Group
• Distell

These accounted for 70% of total outward Capex into Africa from 2008 to September 2018. In addition, an estimated 46% of international companies investing in the Western Cape indicated that they intended on using the Western Cape as a springboard into Africa.

Approximately 10 of the biggest Cape Town-based companies, with an annual turnover exceeding ZAR9bn, have expanded into Africa. These include, amongst others:

• Santam Ltd
• Distell Group Ltd
• The Foschini Group Ltd
• Truworths International Ltd
• Shoprite Holdings Ltd.

The Cape Town Business Hub

Cape Town has enormous potential as an investment destination. The city is thriving in the unique combination of a highly developed first-world economic infrastructure and a vibrant emerging market economy. In fact, South Africa has one of the most advanced, broad-based industrial and productive economies in the whole of Africa.

Cape Town has excellent trade links with the rest of Africa. City-based companies invest in the rest of the continent strengthening Cape Town’s status as a business hub for the continent. Wesgro’s Trade and Investment Report 2019 gives a good snapshot of Cape Town’s biggest trading partners. It’s no surprise that Cape Town has become a gateway to Africa’s diversified economy, as well as a leading services destination within the South African economic climate. Best of all, favourable market access to African and global markets draws many skilled, talented and capable enterprises to the city too. This is a big advantage for any investors wanting to build mutually beneficial regional and global relations to advance South Africa´s trade, industrial policy and economic development objectives.

For more information about access to African markets from Cape Town enterprises and thoroughfares speak to our investment facilitation team!