WITH its sophisticated banking system, decent roads and ports and top notch commercial courts, South Africa is pumping itself up as the ‘Gateway to Africa’, the ideal launchpad for foreign capital into the fast-growing but chaotic markets to its north.
However, the logic of tapping into the momentum of a “rising Africa” and finding alternatives to a flat-lining Europe – currently the destination of nearly a third of South African exports – does not play well north of Pretoria.
Primarily, the ‘Gateway’ label grates with African states seldom keen to roll out the red carpet for the continent’s economic giant, still regarded as somehow “less African”, even though apartheid ended nearly two decades ago.
“Can we please stop using this term because it does not pay any dividends to what we are trying to do,” said Elias Matsilela, chief executive of the Public Investment Corporation, which manages $146 billion in South African civil servants’ pension funds, with a mandate to invest 60 billion of that in the sub-Saharan region outside South Africa.
“In fact, it does the reverse,” he told this week’s Reuters Africa Investment Summit. “It would get on my nerves as well if I weren’t South African.”
The infrastructure premium that South Africa now enjoys may also be shortlived as hefty investments in telecommunications and transport in potential rival African ‘hubs’ such as Kenya start to pay dividends.
Although it is unlikely that $34 billion mobile phone giant MTN will ever ditch its Johannesburg home, chief executive Sifiso Dabengwa conceded locations like Nairobi now “offer more to multinational businesses than 10 years ago”.
South Africa’s days as Africa’s biggest economy – a symbolic but telling label – are also numbered, with Nigeria, already the continent’s biggest oil producer and most populous nation, due to rebase its GDP figures next year.
The recalculation is expected to increase the size of the West African nation’s economy from $250 billion to $350 billion, putting it only a shade behind South Africa’s $385 billion.
If Nigeria maintains its annual growth rate of nearly 7 percent against 3 percent in much more mature South Africa, it will lay claim to the top economy spot in less than three years.Advertisement
Although the ruling African National Congress (ANC) has long-standing ties to many African nations through its years of exile during apartheid, it has struggled to translate that into friends and real influence on the vast and varied continent.
Pretoria’s faltering continental ambitions were starkly revealed last month when 13 South African soldiers were killed in Central African Republic – the worst military casualties since the ANC took power – by rebels who ousted South African-backed President Francois Bozize.
It was also visible in the huge diplomatic efforts South Africa had to expend last year to persuade the African Union to accept its candidate, Nkosazana Dlamini-Zuma, as head of the Addis Ababa-based continental body.
Relations with Nigeria are sufficiently prickly that rows can be sparked by matters as trivial as “District 9”, a 2009 science fiction film that depicted Nigerians as cannibals, or by a group of Nigerians arriving at Johannesburg airport with fake vaccination certificates.
On the South African side, too, the ‘otherness’ is shown by businessmen in Johannesburg commonly referring to plans for “going into Africa”, oblivious to the realities of their location in same way that Britons refer to “Europe” as something that only starts on the other side of the English Channel.
That is slowing changing as a handful of large South African companies make deep – and successful – inroads into the business world’s ‘final frontier’.
Besides MTN, now present in more than 15 African markets, notable other examples are retailer Shoprite, Africa’s biggest supermarket chain, and Standard Bank, the continent’s biggest bank by assets with a presence in nearly 20 African countries.
South African logistics firms are also starting to set up intra-African operations rather than simply plying the route north from Pretoria to Zimbabwe and beyond.
“We’ve always been a north-south operator but we are also becoming more active in the east-west axis,” said Hubert Brody, chief executive of transport firm Imperial, citing the improvement in road networks that in colonial days were designed purely to get raw materials from the interior to the sea.
In a similar vein, South African commercial ties with the rest of Africa are also deepening, with a 29 percent increase in two-way trade from 2011 to 2012 to $23 billion.
But numbers do not tell the whole story.
The first-world comforts of Johannesburg and Pretoria – from hospitals and schools to shopping malls and the continent’s biggest airport – are still likely to make them locations of choice for regional corporate headquarters for years to come.
“In South Africa you have a legal sector, a financial services sector, a commercial sector that’s enormously well developed and that will continue to be a huge benefit,” said Diana Layfield, the Africa head of Standard Chartered bank.
“It will take other people a long time before they catch up to that.”