Categories
BRIC BRICS

BRICS or What does South Africa offer investors?

Times are changing. In February this year, the letter S was added to the abbreviation BRIC, which indicates South Africa, ie the Republic of South Africa.

The country has long sought to side with Brazil, Russia, India and China. What is the economic situation in South Africa?

In this paper on South Africa, we will focus on its economic indicators and related information. According to the World Factbook server, the CIA had a population of 49 million in South Africa last year, making it the 25th most populous country in the world. Comparable countries in terms of population include, for example, Burma (54 million), North Korea (48.7 million) or Spain (46.7 million).

As with the population, South Africa holds a similar position in terms of gross domestic product. Gross domestic product in 2010 was $ 527.5 billion, making it the 26th largest country in Africa. After per capita, South Africa generated $ 10,700. GDP growth was three percent last year.

Strengths and weaknesses of South Africa

One of South Africa’s strengths is intensive mining. The industry is diversified. The sector of services such as telecommunications or banking is relatively developed. On the contrary, the weakness of the country is its inhabitants. A full quarter (26 percent) of the working population is unemployed and eleven percent of the population has AIDS. These two factors hinder the development of the economy and the better use of human resources.

In 2009, imports dominated exports. While exports accounted for 36 percent of gross domestic product, imports accounted for 40 percent of GDP.

Abundance and prosperity, but also scarcity

There is a significant lack of urban transport in South Africa. On the contrary, it has built a quality infrastructure between cities. Electricity generation is a similar strength. The vast majority of production (90 percent) is produced by burning coal in thermal power plants. Coal reserves are estimated at about 150 years. However, the power plants are old, so investment will be needed to modernize the operation. Electricity consumption is growing.

South Africa’s economy is based on commodity prices, which are a major export item. This puts Africa’s largest economy in an unenviable position. It is enough for commodity prices on world stock exchanges to fall and South Africa can cause serious problems.

In the territory of the Republic of South Africa, there are more than large quantities of minerals. If you are looking for the largest reserves of gold, then this country. Also, the reserves of other minerals such as manganese, platinum and vanadium are huge. South Africa ranks fifth in coal production, as well as second in the imaginary ranking of exporters of this raw material. The country mines diamonds, iron ore, chromium, nickel, uranium and natural gas. Only oil is missing and must be imported.

In agriculture, South Africa is self-sufficient. Basic crops such as wheat, corn, sunflower and sugar cane are grown here. South Africa ranks seventh in global vine and wine production.

In which fields to invest in South Africa?

The Ministry of Trade and Industry of the Czech Republic has identified nine main sectors that domestic entrepreneurs could use for exports to South Africa. If you invest in equities, you could focus on companies that operate in the agricultural processing, chemical, pharmaceutical and related industries, metalworking, mining and quarrying industries.

Opportunities for domestic entrepreneurs or investors may also be in the field of information and telecommunication technologies, or in transport. Tourism and the cultural industry are also important, which means, for example, the production of art objects and souvenirs or film production, etc.

Mutual funds and shares

Mutual funds that offer investments in joint-stock companies operating in South Africa are offered by KBC and UBS. You can use index certificates offered by ABN Amro, Commerzbank, Goldman Sachs, Morgan Stanley or Societé Genéralní for your investments. Conversely, for passive investments you can use ETFs from BNP Paribas, Lyxor or Market Access. If you would like to buy South African stocks directly, you can buy them on the Johannesburg Stock Exchange, as well as in New York or London.