A key challenge for Africa in the 21st century is to develop an enabling business environment. This is a clear objective of the New Partnership for Africa’s Development (Nepad). Business, it is presumed, can provide the necessary impetus to unlock Africa’s vast economic potential, allowing it to successfully engage with its many developmental challenges. The experience of South African (SA) companies in the rest of Africa provides an important focus to highlight both the problems and challenges of these markets as well as the potential solutions.
SA business and investment on the continent is growing apace, diversifying from the traditional business of contracts in construction, mining, vehicle components, timber, and steel, into a variety of businesses including skills training, education, IT and telecommunications, clinics and healthcare, franchising, advertising, property development and waste management. (SA Department of Trade & Industry – 2002)
In less than a decade, South Africa has become one of the top 10 investors in, and trading partners of many African countries, displacing European and American companies which traditionally held the high ground, particularly former colonial powers. The push north has been fuelled by stagnation in the local market, curiosity about the opportunities in Africa, the fact that so many South African products are tailor-made for the African market, and regional integration.
In addition, many international companies either re-opened their offices in South Africa or opened new ones after the end of apartheid, and are using South Africa as a springboard for their operations into the continent. Nepad will play a role in future in encouraging business in Africa. These investments however, are not made without risks. According to Games (2003), there are still many overarching problems and trends that apply to the continent. Despite the problems and risks, South Africans continue to flock into the continent.
Investment by South African companies in the rest of the continent has a long history, particularly in the mining and construction sectors. It has risen significantly since the ANC came to power in 1994, across a range of sectors and disciplines, including many non-traditional exports. In 2001, South Africa was listed as the second biggest investor in the SADC region with investment of R14. 8 billion, and exports of approximately R34 billion into the continent.