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SOUTH AFRICA

Country Analysis

SUBMITTED TO:
PROF. R SUGANT
ASST.PROFESSOR, MARKETING
SDMIMD

SUBMITTED BY- GROUP 5, SECTION B


MEMBERS:
BISHAL GUHA-14036
GULLIET RAJU-14060
MOHD.RAFATH- 14082
PRIYA SINGH- 14110
SACHIN HONNAVAR-14129
SIDDHARTH HEGDE-14152
VARKALESH J-14173

Contents
Macro-economic Data............................................................................................ 2
Macroeconomic indicators..................................................................................2
Demographics........................................................................................................ 3
Environmental Analysis Political, Economic, Legal & Socio-Cultural....................5
Natural Resources.................................................................................................. 7
Infrastructure......................................................................................................... 8
Brief Industry Analysis........................................................................................... 9
Automotive Industry........................................................................................... 9
Mining & Minerals............................................................................................... 9
ICT & Electronics............................................................................................... 10
Chemical Industries.......................................................................................... 10
Financial Sector................................................................................................ 10
Agriculture........................................................................................................ 10
SWOT Analysis..................................................................................................... 11
Recommendations............................................................................................... 12
Reference............................................................................................................ 12

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Macro-economic Data
South Africa is a developing country with population of 52.98 Mn as of 2013 with current
GDP of $350.6 Bn. The labour unrest in South Africa that marked 2012 improved in 2013,
proving to be less violent but more widespread, and it significantly affected output in the
automotive and agricultural sectors. Unemployment and labour relations continue to pose
challenges for the country. Unemployment remains high at 25.2% overall, and 64.8% for
young people between the ages of15 and 24. The governments newly launched employment
tax incentive aims to address this challenge by encouraging private sector absorption of youth
by subsidising the salaries of newly recruited workers aged between 18 and 29. However, the
overall labour market remains constrained and labour unrest continued to reduce South
Africas output in 2013, especially in agriculture and manufacturing. Furthermore, output
potential is constrained by a skills shortage, and calls are being made for further investment
and reform of the poorly performing education system.
Broadly, the South African economy remained within the Reserve Banks (SARB) target
inflation range of 3%-6%, estimated at 5.7% in 2013. The Automotive Production
Development Plan (APDP) that came into force in January 2013 is aimed at encouraging new
investments in the industry, promoting use of local components and boosting annual
production to 1.2 million vehicles by 2020. Both South Africas retail sector and its financial
services industry are the most sophisticated on the continent and both have a significant
regional presence

Macroeconomic indicators

2012

2013

2014

2015

Real GDP growth

2.5

1.9

2.7

3.0

Real GDP per capita growth

1.7

1.2

2.0

2.3

CPI inflation

5.7

5.7

5.7

5.3

Budget balance % GDP

-4.2

-4.1

-4.1

-3.9

Current account balance % GDP

-5.2

-6.5

-6.4

-6.4

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Demographics
Demographics are the quantifiable statistics of a given population. Demographics are also
used to identify the study of quantifiable subsets within a given population which
characterize that population at a specific point in time.

Population
The last national census of the South African population was carried out in 2011. In 2014, the
estimate is 53.1 million, but because of other nations outpacing South Africas growth rate,
this would drop the nation to 25th place for being the most populous.
Current population -

51, 790, 913

Current male population -

25, 661, 863 (49.5%)

Current female population -

26, 129, 050 (50.5%)

Age Structure
The age structure of a population is the distribution of people among various ages. Age of
South Africa is divided as follows
1.
2.
3.
4.
5.

0-14 years: 28.3% (male 6,859,518/female 6,815,185)


15-24 years: 20.2% (male 4,914,394/female 4,866,121)
25-54 years: 38.2% (male 9,543,746/female 8,923,605)
55-64 years: 7.1% (male 1,470,282/female 1,950,499)
65 years and over: 6.3% (male 1,205,657/female 1,826,638)

Dependency Ratio
In economics, geography and demography the dependency ratio is an age-population ratio of
those typically not in the labour force. In South Africa the total dependency ratio is 53.9%
where youth dependency ratio is 45.2% and elderly dependency ratio is 8.7%.

Birth rate
The birth rate is the total number of births per 1,000 of a population in a year. The rate of
births in a population is calculated in several ways: live births from a universal registration
system for births, deaths, and marriages; population counts from a census, and estimation
through specialized demographic techniques..
In South Africa the birth rate is 18.94 birth/1,000 in a year

Mortality rate
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Mortality rate is a measure of the number of deaths (in general, or due to a specific cause) in
a population, scaled to the size of that population, per unit of time. Mortality rate is typically
expressed in units of deaths per 1,000 individuals per year.
In South Africa mortality rate is 17.49 deaths/1,000 population.

Infant Mortality rate


Infant mortality is the death of a child less than one year of age. Childhood mortality is the
death of a child before the child's fifth birthday
In South Africa it is
Male:

45.25 deaths/1,000 live births

Female:

37.9 deaths/1,000 live births

Total:

41.61 deaths/1,000 live births

Sex Ratio
Sex ratio is the ratio of males to females in a population. The human sex ratio is of particular
interest to anthropologists and demographers.
In South Africa the sex ratio is as follows:
At birth:

1.02 male(s)/female

Total population:

0.99 male(s)/female

Total Fertility Rate


The total fertility rate (TFR), sometimes also called the fertility rate, population is the average
number of children that would be born to a woman over her lifetime.
The total fertility rate in South Africa is 2.23 children born/woman

Literacy Rate
Literacy is the ability to read and write. Literacy encompasses a complex set of abilities to
understand and use the dominant symbol systems of a culture for personal and community
development.
In South Africa 93% of the population can read and write.
Total population:
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93%

Male:

93.9%

Female:

92.2%

Environmental Analysis Political, Economic, Legal &


Socio-Cultural
The South African economy is one of the stable economies on the African continent. The
economy is expected to experience good growth and reach $500.1 billion by 2018. South
Africas economy was affected by the global financial crisis, but recovered after achieving
significant economic growth due to strong its commodity market and higher domestic
demand.
While much of the world were facing financial meltdown, South Africa has managed to
withstand on its own feet largely due to its prudent fiscal and monetary policies. The
country is politically stable and has a well-capitalised banking system, abundant natural
resources, well developed regulatory systems as well as research and development
capabilities, and an established manufacturing base.
Ranked by the World Bank as an upper middle-income country, South Africa is the largest
economy in Africa and it remains rich with promise. With a world-class and progressive
legal framework, South African legislation governing commerce, labour and maritime issues
is particularly strong, and laws on competition policy, copyright, patents, trademarks and
disputes conform to international norms and standards. The country's modern infrastructure
supports the efficient distribution of goods throughout the southern African region.
The economy has a marked duality, with a sophisticated financial and industrial economy
having grown alongside an underdeveloped informal economy. South Africas success in
reforming its economic policies is probably best reflected by its GDP figures, which reflected
an unprecedented 62 quarters of uninterrupted economic growth between 1993 and 2007,
when GDP rose by 5.1%. With South Africas increased integration into the global market,
there was no escaping the impact of the 2008-09 global economic crisis, and GDP contracted
to 3.1%.

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While the economy continues to grow - driven largely by domestic consumption growth is
at a slower rate than previously forecast. It is projected to grow at 2.7% in 2013, 3.5% in
2014 and 3.8% in 2015.
According to figures from the National Treasury total government spending will reach R1.1trillion in 2013. This represents a doubling in expenditure since 2002/3 in real terms . To
ensure that there is a similar improvement in service-delivery outcomes, the government is
putting in measures to strengthen the efficiency of public spending and to root out corruption.
Under its

inflation-targeting policy, implemented by the South African Reserve

Bank (SARB), prices have been fairly steady. In January 2013, the annual consumer inflation
rate was 5.4%, dipping from December 2012's 5.7%. Stable and low inflation protects living
standards, especially of working families and low-income households.
South Africa has a diverse economy, with key sectors roughly contributing to GDP* as
follows:

Agriculture: 2.2%

Mining: 10%

Manufacturing: 12.3%

Electricity and water: 2.6%

Construction: 3.9%

Wholesale, retail and motor trade: 16.2%

Transport, storage and communication: 9%

Finance, real estate and business services: 21.2%

Government services: 16.7%

Personal services: 5.9%

The country's outlook is affected both by national concerns, such as unrest in and pressure on
the mining industry, as well as international sluggishness, with Europe as one of South
Africas chief export destinations.
However, trade and industrial policies encourage local firms to explore new areas of growth
based on improved competitiveness. China, India and Brazil offer significant opportunities.
Infrastructure, mining, finance and retail developments across Africa are helping to fuel a
growth trajectory in which South Africa can participate.
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The culture of South Africa is known for its ethnic and cultural diversity. The South African
black majority still has a substantial number of rural inhabitants who lead largely
impoverished lives. It is among these people, however, that cultural traditions survive most
strongly; as blacks have become increasingly urbanised and westernised, aspects of
traditional culture have declined. Urban blacks usually speak English or Afrikaans in addition
to their native tongue.

Natural Resources
Africa holds a huge proportion of the worlds natural resources. It is a leading mining country
and it is renowned for its mineral resources, which make up a large portion of the worlds
reserves. South Africas mineral reserves are one of the most valuable in the world. The
country is one of the leading producers and exporters of chromite ore, gold, and diamonds.
Gold
With South Africas economy built on gold and diamond mining, the sector is an important
foreign exchange earner, with gold accounting for more than one-third of exports.
The gold exports are worth billions of dollars. The country has about 50% of the global gold
reserves. Most of the gold is exported to various countries making it one of the natural
resources that has made a big impact to the world. This mineral was discovered in the late
1800s and has grown to become one of the most important industries for the country and the
world.
Diamonds
The country is synonymous with diamonds, which were discovered in the 1800s. South
Africa is a leading diamonds producer and exporter. There are several diamond mines in the
country and it exports millions of carats every year. The country supplies diamonds to
established jewellery shops in various parts of the world including New York.
Ferrochrome
South Africa is among the top ferrochrome producers in the world. The country exports it
raw to different nations. The country has invested in the most advanced production
equipment and this has allowed it to rival some of the other leading producers such as China.
Platinum

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South Africa has more than 80% of the globes platinum reserves. This has helped to make its
platinum mining industry one of the most successful. South Africa and Russia produce about
90% of the worlds platinum.
Vanadium
Vanadium is considered one o the most abundant elements in the world. South Africa
produces about 23% of the worlds vanadium. It is the third leading producer and exporter of
this mineral after China and Russia. Most of the vanadium is required for steel production.
High grade vanadium pentoxide for the international market is produced by the Vanchem
plant. Ferrovanadium is also produced for the local and export market by Vanchem.
Coal
Around 77% of South Africa's energy needs are directly derived from coal and 92% of coal
consumed on the African continent is mined in South Africa.

Infrastructure
Ports and shipping
Major shipping lanes pass along the South African coastline in the south Atlantic and Indian
oceans. Approximately 96% of the country's exports are conveyed by sea, and the eight
commercial ports are the conduits for trade between South Africa and its southern African
partners as well as hubs for traffic to and from Europe, Asia, the Americas and the east and
west coasts of Africa. The commercial ports are: Richards Bay and Durban in KwaZuluNatal; East London, Port Elizabeth and the Port of Ngqura in the Eastern Cape; and Mossel
Bay, Cape Town and Saldanha in the Western Cape.
Roads
South Africa's total road network is about 747000km, the longest network of roads of any
African country. The drive from Musina on South Africa's northern border to Cape Town in
the south is a 2000km journey on well-maintained roads. Sanral is responsible for the
country's network of national roads, which cover around 16200km. There are about
185000km of provincial roads, and the municipal network totals around 66000km, according
to the SA Institute of Civil Engineering.
Railways

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South Africa has an extensive rail network the 14th longest in the world connecting with
networks in the sub-Saharan region. The country's rail infrastructure, which connects the
ports with the rest of South Africa, represents about 80% of Africa's total. The rail network is
managed by the Department of Public Enterprises via Transnet. Transnet Freight Rail is the
largest railroad and heavy haulier in southern Africa, with about 21000km of rail network, of
which about 1500km are heavy haul lines. Just over 8 200km of the lines are electrified.
Around 2.2-million people travel by train every day in South Africa. Metrorail commuter
services can be found in Cape Town, the Eastern Cape Province, Durban, and greater
Johannesburg and Pretoria, focusing mainly on poorer South Africans.
Airports
South Africa's 10 airports handle more than 98% of the country's commercial traffic, with
200 000 aircraft landings and 10-million departing passengers annually. State-owned Airports
Company of South Africa (Acsa) is responsible for managing the country's airports and
improving productivity of its airports. Other airports include Lanseria (Midrand), Gateway
(Polokwane), Nelspruit and Kruger (Mpumalanga).
Dams
South Africa has over 500 government owned dams. The dams are spread across all nine
provinces and can be seen to range in storage capacity from a volume of 5500 million cubic
metres of water down to 0.2 million cubic metres of water. Currently, South Africa uses about
10200 million cubic metres of water from our various major dams per year. This amount is
about 20% of the total mean run-off volume of water South Africa receives per annum.
Energy
With abundant coal supplies, South Africa meets around 77% of its energyneeds through
coal. While it is largely used to generate electricity, a significant amount is channelled to
synthetic fuel and petrochemical operations. Around 28% of coal production is exported

Brief Industry Analysis


Automotive Industry
Many of the major multinational firms use South Africa to source components and assemble
vehicles for the local and international markets. The sector is one of South Africas most
important, contributing at least 6% to the countrys GDP. In 2010, 271 000 vehicles were
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exported. More than 28 000 people are directly employed in automotive manufacturing.
Vehicle manufacturers such as BMW, Ford (incorporating Mazda), General Motors,
Mercedes Benz, Nissan, Renault, Toyota and Volkswagen have production plants in South
Africa

Mining & Minerals


South Africa is a world leader in mining. The country is famous for its abundance of mineral
resources, accounting for a significant proportion of world production and reserves, and
South African mining companies are key players in the global industry Overall, the country is
estimated to have the worlds fifth-largest mining sector in terms of GDP value. South Africa
is also a world leader of new technologies, such as a ground-breaking process that converts
low-grade superfine iron ore into high- quality iron units.

ICT & Electronics


The South African information and communication technologies (ICT) sector is well
established and sophisticated. South African companies are world leaders in pre-payment,
revenue management and fraud prevention systems, and in the manufacture of set-top boxes,
all exported successfully to the rest of the world. With a network that is 99.9% digital and
includes the latest in wireless and satellite communication, the country has the most
developed telecom network in Africa.

Chemical Industries
South Africa's chemical industry, the largest of its kind in Africa, is highly complex and
widely diverse, spanning fuel and plastics fabrication to pharmaceuticals. It is of substantial
significance to the South African economy, and a key component of the country's industrial
base. It employs around 200 000 people. South Africa is among the most cost-effective
producers of ethylene and propylene in the world, thanks to abundant access to low-grade
coal and leading-edge process technology.

Financial Sector
South Africa's financial services sector, backed by a sound regulatory and legal framework, is
sophisticated, boasting dozens of domestic and foreign institutions providing a full range of
services commercial, retail and merchant banking, mortgage lending, insurance and
investment. The South African banking system is well developed and effectively regulated,
comprising a central bank the South African Reserve Bank .Investment and merchant
banking remains the most competitive front in the industry, while the country's "big five"
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banks Absa, FNB, Standard Bank, Nedbank and newcomer Capitec dominate the retail
market

Agriculture
South Africa has a dual agricultural economy, with both well-developed commercial farming
and more subsistence-based production in the deep rural areas. biodiversity, together with a
coastline 3 000 kilometres long and served by eight commercial ports, favours the cultivation
of a highly diverse range of marine and agricultural products, from deciduous, citrus and
subtropical fruit to grain, wool, cut flowers, livestock and game. While 12% of South Africa's
land can be used for crop production, only 22% of this is high-potential arable land. The
greatest limitation is the availability of water, with uneven and unreliable rainfall. Around
1.3-million hectares are under irrigation, and around 50% of South Africa's water is used for
agriculture. Aquaculture (fish farming) is regarded as priority sector, largely because of its
potential for job creation as it scales up to meet increasing domestic demand

SWOT Analysis
Strengths

Regime & Regulatory wise more evolved


Level of Corruption is low - Second least corrupt country in African Continent
Modern Infrastructure
Median Age is 17 years ( Strong Labour Force)
Large English speaking population
Strategic Population

Weakness

Inadequate Technology
High Taxation level
High Unemployment
Lack of Capital management- Citizens feel entitled to increased pays
High Education Costs

Opportunities

Online Selling
Transhipment point
Renewable Source of Energy
Large Young labour Force

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Threats

Racism
Coastal Area
Crime in Big cities

Recommendations
There is lot of Scope for Indian Pharmaceutical industry in South Africa. The tropical climate
of Africa makes the continent hotbed for infectious diseases particularly Malaria,
Tuberculosis and AIDS. Outbreak of Polio, Cholera, yellow fever, measles, hepatitis and
tetanus are also frequent. It is also estimated that pharma markets revenue are going to
increase 13.8% CAGR.
To penetrate the market, foreign pharmaceutical companies must bolster their distribution
channels by entering strategic partnerships with local, trustworthy stakeholders. They will
also need to address the loopholes in the supply chain and distribution channels to ensure
product availability and prevent the distribution of counterfeit drugs.
For this reason, we suggest Acquiring the existing drug industry by wholly acquiring them.
This will not only help get their customer base but also help them have a strong supply chain
and distribution network

Reference
http://www.mediaclubsouthafrica.com/africa/37-economy/economy-bg/111-saeconomy-key-sectors
http://www.southafrica.info/business/economy/sectors/
http://en.wikipedia.org/wiki/South_Africa
http://data.worldbank.org/country/south-africa
http://www.eia.gov/countries/cab.cfm?fips=SF
http://www.brandsouthafrica.com/research-analysis
http://www.southafrica.info/business/economy/econoverview.htm#.VIQK0zGUeAU#ix
zz3LCIwIcQo

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