Growth Factors of Internet Retail in South Africa

1. Expanding Internet Penetration: Expanding Internet Penetration: One of the primary catalysts behind the rapid growth of internet retail in South Africa is the increasing accessibility of the internet. With improved infrastructure and affordable data plans, a larger portion of the population now has the ability to connect to the digital world. This expanded internet penetration has opened doors to new online shoppers, creating a vast consumer base that seeks the convenience and efficiency of virtual marketplaces.
2. Mobile Revolution: The ease of access to smartphones has played a pivotal role in propelling the growth of internet retail. South Africa has witnessed a significant increase in mobile usage, with more people relying on their smartphones to access the internet and make online purchases. Mobile-friendly E-Commerce platforms, coupled with secure and seamless payment options, have made it easier for consumers to shop on-the-go, driving the surge in mobile commerce.
3. Digital Payment Solutions: The evolution of digital payments has significantly contributed to the growth of internet retail. South Africa has witnessed the rise of convenient and secure payment methods such as mobile wallets, digital banking, and payment gateways. These innovations have instilled trust among consumers, making online transactions more seamless and reducing barriers to entry for those who were previously hesitant to shop online.
4. Diverse Product Range and Competitive Pricing: Internet retail in South Africa has diversified the product range available to consumers, surpassing the limitations of physical stores. Online platforms now offer an extensive selection of products, including niche items and international brands, catering to a wide range of preferences and interests. Furthermore, online retailers often provide competitive pricing due to reduced overhead costs, passing on the benefits to consumers.
5. Enhanced Customer Experience: The growth of internet retail in South Africa has forced businesses to prioritize customer experience. Online retailers are investing in user-friendly interfaces, personalized recommendations, and efficient delivery services. Consumers now have the convenience of comparing products, reading reviews, and making informed decisions from the comfort of their homes. This enhanced customer experience has fostered loyalty and trust, encouraging repeat purchases.

The Future of Retail

As the dynamic nature of the digital world has proven, nothing stays the same for very long. As a result, it can be adequately predicted that more and more physical stores are going to invest in functioning online platforms which are mobile and user friendly in an attempt to maintain market share. As more of the population is able to access the internet through different means, retailers will need to think quick on their feet to ensure that the content and online interface that they are offering is engaging and competitive in order to keep potential customers interactive on their page and promote them to complete their purchases. This screen stimulation can be aided by the ease of online payment methods and growing ease of purchase.

Consumers owe the growth of internet retail in South Africa for having ushered in a new era of convenience, choice and accessibility in both the business-to-business and the business-to-consumer markets.  As internet penetration expands, mobile usage soars, and digital payment solutions become more prevalent, online shopping is set to continue its upward trajectory. Businesses that embrace the digital landscape and adapt to evolving consumer preferences stand to benefit from the climbing potential in internet retail in South Africa. The future holds exciting possibilities as technology continues to shape the way we shop, connect, and engage in the ever-evolving digital world.

InterGest South Africa is able to offer a full understanding on the South African market and the potential that comes with expanding access to online markets. With our thorough services of accounting practices, local tax advisory, employer of record, incorporation of companies and banking services, we are able to offer an all-encompassing view of South Africa as a business destination. Allow us the opportunity to focus on the market entry, while you and your company focus on the client relationships and online and in person engagement.

For more information on South Africa as an investment destination or as a market entry point, check out our Investment Guide.

SOURCES:

https://www.euromonitor.com/article/growth-internet-retail-south-africa

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The world today is abuzz with fast-paced and highly competitive business environments in all fields. This is where B2B (business-to-business) supply chain optimisation of operations could prove crucial to achieving success. For businesses in South Africa, this means implementing B2B supply chain optimization strategies that can help improve efficiency, reduce costs, and enhance overall productivity.

Supply Chain Pain Points:

Supply chain management is a turbulent industry to be in these days. Technological advancements, delivery restrictions, increased competitors and fluctuating price structures challenges companies to meet their deadlines and deliver on their customer service promise while maintaining an efficient cost base and asset utilisation.

• Increase in shifting buying behaviour: the buying structure seen by suppliers both at business and consumer level is that of a hybrid system. Buyers now take the form of both online and in person. This new model brings with it a new balance that supply chain must master in order to fufil the ever changing need of the customer.
• Rising supply chain costs: The costs of logistics is one which no company can hide from. Globally costs have been driven up by the demand for fossil fuels and energy resources.
• Outdated business practices: Just like fad trends, fad business practices can also exist. Rigid, traditional and inflexible ways of thinking are often to blame when it comes to stock outs, lost sales and lost market share.
• Sustainability: Consumers demand for sustainable practices plays a heavy part in business decisions. Access to information has triggered consumers desire to know the origin of the product, the detailed structure of the product, where the product will go after use and how a business in involved in managing climate change.

What is B2B Supply Chain Optimisation?

B2B supply chain optimisation is the process of streamlining and improving the flow of goods and services from one business to another. This flow of goods does not make any contact with the final consumer. It involves two businesses optimising their various supply chain processes, including procurement, inventory management, transportation, and logistics, to ensure that they are efficient and effective.

By implementing B2B supply chain optimisation strategies, businesses can reduce lead times, improve delivery times, and increase customer satisfaction. This, in turn, can help businesses gain a competitive advantage in the market and achieve long-term success and preference against competitors.

Benefits of B2B Supply Chain Optimisation:

There are several benefits to optimising B2B supply chain operations, including:

• • Improved Efficiency: By streamlining supply chain processes, businesses can reduce waste and improve efficiency, leading to cost savings and increased profitability.
  • Enhanced Customer Satisfaction: Optimising supply chain operations can help businesses improve delivery times, reduce errors, and provide better customer service, leading to increased customer satisfaction.
  • Increased Flexibility: A well-optimised supply chain can help businesses respond quickly to changes in demand or market conditions, allowing them to adapt and remain competitive.

Implementing B2B Supply Chain Optimisation in South Africa:

Implementing B2B supply chain optimisation strategies in South Africa requires a comprehensive approach that addresses the unique challenges faced by businesses in the region. Some key strategies that can help optimize supply chain operations in South Africa include:

• Leveraging Technology: Businesses can use technology to automate and streamline various supply chain processes, such as inventory management, transportation, and logistics.
• Collaboration: Collaboration between businesses in the supply chain can help improve communication and coordination, leading to better efficiency and reduced costs.
• Data Analytics: Businesses can use data analytics to gain insights into supply chain operations and identify areas for improvement.
• Lean Management: Lean management principles can help businesses reduce waste, improve efficiency, and increase productivity.
• Developing Local Suppliers: Developing relationships with local suppliers can help businesses reduce lead times, transportation costs, and improve overall supply chain efficiency.

If there is anything promised in the international business market, it is that nothing stays the same for very long. This liquid market which we find ourselves in calls for flexible business practices which are efficient and engaging for companies. With very little room for error or for profit loss, finding effective means and implementing B2B supply chain optimisation strategies is crucial for businesses in South Africa to remain competitive and achieve long-term success. By leveraging technology, collaborating with supply chain partners, using data analytics, implementing lean management principles, and developing relationships with local suppliers, businesses can optimise their supply chain operations and achieve greater efficiency, reduced costs, and increased customer satisfaction.

InterGest South Africa works closely with logistics partners and values the relationship we share. By putting our clients in touch with the right distribution channels ease of business is promoted along with ease of access for consumers. Local warehousing, adequate access to fuels, and complete knowledge of the distribution link often can seem daunting in a foreign market, however with us readily available to advice and introduce you to the right people, it could be process worth fully understanding in order to take full advantage of and reap the benefits that lie instore. Our African reach includes Kenya, Mozambique, Tanzania and South Africa and provides us the opportunity to onboard a vast array of clients with the potential to grow internationally. For more about our accounting services, tax advisory, payroll experts, company incorporation or employer of record services, send us as email at contact@intergest.co.za or visit our website.

SOURCES

https://www.pwc.co.za/en/services/consulting/supply-chain-management.html

https://www.researchgate.net/publication/304184293_Supply_chain_management_challenges_in_the_South_African_public_sector

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• Smartphones:
  • Smartphones have become an integral part of our day to day lives and with South Africa having had taken to the digital revolution in recent years. Spanning beyond South Africa, the African region are eager to stay connected to the rest of the world and to global news and opportunities. In 2022, it was recorded that 20 million people in South Africa make use of a smartphone, accounting for one third of the population (Statista). The benefits of this digital interconnectedness are seen through social media, e-commerce opportunities and mobile banking. Leading smart phone brands offer competitive features and affordable prices to the African market making it a highly sought after product.
• Solar Power Systems:
  • Electricity has become a valuable resource in South Africa as the cost has risen and its availability has dwindled. With this is mind, it is clear why residents are turning to a more renewable energy solution. Solar Power Systems have gained popularity in recent years due to their ability to reduce electivity bills and provide a reliable back up power supply during outages. This Solar Power system appeals to a resource which Africa is renowned for, the sun. The abundant sunshine in the region throughout the year in South Africa offers an ideal environment for harnessing solar energy leading business owners to make this product readily available in South Africa. The demand therefore for solar panels, batteries and inverters has surged in the country, and only stands to grow as more success stories and ease of use arise.
• Home Appliances:
  • The demand for home appliances remains steady as a result of practicality and convenience. Kitchen appliances like refrigerators, washing machines, dishwashers and washing machines are essential in a modern home. With new energy-efficient models becoming particularly popular, electrical consumption can be throttled and contribute towards a greener environment. Tech savvy consumers are now focusing on building ”SmartHomes” and therefore creating a demand for advanced features such as application-controlled functionality.
• Health and Wellness Products:
  • Health and wellness post pandemic has become a main focus in many South Africans lives, obviously having an effect on product demand. Dietary supplements, fitness equipment and personal care items are sought after by South Africans who aim to live a healthy lifestyle. Impressively, South Africans are well known for being one of the more active countries on the continent, measuring 2.2 million people. A market for natural and organic products including skincare, hair care and organ health boosters is seen to be on the rise and consumers have become more conscious of the ingredients which they use.
• Online Gaming Consoles:
  • The gaming industry has experienced remarkable growth worldwide and South Africa is no exception. The demand for online gaming consoles, accessories and games has skyrocketed in recent years highlighting the need for product availability in South Africa. With a large enthusiastic gaming community, South Africans are embracing the immersive experience provided by gaming consoles. Online multiplayer games, virtual reality (VR) devices and gaming accessories, such as head sets and controllers are highly sought after by gamers country wide.

South Africa’s dynamic consumer market has witnessed an increased demand for various products driven by technological advancements, sustainability, health conscious and entertainment preferences. The demands of the region allow companies to profile the target market and develop effective campaigns and useful products to infiltrate products. As consumer needs continue to grow and evolve, it will be fascinating to witness how the market responds and expands.

With this ever changing market, narrowing down a successful path may only become known through excessive knowledge of local trends. Our team at InterGest South Africa have sufficient understanding and many contacts spanning many industries, appealing to entrepreneurs and foreign investors who wish to gauge the African market. The basic needs of consumers tend to follow an exponential path as population and requirements for basic needs increase. Allow InterGest South Africa the opportunity to discuss your business ideas and plans further in order to appeal to the ever growing African Market.

If you have a product or service in one of these industries or another, check out our investment guide and pop us an email to further understand the successful potential of African soil.

SOURCES:

https://www.statista.com/statistics/488376/forecast-of-smartphone-users-in-south-africa/

https://www.statista.com/statistics/308807/members-of-health-clubs-in-africa-and-middle-east-countries/#:~:text=In%20South%20Africa%2C%20fitness%20and,2.26%20million%20people%20in%202019.

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Hydroponic Farming defined:

Hydroponics is a method of growing plants and crops without soil. Instead, plants and crops are grown in a nutrient-rich water-based solution that is circulated through their roots. This approach allows for precise control over the crops’ growing conditions, including water, nutrients, and temperature. Hydroponic farming can be performed indoors, in greenhouses, or outdoor environments making it a low-fuss setup and rather easy to maintain (an attractive factor to African farmers and investors who are used to inconsistent conditions).

Advantages of Hydroponic Farming in Africa:

• Less Water Usage: Hydroponics offers several advantages over traditional soil-based agriculture, particularly in the African region. First and foremost, hydroponics uses significantly less water than traditional agriculture. Water is a scarce and precious resource in many parts of Africa, and hydroponics allows for more efficient water use, reducing the strain on local water sources.
• Less Soil: Second, hydroponics can be done in areas where soil quality is poor or non-existent. Many areas of Africa are arid where the soil is either depleted of nutrients or contaminated with toxins from pesticides and other chemicals. Hydroponics eliminates the need for soil, allowing for a cleaner and more sustainable food production system. A lack of dirt on the crops also aids in the reduction of water usage needed to clean the crops and deem them safe for consumers.
• Fewer Weather precautions: Third, hydroponics allows for year-round crop production, regardless of weather conditions. This is particularly important in regions with a short rainy season or unpredictable weather patterns. The African continent holds a large portion of land with multiple biomes and weather patterns all influencing the farming capacity of the land. With wetter conditions around the equator and dry ground further north, a consistent form of farming crops will have surmountable benefits. Hydroponics offers farmers the unique opportunity to grow crops all year long, bringing with it a real game-changing strategy towards food supply.
• Less Land: Finally, hydroponic farms can be built and performed to scale. From large multi-crop farms feeding wholesalers and manufacturers to small-scale local subsistence farming, Hydroponics does not discriminate. This unique trait of using what you need for what you have is an ideal solution for smallholder farmers who may lack the resources and infrastructure to implement large-scale agricultural projects. With the minimum resources required to start up and maintain hydroponics, Africa has the opportunity to dive into this juncture and find a routine to support not only their current farming obligations but grow what they have to offer.

Challenges of Hydroponics in Africa:

Like every business opportunity, one must assess the positives as opposed to the risks. While hydroponics holds great promise for sustainable food production in Africa, several challenges must be fully understood and thought over.

• More Equipment: One of the biggest challenges is the high cost of equipment and inputs. Hydroponics requires specialised equipment, such as pumps, grow lights, and custom nutrient solutions which need to be chemically balanced. Additionally, the inputs mentioned are not easily available locally, increasing the cost of production.
• More Technical Understanding: Another challenge is the lack of technical expertise and training available to the African market. Hydroponics is a relatively new technology in many parts of Africa, and therefore there is a shortage in the number of skilled technicians, installers, maintenance employees and trainers to support its implementation. Farmers and workers will need to be trained on the principles of hydroponics and how to maintain the equipment and nutrient solutions.
• More Distribution Channels: Finally, there is a shortage in the supply of adequate infrastructure to support the distribution and marketing of hydroponic produce. Farmers need access to the market and suitable transportation to sell their crops. This comes with the need for cold storage and packaging facilities to ensure that the quality and freshness of the produce are withheld along the links of the logistics chain to the end consumer.

How DACH companies can capitalise on Africa’s Hydroponics industry:

DACH companies can invest in hydroponic technology and provide it to local farmers at an affordable price. This will enable them to improve their yields and profitability, while also reducing water and nutrient wastage. Companies can also provide training and support to help farmers set up and maintain their hydroponic systems.

• Partner with local farmers: DACH companies can partner with local farmers to set up hydroponic farms and grow high-value crops such as lettuce, tomatoes, and strawberries. This will not only help to meet the growing demand for fresh produce but also provide farmers with a new source of income. Companies can also help farmers to market their produce and connect them with buyers.
• Develop sustainable supply chains: DACH companies can work with local farmers to develop sustainable supply chains for hydroponic produce. This includes investing in cold storage facilities, transportation, and logistics to ensure that produce reaches the market in a timely and efficient manner. Companies can also help farmers to adopt sustainable farming practices to reduce their carbon footprint and improve the quality of their produce.
• Conduct research and development: DACH companies can conduct research and development to develop new hydroponic systems and crops that are better suited to African conditions. This includes developing crops that are drought-resistant and can thrive in low-light conditions. Companies can also develop hydroponic systems that are affordable and easy to set up and maintain.
• Collaborate with government and NGOs: DACH companies can collaborate with the government and NGOs to promote the adoption of hydroponic farming in Africa. This includes working with policymakers to create an enabling environment for hydroponic farming and partnering with NGOs to provide training and support to local farmers.

Hydroponics has the potential to revolutionise food production in Africa, providing a feasible and implementable sustainable solution for food security. With its ability to use less water, produce crops year-round, and grow in areas with poor soil quality, hydroponics can help smallholder farmers increase their income and improve their livelihoods. However, to fully realise the potential of hydroponics in Africa, there is a need for investment in infrastructure, training, and technical support for the African people. With the right policies and investments, Africa stands the chance to turn the ship on food insecurity and double their offering to the world market of fresh produce and basic crops.

The hydroponics industry in Africa presents a significant opportunity for DACH companies to capitalise on. By investing in hydroponic technology, partnering with local farmers, developing sustainable supply chains, conducting research and development, and collaborating with government and NGOs, DACH companies can help to unlock the potential of this emerging market while also contributing to sustainable development in Africa.

InterGest South Africa supports, encourages, and promotes foreign investment on the African continent and works hard to offer constant support and endless advice on entering this opportunity-rich market. With our dedicated accounts and staff at your availability, you can take a thorough look into Africa and see how your business and industry can not only join the market but succeed on African Soil.

Sources:

https://borgenproject.org/hydroponic-farming-in-africa/

https://theexchange.africa/industry-and-trade/hydroponics-a-potential-way-to-revive-agriculture-in-africa/

Send us a mail at contact@intregest.co.za or continue to browse our website https://intergest.co.za/ for more!

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One of the major driving forces of Africa’s growth is the widespread adoption of mobile technology. According to Groupe Speciale Mobile Association (GSMA), a global organisation unifying the mobile ecosystem, the mobile economy in Sub-Saharan Africa is set to contribute $184 billion to the region’s GDP by 2024. With over 800 million mobile phone subscribers and growing, mobile technology is revolutionising the way Africans live, work, and do business.

Africa and e-Commerce Growth:

Africa’s digital revolution has paved the way for new route-to-market strategies that leverage technology to reach customers more effectively. One such strategy is e-Commerce, which has seen significant growth in recent years specifically in the African region. The e-Commerce market in Africa is projected to grow at a compound annual growth rate (CAGR) of 25% from 2020 to 2025, according to a report generated by ResearchAndMarkets.

African Growth and Digital Marketing:

Another route-to-market strategy is digital marketing. With the growing adoption of social media in Africa, companies can leverage platforms such as Facebook, Instagram, LinkedIn, and Twitter to reach their target audience more effectively. Social media has become an essential tool for companies looking to build brand awareness, engage with customers, and drive sales.

In addition, the rise of digital payments has also created new opportunities for companies looking to do business in Africa. Digital payment platforms such as M-Pesa, Paystack, and Flutterwave have made it easier for companies to transact with customers in Africa. These platforms offer secure, fast, and convenient payment options for customers, which can help drive sales and improve customer satisfaction.

However, as newcomer companies navigate the digital landscape in Africa, they must also square up to face the continent’s unique challenges. For example, infrastructure and logistics can pose significant challenges for companies looking to distribute goods and services across the continent. Companies must also consider the complex regulatory environment in Africa, which is region specific and can vary significantly from country to country.

Despite these challenges, the digital revolution and the adoption of new technologies are driving African growth through offering significant opportunities for companies looking to enter and succeed in the market. By leveraging new route-to-market strategies and understanding the unique trends of doing business in Africa, companies can unlock the continent’s vast potential for growth and prosperity.

COMBINING OPPORTUNITY CAPITALISATION AND ROUTE-TO-MARKET STRATEGY TO DRIVE AFRICAN SUCCESS

• A developing economic environment

Sub-Saharan Africa is experiencing steady growth, with a 4% expected annual real GDP growth in 2025. Urbanisation is driving modern retailing, while traditional markets remain an important factor that cannot be ignored. The rise of Africa’s middle class is set to boost disposable incomes by an additional 4% compound annual growth rate (CAGR) until 2030. Key industries such as packaged food, non-alcoholic beverages, and alcoholic drinks can expect to see a rise in sales. The continued growth rate and developing economic environment are also due to the African Free Trade Continent Agreement which works hard towards reducing tariffs and standardising trade policies among member countries. Therefore, making it easier for companies to trade between African countries.

• Digital connectivity

The digital revolution in Africa is leading to targeted and innovative solutions that turn challenges into opportunities. With a surge in mobile subscriptions, connectivity is becoming a lifeline for many Africans, enabling them to make purchases and conduct transactions through secure mobile payment systems. The continent’s lack of legacy systems has become a “testing ground” for digital innovation such as the use of apps that provide farmers with commodity pricing and equipment training. Social media is also making it easier to target consumers and develop partnerships with local inhabitants, highlighting the abundant opportunities for those who understand the complexities of doing business in Africa.

• Localising route-to-market strategies

As this article mentioned afore, developing effective route-to-market strategies is as crucial as adapting to Africa’s ever-improving digital technologies. With 54 independent countries, each having its own cultural attitudes, it’s essential to respect local nuances and business requirements when selling products. No African country operates the same, the target markets and way of doing business vary with each country. To succeed in African markets, companies should consider connecting with informal markets. Through the creation of local partnerships along the supply chain, and by promoting social trust and relationship strengthening,  companies stand to inherit more value and rapport as these communities honour honest communication solutions and do not take word-of-mouth recommendations lightly. These recommendations will assist foreign companies entering the African market to overcome distribution challenges and respond flexibly to changing market needs, all while generating a positive consumer response and driving African growth.

In conclusion, Africa presents a range of opportunities for foreign companies willing to invest the time and resources to understand the complexities of the African business market. The digital revolution and growth in mobile connectivity have offered many Africans new avenues for companies and entrepreneurs to engage with consumers and sell products. However, it is important for companies to recognise the idiosyncratic nature of each market within Africa and to focus on developing local route-to-market strategies that respect the cultural attitudes and beliefs of each country into which they wish to expand into. Building local partnerships with market entry service providers such as InterGest South Africa will ensure that companies overcome market entry challenges and gain a greater stake in their business outcomes. With the right approach, companies can capitalise on the growth and opportunities presented by the African market in both the near and long term.

For more information on the services rendered by InterGest South Africa, please send an email to contact@intergest.co.za

Source:

• Digital revolution and route to market strategies will drive African, growth –https://www.euromonitor.com/article/digital-revolution-and-route-to-market-strategies-will-drive-african-growth
• Mobile economy of Sub-Saharan Africa – https://www.gsma.com/mobileeconomy/sub-saharan-africa/
• South Africa eCommerce market size forecast – https://www.researchandmarkets.com/reports/5504330/south-africa-e-commerce-market-size-forecast

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InterGest South Africa is listed as a consulting firm under the Bundesamt für Wirtschaft und Ausfuhrkontrolle – BAFA Consulting Vouchers Africa. This means that our market entry consultations and services are funded in the following countries:

• Southern Africa (South Africa, Namibia)
• East Africa (Kenya, Tanzania and Uganda)
• West Africa (Nigeria)

The content below explains the qualification categories that German companies need to meet in order to qualify for funding, the application process as well as the rules and regulations around obtaining the funding.

1.  Aim of the “Consulting Vouchers” Funding Program

1.1   The aim of the program is to use needs-based consulting services to make it easier for German companies to enter the African market, to increase the competitiveness of the companies to be advised and thus to make an effective contribution to maintaining as well as creating jobs both in Europe and in African target markets Afford.

1.2   The funding is intended to assist German companies in correctly assessing possible economic risks associated with entering the African market.

2.  Subject of the Business Network Funding

2.1   The subject of the funding is external consulting services for the preparation and implementation of economic projects in African target markets by listed consulting companies/organizations.

2.2   The funded advice can relate to questions about specific industries or economic sectors, African target markets, and legal framework conditions about foreign trade and/or foreign investments and economic studies for the prospective project in Africa.

• • Funding will not be granted if:
    • If consulting services were already carried out before the decision on the grant was made.
    • If consulting services for market entry in Africa that have already been funded or promised by other aid from the EU, the federal government or a country.
    • If services are provided to partner or affiliated companies or where the consulting company/organization has a corresponding economic self-interest in generating income for the consulting company, e.g. B. a profit sharing.
    • Companies in difficulty under Article 2(18) of the General Block Exemption Regulation.

• • The advice is not eligible if:

• • • The company to be advised has not complied with a recovery order based on an earlier decision by the EU Commission to determine the inadmissibility of state aid and its incompatibility with the internal market.
    • The company to be advised has concluded the consulting contract with the consulting company/organization before the decision on the donation (consulting voucher) has been made, the consulting has started or agreements for future consulting have been concluded in a legally binding manner.
    • The consulting company/organization is no longer listed at the time the contract is concluded with the company to be advised.

3.  Who can Apply for Funding:

3.1   The funding for consulting services is aimed at legally independent small and medium-sized commercial German companies with a permanent establishment or branch in Germany who are interested in entering the African market.

3.2   A German company is considered to be medium-sized German if it employs fewer than 500 people at the time of application and generates a maximum of EUR 50 million in sales annually.

4.  Funding Amount:

4.1   For a consultant day, a maximum of 1,200 euros net are eligible per day, depending on the consulting issue.

4.2   A maximum of 15 consultant days are funded per consultation. The eligible daily maximum rates for the respective consulting topics are as follows:

4.3   A consulting day consists of at least eight hours. Preparation and follow-up of the consultations, travel expenses and other ancillary costs including the costs of financial transactions are compensated with the respective daily rate.

4.4   In one calendar year, a maximum of three advisory vouchers of a maximum of 13,500 euros each can be used. The annual maximum amount that can be paid out is therefore 40,500 euros. This corresponds to a funding rate of 75% when using three times 15 consulting days at a maximum of 1,200 euros net.

4.5   Only activities in the same category (maximum daily rates) can be applied for each consultant voucher. It can e.g. For example, advice on customs/import regulations and logistics and transport can be combined, but not customs/import regulations with the development of a sales structure or financing.

4.6   The service provided is taxable at the full rate of sales tax applicable in the country in which the service was provided. The expenses not covered by the consulting voucher are to be paid by the company to be advised (beneficiary) as a personal contribution.

5.  Application for Consulting Vouchers

5.1   Interested companies first find out more about the target market and eligible projects on the website of the “Business Network Africa” office. The office staff are also available by telephone for non-binding advice on the basic feasibility and eligibility of the advice project. With the information from the homepage and, if necessary, from the discussion with the office, please look for a listed consulting company/consulting organization and contact the consulting company/organisation.

5.2   Important! Please note that a consulting contract may only be concluded after the consulting voucher has been approved.

5.3   After you have chosen a listed consulting company/consulting organization from the list, please submit an electronic application for funding for consulting services.

5.4   A total of three applications can be submitted per year. The applications can only be submitted one after the other, i.e. the second application can only be submitted after BAFA has checked the proof of use of the first application.

Further information pertaining this process, find out how to Receive Government funding for your business activities here: BAFA Funding presentation.

With InterGest South Africa’s reputable name in the industry of international consulting vouchers and particularly consulting vouchers for Africa, clients are reassured of our services and often will choose to work with us. Our experts hold unique knowledge with regard to consulting vouchers and are always eager to assist. With 20 years of service behind us our team is well accustomed to any funding queries you may have. For more information on how we work or to get in contact, visit our website: https://intergest.co.za/

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South Africa has always been an attractive investment destination to investors seeking to expand their business activities into Africa and 2023 is no different. With Africa being a large and lucrative market to break into when done correctly, South Africa presents itself as a promising gateway.

Confidence in South Africa as an investment destination

South Africa is a thriving democracy with an advanced and diverse economy, a sophisticated and well-regulated financial sector, and extensive transport, telecommunications and energy infrastructure. South Africa’s government continues to work hard to create a dynamic and enabling business environment that will promote South Africa as the best investment destination amongst foreign countries looking to expand their business activities into Africa.

In 2018, South Africa embarked on an ambitious investment drive, which aimed to raise $100 billion in new investment over five years. — which at the time translated to R1.2 trillion — over five years. To date, the investment drive has achieved 95% of this target in investment commitments over the last four years whereby 2023 will be the last instalment of the Presidential Investment Conference. This confirms the continued interest in utilising South Africa as an investment destination from both foreign and local companies.

As part of the investment drive, the country is intensifying efforts to improve the business environment. The government has further put in place a “very attractive package of incentives” administered by the Department of Trade Industry and Competition (DITC) with the main aim to assist potential investors in identifying opportunities and facilitating a seamless investment process.

• World-class infrastructure and logistics

South Africa is the best performer in Africa for trade facilitation logistics. The transport sector is a key contributor to South Africa’s competitiveness in global markets. South Africa’s world-class infrastructure and undeniable position as a foothold into the rest of Africa. According to the Logistics Performance Index (LPI), South Africa has the highest trade logistics performance in Africa.

The country’s network of roads and highways has a total length of 750,000 kilometres resulting in long distances having to be covered to reach the more remote parts of the country. The air and rail networks are the largest on the continent while South Africa’s port efficiency has improved considerably as a result of investment in new assets such as ship-to-shore cranes and other supporting handling equipment.

• Largest presence of multinationals

South Africa has one of the most sophisticated business environments in sub-Saharan Africa and strong state institutions, which are key to its status as a regional economic powerhouse and often the first country that multinationals consider when expanding their business activities into Africa.

Another strong pulling factor for multinationals to set up companies in South Africa is the country’s resilient and stable banking sector. The private business regulatory climate is also regarded to be one of the most conducive in Africa while the tax regime is progressive and includes several incentives for non-South Africans.

South Africa prides itself to be an investment-friendly environment and has piqued interest amongst global investors through increasing engagement and networking. As one of the most open economies in the world (exports and imports collectively represented approximately 51% of GDP in 2020), and with preferential access to numerous global markets.

Many multinational companies also use South Africa as a gateway to the rest of Africa due to the number of trade incentives that have been set in place between the African countries. One such example is The African Continental Free Trade Area (AfCFTA) which provides manufacturers based in South Africa the opportunity to increase the volume of trade with the balance of the continent. As it stands, more than 37% of goods made in South Africa are destined for other African countries.

• Manufacturing Hubs

According to The DITC South Africa’s well-established manufacturing sector presents numerous opportunities to potential investors that are considering South Africa as a potential investment destination. The sector’s diverse industry means investors are spoilt for choice towards which industries they wish to explore.

South Africa’s manufacturing sector presents multiple reasons why South Africa remains an attractive investment destination. The sector is well-established, possesses advanced technologies to produce quality goods and is strategically placed to provide businesses with access to the rest of the African continent.

In 2022, the manufacturing industry increased by 1.5% in the third quarter, contributing 0.2 of a percentage point to the country’s overall Gross Domestic Product GDP growth. An impressive 7 of the 10 manufacturing divisions reported positive growth rates in the third quarter, (Stats SA). The value added by manufacturing to the GDP in South Africa was measured at approximately 545,507 million South African rand in the third quarter of 2022.

Of the 10 manufacturing divisions, the largest positive contributions were made by the motor vehicles, parts and accessories. This is mainly due to South Africa housing some of the world’s biggest automotive companies including Mercedes-Benz, Nissan, BMW, Ford, and Toyota to name a few. The favourable government policies, ease of doing business, low tariff rates, reasonable labour practices and availability of low-cost skilled labour all contribute to why these worldwide brands chose to invest functional plants on South African soil. The vehicle and component production forms an integral part of the economy and has accounted for nearly 30 percent of the country’s manufacturing output.

Other top manufacturing divisions are that of the petroleum, chemical products, rubber and plastic products. While niche industries such as food processing, beverages, motor manufacturing and wood products have reached maturity, there remain further ripe opportunities for foreign direct investment.

• Internet

When it comes to the internet, South Africa is one of Africa’s leading markets alongside Nigeria. Over the past century, South Africa has worked hard to position itself strategically as a hub for Africa’s digital economic revolution. South Africa’s internet quality remains the best in Africa. South Africa is ranked amongst the top-performing countries according to the Digital Quality of Life (DQL) Index. The study considers a country’s internet affordability and quality, electronic infrastructure, security, and how digitally advanced its government is.

The boom in internet traffic in South Africa has been supported by higher speeds and improved fibre infrastructure. Driving internet traffic growth is the need for large file transfers, cloud computing and remote working resulting in the country’s average speed increasing three-fold between 2016 and 2021, from 6 Mbps to almost 18 Mbps.

This has not gone unnoticed by tech companies. Netflix, for example, announced an investment of $60 million at the annual South Africa Investment Conference, in a bid to help South African creatives bring high-quality stories to a global audience. With that said, there is still a lot of room for improvement – presenting opportunities to foreign investors looking to expand into Africa.

• Emerging market

The South Africa of today [2023] is one of the most sophisticated and promising emerging markets globally. This is mainly due to the unique combination of a highly developed first-world economic infrastructure and a huge emergent market economy that has given rise to a strong entrepreneurial and dynamic investment environment.

South Africa’s dream of emerging as an economic powerhouse, capable of using all the talent and brainpower at its disposal, while alleviating poverty and significantly lowering the staggering unemployment numbers, is an achievable reality. The world has shown its solidarity and aid behind this sentiment by investing and making significant pledges in a bid to cement its support towards South Africa.

Furthermore, the increased growth in purchasing power opens new opportunities for both consumers and foreigners looking to enter the market. South Africa’s economy was originally based on agriculture and mining, but this has changed over the years. With services and manufacturing now contributing the greatest share to GDP. The country’s economy is reasonably diversified with key economic sectors including mining, agriculture and fisheries, vehicle manufacturing and assembly, food processing, clothing and textiles, telecommunication, energy, financial and business services, real estate, tourism, transportation, and wholesale and retail trade.

Conclusion

South Africa has set itself apart as an emerging economic hub. South Africa remains an investment destination of choice for many global corporates, with more than 180 Fortune Global 500 companies having a footprint in the country.

With developed first-world economic infrastructure and a growing emerging market, South Africa’s investment potential lies in its diversity of sectors and industries, South Africa is also a major trading nation, exporting and importing billions worth of goods globally every year.

InterGest South Africa has been assisting multinational companies to enter the market successfully for the past 20 years. Our services and systems are designed to assist the exporting company in the establishment and administration of a foreign branch, subsidiary, or a direct selling organisation. From market entry through to the setup, recruitment, financial administration (accounting, payroll, tax), management of subsidiaries and sales organisation, identification of local sales partners, and legal services, we are able to assist multinational companies at all stages of their business journey into Africa.

For a full range of our services, click here: https://intergest.co.za/our-services-administrative-experts/

Get in touch today! Send us an email at contact@intergest.co.za

Sources:

https://brandsouthafrica.com

https://businesstech.co.za/news/finance/649255/big-surprise-for-south-africas-economy/

https://www.pwc.com/gx/en/transportation-logistics/publications/africa-infrastructure-investment/assets/south-africa.pdf

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Favourable trade figures between Germany and Africa for 2022

South Africa continues to be Germany’s top trading partner in Africa.

Imports from oil-producing countries in Africa are also increasing.

German Imports from Africa

German-Africa Trade increased significantly in the year 2022. German foreign trade with Africa (both imports and exports) has increased by 21.3 percent (%) in the year 2022. These updated statistics reach a new record level of trade being valued at an impressive 59.8 billion euros.

Imports from Africa to Germany increased by 27.4 percent (%) to 33.4 billion euros. More specifically, the goods imported by Germany from the Republic of South Africa calculated a total of 14.4 billion euros in comparison to the previous year [2021] where the total value of imports was 12.3 billion euros. The difference of 2.1 billion euros is a testament to the ever-increasing trade volumes between the two countries. Experts predict that the year 2023 will reflect a further increase in trade following the Russia-Ukraine war.

Libya is followed in second place, from where Germany almost exclusively imported oil worth 3.6 billion euros. This is followed by Nigeria, another oil-producing country, which exported a total of 1.9 billion euros of oil to Germany as well as Chad with a trading volume of 1.2 billion euros in the year 2022.

German exports to Africa

While exports to Africa have shown growth, German exports grew slightly less in comparison to the import figures from Africa. Regarding exports, Statistics for German-Africa Trade increased in the year 2022. Germany’s exports to Africa rose by 14.5 percent (%) to a total of 26.4 billion euros. 

Here, too, South Africa was the top trading partner in Africa with deliveries valued at 9.8 billion euros for the year 2022. Germany also exported goods to Egypt which was valued at a total of 4.2 billion euros, followed by Morocco with 2.8 billion euros.

In addition to South Africa, other important sales markets in sub-Saharan Africa were Nigeria with exports of 1.1 billion euros, Côte d’Ivoiré with delivered goods worth 334 million euros and Kenya with exports of 260 million euros.

Ten largest german export markets in Africa 2022

Obtain Government Funding

If you are a German company that is interested in exporting your products to Africa, we highly recommend that you take a look at the funding options available to you.InterGest South Africa is a registered consulting firm of Bundesamt für Wirtschaft und Ausfuhrkontrolle – BAFA. Qualifying german companies are eligible to recieve up to 75% of our market entry services funded. For more information, click HERE.

Source: Africa Business Guide

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Goals of the Electra Mining Africa 2022 Expo

For many companies, the Covid Pandemic meant less exposure – thus the opportunity to showcase new technologies and innovations at this years’ expo was greatly welcomed.

This year’s event aimed to ignite investor relations & export potential and increase investments, effectively highlighting South Africa’s ability to design and manufacture world-class products.

Eric Bruggeman, CEO of the South African Capital and Equipment Export Counsil (SACEEC), said that the SACEEC aims to drive localisation in the manufacturing space, utilising platforms like the Elektra Mining Expo and the Local Southern African Manufacturing Expo as part of their so called “inward buying mission”.

Inward buying and localisation aim to create jobs, drive investor relations and showcase South Africa’s strengths and abilities, thereby strengthening exports and improving the South African economy.

The North-South Corridor

Another element to strengthen exports is the received significant interest in the North-South Corridor (NSC).

The NSC programme was designed as a transit and transport value chain to address transport issues in a sequential and multi-modal manner.  It includes interlinked projects addressing road infrastructure, road transport facilitation, railway system and rail infrastructure management, physical and operational improvements at border crossings, port infrastructure, air transport management and energy interconnections.

The Electra Mining Innovation Awards

On the evening of the 9^th of September, the Electra Mining Innovation Awards took place. In this ceremony, the SACEEC engaged with international delegates from countries around the world including the Netherlands, Russia, Peru, Chile and Ecuador. Additionally to these international participants, African countries including Zambia, the Democratic Republic of Congo, Ghana and Kenya have expressed interest in participating in upcoming trade expos in South Africa.

Challenges

The manufacturing and export sectors of South Africa are facing a number of challenges that, according to Bruggeman, need to be addressed urgently.

Local manufacturers need a constant supply of power to maintain machinery uptime. Currently, South Africa is experiencing between 2 and 6 hours of downtime a day. To combat this, the planned solar and wind energy projects should be fast tracked.

Bruggeman added that the state of the countries ports and transport infrastructure needs to be further improved to be able to fully exploit the export potentials. According to him, South African ports need to be properly maintained and upgraded to give potential investors and international customers the assurance that products will arrive at their destination on time and intact.

A further challenge is the availability of well-priced raw materials. Through recycling and reusing, the country should be able to cater for most manufacturers’ raw material requirements without the need to import. The method of recycling and reusing will also facilitate an increase in jobs, upskilling of workers and a decrease of manufacturing turnaround times.

Opportunities in South Africa – The South African Steel and Metal Fabrication Master Plan 1.0

To combat the forementioned challenges, the Department of Trade, Industry and Competition (DTIC) together with industry stakeholders and government facilitators, have set the foundation for the so-called “South African Steel and Metal Fabrication Master Plan 1.0”. 

It is estimated that, through the plan, about 200.000 tonnes and up to 500.000 tonnes of imported final products could be replaced. This would create approximately 800 direct jobs and add about ZAR 7 billion to the countries’ GDP.

Lately, imports in the manufacturing and automotive sectors have seen their market share grow. According to Bruggeman, the current focus should be on the construction, automotive and mining industries’ manufacturing space. He sees this as essential pillar in the development of the steel and engineering industry. He believes that export and manufacturing are an essential part of the countries’ future and emphasized that while the Master Plan is still in the early stages, it should not simply remain a plan, but action needs to be taken to reach the next level of implementation soon.

Source:

• https://www.engineeringnews.co.za/article/manufacturers-must-increase-export-potential-export-council-2022-09-09

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While we understand that running a company or expanding into new territories might not be a new concept for many reading this article. But it’s worth stepping back to make sure you avoid some common mistakes that plague many multinational companies when expanding into Africa. It is essential that you make the right moves in the beginning which can help you avoid headaches later.

InterGest South Africa has identified the 9 common mistakes that newcomers make. We would like to share a few tips that we recommend companies consider: 

1. Neglecting to customise a business plan for the African market

If you’re a multinational company, there’s no better place to invest than in Africa. If you think of the continent today, it’s young, it’s fast-growing, and it’s urbanising. Half of Africans are under the age of 19, so if you’re taking a long-term10-, 20-, or 30-year view, where else do you want to be?

But, in order to be successful, companies need to approach the African market with a plan. You need to understand that the way of doing business in, for example, Europe, is not necessarily the way business gets done in Africa.

Factors worth considering are the business language and culture, demand for your products, pricing of your products in accordance with competitors that are already operating in the market, access to skilled labour and if upskilling/training will be required.

The business plan doesn’t need to be especially long or detailed. But taking the time to map out a business plan and identify possible barriers will ensure that you are prepared. It will also help you to focus your efforts and serve as a rallying point for your team and give milestones to measure your progress in the new market.

2. Inadequate financial preparation and resources

Expanding your business ventures into a new market requires big capital investments. It is therefore imperative that you do it right the first time. While we are aware that seeking professional support can be costly. Our experience shows that companies with the highest return are companies that did not rush their market entry project but instead took their time to fully understand the realities of the local markets.

Expanding into Africa – When venturing into African markets, it is beneficial to source the services of local experts that will guide you through the financial and business landscape.

As a newcomer, you will need the following support if you are serious about your export venture:

• A financial service provider to assist with the incorporation of a subsidiary, opening of bank accounts, registering at the relevant authorities, and running of day-to-day accounts.
• A lawyer to help you deal with tax and regulatory issues related to your business
• A local business developer to help you establish a local network and a strong footing
• Market researcher for verifying your assumptions and conducting research on the current market situation
• A recruiter to assist with identifying skilled labour

The above-listed services can conveniently be rendered by InterGest South Africa. This is beneficial as you will only have to deal with one point of contact.  

3. Failing to monitor progress and adjust

We have often experienced that foreign companies start business ventures with their business plan and financial projections clearly defined. The unfortunate part is that once the company actively starts doing business in Africa, they become distracted and forget to reflect on their business plans.

It’s important that companies continuously monitor and reflect on the progress to ensure that they remain on track with their plan and projections once actively doing business in Africa. A business venture in a new country is a constant process of making adjustments and responding to changes. If companies aren’t constantly scanning the environment and responding to it with assumptions, tests, and pivots, your company will either get left behind going in the wrong direction or will make investments without knowing if it will be successful or profitable. 

4. Not Testing before rolling out  

For a company to determine potential success in a new market, requires testing the waters first. Companies expanding are recommended to make assumptions about the market, and then test it first. If the company’s assumptions are disproved, companies should re-examine their strategy. If the assumptions are proved, it is an indication that it is safe to proceed.

The idea is to sell directly to the market in the country that you are expanding into. Selling your product directly to the market can be a tricky exercise if there is no brand recognition amongst the consumers. A strategy that you can try is to partner with a reliable local distributor or agent as they have direct access and trustworthy relationships with local contacts that could be interested in purchasing your products. Partnering doesn’t need to be a long-term strategy. It can be used as a steppingstone and opportunity to develop your network.

InterGest South Africa’s services include partner and agency search. The project duration ranges from 6-8 weeks and will assist you in identifying the best-suited portfolio of potential partners for your business and the industry you are operating in. An alternative strategy to the aforementioned is our Go2Africa solution whereby companies can enjoy a local presence without having to incorporate a company in the short term. Read more here.

5. Setting the wrong price

Don’t make the mistake of setting your prices based solely on what the competition charges. It’s important to research your costs in detail for each of your products when deciding what to charge. Also, monitor actual costs as you go to make any needed adjustments. Factors to consider is whether you will be manufacturing your products locally in the African country of your choice or whether you will be importing the final product from your headquarters abroad. Another cost factor to consider is warehousing fees and what effect it will have on the profitability ratio of your products.

6. Ignoring or neglecting online marketing

With the ever-evolving business landscape, it is important not to ignore the latest trends in technology and online marketing. To ensure the best chances of success, companies entering new markets should consider how technology could be used to improve growth, brand recognition and loyalty, efficiency, and profitability. In short, be sure to consider ways to harness the marketing potential of the Internet.

For example, there is a rising trend in B2B eCommerce across the globe this is because it is both a cost-effective and easy way to target specific market segments with minimal effort. Enlisting your products on a B2B eCommerce platform such as Enterprise Africa means that your products will be displayed on social media platforms while targeting the prospective buyers identified by your company.

7. Failing to learn

As you start your new business venture in Africa, learn from your initial missteps and use them to guide your eventual success. Remember that you always have access to experts that have experience in assisting multinationals with expanding into Africa who are available to assist with advice and guidance.

8. Not using the right resources to identify skilled labour

To ensure you employ the right candidate in any new market, make sure that you use a reputable recruitment agency that has access to skilled workers, who can conduct background searches to confirm education courses and references. The good news is that recruitment forms a part of the suite of services that InterGest South Africa renders.

In addition to sourcing skilled labour, it is also recommended that a company offers additional training. While it may lead to additional overhead costs, sending new candidates on training or courses will increase the candidate’s productivity and return on investment.

9. Giving up too early

Irrespective of where in the world you decide to expand your business activities to, expansion is often coupled with barriers and learning curves.  Entering a new market comes with its ups and downs and requires endurance and belief in its employees and service providers. While some businesses take off right away, others take some extra time to gain traction. If you give up too early, you may be missing out on the one that takes just a little while longer.

Now that you know and are aware of some of the common mistakes to avoid, you are on your way to success! Should you wish to discuss your business ambitions for the African market in more detail, we invite you to schedule a call with us. InterGest South Africa assists foreign companies expanding into Africa. Our first consultation is cost and obligation free. Out team of experts are excited to hear from you. Reach out today: Visit our website www.intergest.co.za or send an email to contact@intergest.co.za

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