Discover The Fastest Growing Industries in South Africa (2018)

South Africa is forecasted to be one of the next major world markets promising exponential growth and opportunities. The fastest growing industries in South Africa are what will help this country become a global powerhouse all while continuing to contribute greatly to Africa’s overall GDP. These industries include agriculture, mining, manufacturing, communications, tourism, textiles, wholesale and retail trade and even real estate, finance, and business services.

Although Africa has its challenges, there are many promising opportunities for global investors and businesses. Africa is known to take advantage of their growing youthful population and is forecasted to have the largest urbanization rate, surpassing China and India by 2034. Spending by African consumers reaches a whopping USD 4 trillion annually, with household consumption expecting to grow 3.8% by 2025. African businesses are also quite the spenders, with stats from 2015 stating they spent USD 2.6 trillion annually. Experts forecast this will increase to USD 3.5 trillion by 2025.

The Fastest Growing Industries in South Africa

Are you looking to get a piece of the pie? Then look no further than these fastest growing industries in South Africa. According to Statistics South Africa GDP – 2nd Quarter 2017, the sectors promising a lot of growth include finance/business services and real estate, which contribute around 22% towards the country’s GDP. Wholesale, retail and catering/accommodations contribute about 15%. Manufacturing sits at 14%.

Communications/Tech

ICT actually beats out agriculture as one of the fastest growing industries in South Africa. South Africa’s ICT sector grew at a whopping 5%, which is 15X times faster than the entire South African economy. The South African Electrolytic Corrosion Committee (SAECC) states that this country’s ICT market was worth an estimated USD 42.6 billion (R468.4-billion) in 2013 with IT accounting for USD15.08 billion and communications technology accounting for USD27.18 billion. The communications tech sector contributed more than 7% to South Africa’s GDP in 2016.

The country’s cell phone market is also the 4th fastest growing in the world at a rate of 50% per year. The cell phone market has only three operators but there are world-class telecommunications brands as well like Siemens, Alcatel, Telecom Malaysia and Vodaphone. Many investment opportunities lie in developing access control systems/security equipment, systems, and software development in the banking and financial services sector, exporting hardware, silicon processing for fiber optics, integrated circuits, and solar cells.

Agriculture

Agriculture is one of the fastest growing industries in South Africa known for their vast lands and profitable farming opportunities. Agriculture, including forestry and fisheries, is vital to the country’s economy as the sector grew by over 22% and contributed 4% to the country’s GDP in the first quarter of 2017. The GDP from the agricultural sector is expected to reach beyond USD 6 million by the end of the first quarter of 2018.

Not only is South Africa nearly self-sufficient in all major agricultural products, they are also a net food exporter. In 2016, South Africa exported USD 29.1 million worth of vegetables, fresh or chilled, to countries like the U.K (31%), the Netherlands (26%) and France (4.2%). Meanwhile, South Africa only imports about USD 1.97 million worth of vegetables, fresh or chilled (2016).

Mining

South Africa is the world’s biggest producer of gold and platinum, is the 4th largest diamond industry in the world and is also a leading nation in base metals and coal. There is no lack of abundance of mineral resources, resulting in mining as one of the fastest growing industries in South Africa. This untapped market has 40% of the world’s known resources, with an estimated 36,000 tonnes of undeveloped resources. Experts say that ⅓ of the world’s gold has yet to be mined.

The GDP from mining in South Africa is expected to be USD 2.06 million by the end of the 1st quarter of 2018. Long-term projections for GDP from mining forecast it to reach USD2.07 million in 2020. Lucrative opportunities are abundant, especially in downstream processing and adding value to iron, carbon, steel, stainless steel, aluminum, platinum metals and gold.

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Manufacturing

Manufacturing production increased by 2% in December 2017 as compared to the previous year and sees the highest utilisation of production capacity in radio, television and communication apparatus (85.4%), petroleum and plastic products (83.5%), wood products, paper, publishing and printing (82.9%), food and beverages (82.5%) and motor vehicles, parts and accessories (82.3%).

Manufacturing has always been a dominant industry and sectors such as agro-processing, automotive, chemicals, technology, and electronics, metals, textiles, clothing and footwear are helping the country to become a new potential global powerhouse. The GDP from manufacturing in South Africa increased to USD 33 million in the third quarter of 2017 from USD 32.9 million in the second quarter of 2017. Experts forecast that the manufacturing industry will nearly double its output from $500 billion today to $930 billion in 2025, making this one of the fastest growing industries in South Africa.

Tourism

According to the latest Tourism and Migration Survey, almost 3.5 million tourists passed through South Africa’s ports of entry in August 2017. Nearly 97% of tourists travel through for a holiday while the rest were either for business or school. Students made up 4.7% of tourists from ‘other’ African countries compared with 0.6% from the SADC countries. Of all travelers, 74% were non-South African.

There are many opportunities in tourism, as it is one of the fastest growing industries in South Africa. Some investment and business opportunities include infrastructure development; accommodations like hotels, boutique hotels, lodges and resorts; adventure, eco-adventures, sports, conference and cultural tourism; leisure complexes and world-class golf courses; attractions and activity-based tourism; and museums and heritage, cultural, music, arts festivals and events … only to name a few.

According to the World Travel and Tourism Council, tourism contributes about 7% of the GDP and employment in South Africa.

Textiles & Apparel

Textiles and apparel accounted for 14% of manufacturing in South Africa and is their 2nd largest source of tax revenue. Textiles and apparel is also the 3rd largest employer in the manufacturing sector and their 11th largest export. Textiles contribute about 9% to the country’s GDP.

This capital-intensive industry has undergone intense technological change and is supported by a comprehensive transport and communications infrastructure. Based on these transformations and the support from African Growth and Opportunity Act (AGOA), there are many opportunities abound within the textile and apparel industry in South Africa, everything from natural and synthetic fiber production to non-woven fabric, spinning, weaving, tufting, knitting, dyeing, and finishing.

A government initiative, The Clothing and Textile Competitiveness Programme (CTCP), is a program meant to improve South Africa’s global competitiveness. It covers all aspects of business operations, from the very specific to the very generic. More information can be found at the CTCP website.

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Wholesale/Retail Trade

The retail market is one of South Africa’s biggest, most affluent and important sectors. The retail market grew 2.4% in 2014 with the fastest growing segments including textiles and clothes at +3.5%, hardware by +2.6%, general stores by +2.4%, household goods by +2.3%, pharmaceuticals by +2.1% and food and drinks by +0.9%. This market is promising medium to long-term growth due to the growing youthful demographic of 55 million people, as well as from its position as a springboard to the rest of sub-Saharan Africa.

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Real Estate, Finance & Business Services

South Africa’s financial sector is very sophisticated despite the country’s “emerging market” status. The strong financial sector is built on a foundation of concrete legal and physical infrastructures that promise stable economic growth. South Africa has recently survived a recession and has come out in a pretty solid position.

Financial, real estate and business sector services are the pillar of South Africa’s economic growth and made it on our list as one of the fastest growing industries in South Africa. Many domestic and foreign institutions already provide a full range of services from commercial and retail, to merchant banking, mortgage lending and insurance, as well as investments. When compared to even the best-industrialized countries, South Africa’s banking sector is a tough competitor.

Fastest Growing Industries in South Africa Promise New Opportunities

All of these fastest growing industries in South Africa are characterized by high growth, high profitability, and low consolidation. Despite recent challenges in South Africa and the rest of Africa, spending seems to remain the same. Economic experts are forecasting that 2018-19 will see stronger activity in trading with a boost of specific exports. Investment growth will also happen in 2019 on the assumption that business confidence will continue to increase and policy uncertainty will continue to fade.

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