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Country Profile: South Africa

• With a GDP of US$ 371.3 billion, South Africa is the second largest economy in the African continent after Nigeria.
• South Africa is one of the world’s leading mining and mineral-processing countries with around 60% of its exports represented by mining and mineral products.
• South Africa’s total trade slightly reduced in the past five years from US$ 192.38 billion in 2014 to US$ 187.85 billion in 2018.
• The complementarities between South Africa and India provide scope for more collaboration in food & agro processing, deep mining, defence, fin-tech, insurance healthcare & pharma, bio-tech, IT and IT enabled sectors, gems & jewellery and infrastructure

With a GDP of US$ 371.30 billion, the economy of South Africa is the second largest in the African continent after Nigeria. The World Bank categorises South Africa as an upper middle-income economy, one of only four such countries in Africa alongside Botswana Gabon and Mauritius as other three. South Africa faced a decade and a half of international sanctions, during which the GDP of this economy tripled. It is the only African economy to be a part of the G20 group of countries. It also became a part of the BRIC group (Brazil, Russia, India & China) in 2010, eventually forming what is now known as the BRICS.

South Africa is one of the world’s leading mining and mineral-processing countries with around 60% of its exports represented by mining and mineral products. Apart from gold and diamonds, the country also contains reserves of chromium, copper, iron ore, platinum, manganese, uranium, silver, titanium and beryllium.

In 2016 the top five challenges to doing business in the country were shortage of skilled workers, restrictive labour regulations, inefficient government bureaucracy, political instability, and corruption, whereas a strong banking sector was rated as a strongly positive feature of the economy.  

South African economy was colonized by four colonists, which included Dutch, French, German and British in a span of approx. three centuries. In December 1866, the first authenticated diamond was discovered on the banks of the Orange River by Erasmus Jacobs. In May 1871, De Beers Mine was discovered on Vooruitzicht farm near Bultfontein. Today, the South Africa economy has made a perennial mark on the world’s diamond industry, becoming one of the leading producers on the planet.

 

Source: https://countryeconomy.com/gdp/south-africa

 

Trade performance

South Africa’s total trade slightly reduced in the past five years from US$ 192.38 billion in 2014 to US$ 187.85 billion in 2018. Exports registered a growth of 7% and 1% for the time period 2017-2018 and 2014-2018 respectively. Imports for the said time period grew by 13% and -2% respectively. Current exports and imports figures of South Africa are US$ 94.42 billion and US$ 93.42 billion respectively. The effectively applied weighted average tariff (customs duty) for South Africa is 4.61% and the Most Favoured Nation (MFN) weighted average tariff is 6.65%. Total services trade of South Africa is US$ 31.9 billion, out of which US$ 16.1 billion is imports and US$ 15.8 billion is exports.

When it comes to services exports, travel services tops the list with 55% of services exports followed by transport services (15%). In terms of services imports, transport services (38.5%) imports top the list followed by travel (21.1%), other business services (14.7%) and telecommunications (8%). According to Services Trade Restrictiveness Index provided By OECD STRI database, air transport services and courier services are most restricted sectors, while road freight transport services and insurance services are the most liberal services to invest.

Openness to trade can stimulate and spur productivity growth through enhanced competitive pressures, access to new technology embodied in imported inputs, access to a wider range of complementary intermediate inputs and scale economies as export firms expand.

India-South Africa trade relations 

India is South Africa’s sixth largest exporting partner and fifth largest importing partner as per 2018 trade figures. In 2018-19, India’s exports to South Africa stood at US$ 4.06 billion registering a growth of 6.3% YoY. India’s imports from South Africa declined by 4.64%, plummeting to US$ 6.51 billion in 2018-19.

 

Source: Export Import Databank of India, MOCI, Government of India

India’s total trade with South Africa decreased from US$ 11.79 billion in 2014-15 to US$ 10.57 billion in 2018-19. Due to decline in India’s exports to South Africa from US$ 5.3 billion to US$ 4.06 billion between 2014-15 to 2018-19 our trade deficit increased from US$ 1.19 billion to US$ 2.45 billion for the same period.

Top products in terms of export potential for India in South Africa are rice, pharmaceutical products, motor vehicles, agro processing machineries, plastic and rubber products, processed food and beverages, chemical products and apparels.

India’s trade basket with South Africa, 2018-19

India’s export basket India’s Import Basket
HS CODE Product Description India’s Exports in US$ Mn HS CODE Product Description India’s Imports from US$ Mn
271019 Petroleum oils and oils obtained from bituminous minerals 494.37 270119 Other Coal such as coking coal 2,343.72
300490 Medicine put up for retail sale 439.38 710812 Gold as unwrought forms 1,296.07
870322 Sedan cars 384.24 710231 Non-industrial diamonds 383.28
890690 Lifeboats Vessels 184.23 270112 Bituminous coal 362.66
870321 Small hatchback cars 127.59 260200 Manganese Ores and Concentrates 301.51
851712 Telephones for cellular networks 98.13 260111 Iron ores and concentrates 251.96
271012 Light oils and preparations: 73.08 890690 Lifeboats vessels 180.75
100630 Rice 71.24 720449 Waste and scrap of Iron or Steel 139.35
610910 T-shirts of cotton 59.78 470200 Chemical wood pulp dissolving grades 124.94
293499 Other heterocyclic compounds 54.21 840734 Reciprocating piston engines used for propulsion of small vehicles 83.07

Source: Export Import Databank of India, MOCI, Government of India, figures in US$ million.

In 2016, the two countries set a target of doubling bilateral trade and investment to US$ 20 billion by 2021. So far, more than 150 Indian companies have invested in South Africa, employing more than 20,000 South Africans. These investors include some of India’s biggest and best-known industrial groups, such as Tata (automobiles, IT, hospitality and ferrochrome plant), UB Group (breweries, hospitality), Mahindra (automobiles) and a number of pharmaceutical companies, including Ranbaxy and CIPLA, as well as IT companies and some investments in the mining sector. Around 1.2 lakh Indian tourists visit South Africa while approx. 60,000 South African tourists visit India every year.

South African investments in India are also growing, led by SAB Miller for breweries, ACSA for modernizing airports, SANLAM and Old Mutual for insurance, Adcock Ingram for pharmaceuticals, Rand Merchant Bank for banking, etc.

South Africa has evolved as a regional hub of industrial and commercial development in Africa and beyond. The complementarities between South Africa and India provide scope for greater collaboration in food and agro processing, deep mining, defence, fin-tech, insurance healthcare and pharma, bio-tech, IT and IT-enabled sectors, gems and jewellery and infrastructure.

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