Key Success Factors for Doing Business in South Africa

Essay: Key success factors in doing business in South Africa and their impacts on new business entrants

INTRODUCTION AND BACKGROUND

Africa is emerging as the new frontier of growth. The continent is the last frontier, with six of the world’s 10 fastest growing economies located in sub-Saharan Africa. Africa is home to more than a billion people and its economic growth will be fueled by global demand for resources, growing economic infrastructure spending, increasing population and urbanization. Africa’s huge business potential lies in the rise of its middle class, with one in three people now considered to be living above the poverty line- but not among the wealthy. Africans are aspirational and consumers have huge appetite and want goods and services similar to other growing economies such as the BRIC (Brazil, Russia, India and China) nations. Africa’s growth is being primarily driven by consumption of goods and services such as Retail, Financial Services and telecommunications.

South Africa is Africa’s most sophisticated economy and biggest of in terms GDP. However, it remains one of the most unequal countries in the world, which is largely a legacy of its apartheid past which created and exacerbated income inequality by excluding the majority of the country’s population from the economy. The South African government has launched various initiatives such as RDP, GEAR, AsgiSA , New Growth Path and National Development Plan to create the economic growth and to reduce the country’s poverty levels. South Africa has very strong financial sector and is 28th largest economy in the world and Africa’s biggest. The major exports are gold, diamonds, platinum, other metals and minerals and it has world class IT and emerging manufacturing sector.

The following are some of the key success factors of doing business in South Africa/Africa

• Understanding local consumers: Companies must take the time to understand the values, needs and behavior patterns of local consumers. African consumers typically have low incomes with unreliable cash flows, leading to distinctive buying patterns.

• Finding the right talent: While highly educated resources are becoming more common, they tend to lack the technical skills