SOUTH AFRICA: THE SOUTH THAT INVESTS

by Mundi Live

Interview with Mariagrazia Biancospino

by Elvio Bordignon

and Margherita Chiara Immordino Tedesco

 

Mariagrazia Biancospino has been Secretary General of the Italian-South African Chamber of Commerce for thirteen years, now she has started a new consulting activity aimed at Italian companies wishing to expand their activities in Sub-Saharan Africa. Taking, with prior authorization, some important parts of the letter of resignation, it can be inferred that there has been a long and hard work culminated with significant goals.

“When I was hired by the Italian-South African Chamber of Commerce at the end of 2006, I found a stalemate with only a few scheduled events and a total lack of service to businesses, but thanks to the people I had the privilege to work with and the entrepreneurs who trusted me, we were able to relaunch the Chamber until we took it to the top 20 Italian bilateral chambers in the world. Thanks to our constant commitment, we have been able to have economic availability, both for the purchase of offices and for the financial reserves, which are fundamental for growth.

The Italian-South African Chamber was founded 35 years ago and its main objective was and still is to encourage and improve economic relations between Italy and South Africa, an expectation fully shared by the Italian Government towards us. During my term of office, adopting a startegia of adaptation to the times, I contributed, within the Chamber and in the country in general, to important successes with the avoidance of the development of the Italian entrepreneurial presence in South Africa. With a dedicated team, I have been able to help many Italian and South African entrepreneurs, in a wide range of sectors, to increase their presence and importance in both countries.

I also had the opportunity to work in close contact with all the Italian institutions represented in South Africa, and which make up SISTEMA ITALIA, including the Italian Embassy in Pretoria, the Institute for Foreign Trade and Consulates. Thanks to our flexibility, we have been able to ensure continuity in supporting entrepreneurs who have decided to use our internationalisation services, in a difficult but very stimulating global economic climate”.

This is a wonderful testimony to what is happening outside national borders and affects everyone, even citizens who are not directly affected by it. Thanks to new technologies, we are witnessing a globalization of national economies that reduce the distances between countries. This new reality leads ‘business people’ such as entrepreneurs, Chambers of Commerce but also embassies and non-profit organizations to cooperate to share information and implement common strategies in line with this enormous change. An expert professional like Mariagrazia Biancospino, who has been working for many years in these delicate mechanisms, can give a more accurate reading and provide the most suitable tools for Italian entrepreneurs who want to expand their presence in one of the richest and most industrialized countries in Africa. In short, South Africa is a country of almost 60 million inhabitants that enjoys good macroeconomic stability and an environment that is mainly favourable to businesses.

In 2018, gross domestic product (GDP) grew by 0.8% to about $808 billion (based on purchasing power parity – ppp, or $336 billion in the definition of standard GDP most widely used). South African economic maturity is immediately reflected in the mix of sectors: Primary (including agriculture, fisheries and mining) 10%. Secondary (production, construction and public services) 21%. Tertiary (trade, transport and services) 69%. In 2018, the tourism sector grew by 11%, well above the global average of 8%, capitalising on much of the landscape beauty, nature reserves and good infrastructure.

The country is an important collector of foreign investments, has large mineral reserves, produces and transforms in various sectors including agriculture, manufacturing and high-tech. Some parts of the country’s urban areas have well-developed infrastructure comparable to OECD standards, and the Johannesburg Stock Exchange (JSE) is one of the world’s leading emerging markets. South Africa is also a member of the World Trade Organisation (WTO), the G20 and the BRICS (Brazil, Russia, India, China and South Africa); the country is in clear economic expansion and offers real opportunities for Italian companies. Thanks to social media and the latest information technologies, the process of internationalization of companies will undergo a more rapid expansion, a further reason, and not insignificant, to bring South Africa to the attention of those who want to diversify investments. Mariagrazia Biancospino believes in this and wanted to share with us strategic information about the country.

South Africa is about 10,000 km away from Italy, but it has the same daylight saving time and this can be a great competitive advantage. What are the main methods of approaching the South African market?

Working with a country that is in the same time zone as Italy has many advantages. You communicate in real time with the counterparts, at the level of technical and commercial assistance you work directly with the offices and factories, also taking a plane in the evening you arrive in the morning without losing days of work. The South African entrepreneurial culture is very Anglo-Saxon, informal but punctual. When meeting counterparts you have to go to the offices of the South African company, are not well seen meetings in hotels or public areas, the South African entrepreneur prefers to discuss business in their representative offices. The establishment of a company is very fast, it takes about three weeks to be operational, it is not necessary to have a local partner and the system of taxation is simple and very attractive.

In South Africa there are 9 very different regions. Which are the special economic zones in which to invest more than others?

The most industrialized part of South Africa is undoubtedly Gauteng, which includes Johannesburg and Pretoria, while for other sectors such as boating, food and wine and tourism Cape Town and Durban offer interesting opportunities for development. There are also strategic districts in some areas of the country, in particular: automotive, jewellery, footwear, textiles and other industrial productions. These areas are interesting because it is possible to take advantage of incentives and facilitations really remarkable. Even the start-ups are very active and thrive because they can act as a collector and valuable support to the traditional economy through a less academic and more innovative approach.

 

What are the sectors where Italian companies find the most opportunities in South Africa?

Italy has good market shares in several sectors of the South African economy in particular: Agro-industry ranging from food products in the strict sense of the word to food packaging and processing machinery, machinery for agriculture and forestry; hospital medical products; machine tools; machinery and equipment (especially in the automotive, textile, wood and heavy industry); automation systems; chemicals and pharmaceuticals; products from oil refining; earthmoving machinery; mining; automotive (especially components); renewable energy; electrical equipment; appliances for domestic use; plastics. Democratic South Africa has chosen the European Union as its strategic partner, so most of the goods produced within the EU arrive in South Africa without customs duties. This factor or aspect is not insignificant, seeing that on the contrary certain countries are raising duties and goods control systems.

Cape Town, Johannesburg, Pretoria, Port Elizabeth, Durban are the best known cities (and developed) relaunched thanks to the 2010 World Cup. After 10 years, what are the future projects of this country?

The infrastructure and major works sector is in constant turmoil. Italy, with the State Railways FS International, has won a major contract for the construction of a freight village near Johannesburg. The residential and commercial construction sector is growing steadily and requires both building materials and everything related to the home system. The renewable energy sector sees Italy with ENEL green power as the first foreign investor. Often Italian companies involved in medium/long-term projects bring with them a group of Italian companies for subcontracting. The system of hooking up is a valid one that allows you to explore the country and at the same time lower the classic risks of investments in foreign land.

They say, “It’s not all gold that glitters. Her long experience has also allowed her to see what not to do and where not to go so as not to waste time, money and precious energy. What are the ‘grey areas’ of this country with great potential?

The sectors where opportunities are less for Italian companies are: luxury, office furniture and all products with low added value where price is a determining element. If an Italian company wants to explore business opportunities with South Africa, I suggest to rely on experts who know the country very well and not trust the proposals that are found for example on the Internet. I always advise Italian entrepreneurs to come on a mission to South Africa before making investments and to acquire all the necessary information before making decisions. South Africa is the gateway to the market of Sub-Saharan Africa, a market that is being structured on the example of the European Union with infrastructure projects that allow the free movement of people and goods and the reduction of customs tariffs. There are many trade fairs that attract buyers from all over Africa, I always recommend to visit them and possibly participate as exhibitors to have a first and useful contact with the territory.

 

Aerial view of the city of Cape Town

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