SOUTH AFRICA
1.0
PROFILE
South Africa, officially the Republi c of South Africa
(RSA) has 2,798 kilometres (1,739 mi) of coastline
and is the 25th-largest country in the world by land
area. With close to 53 million people, it is the
world's 25th-most populous nation. South Africa is a
multi-ethnic society encompassing a wide variety of
cultures, languages, and religions.
Dutch traders landed at the southern tip of modern
day South Africa in 1652 and established a stopover
point on the spice route between the Netherlands
and the Far East, founding the city of Cape Town.
After the British seized the Cape of Good Hope area
in 1806, many of the Dutch settlers (the Boers)
trekked north to found their own republics.
1,219,090 km2
48 Million
120000
Trend import and Export -South
Africa
100000
80000
USD
IsiZulu (official) 22.7%,
IsiXhosa (official) 16%,
Afrikaans (official) 13.5%,
English (official) 9.6%
Millions
Area
Population
Capital
Language
60000
40000
GDP
GDP growth
real
350.6 bn USD
1.89 %
20000
0
2010
2011
2012
Year
Import
GDP per capita 6617.9 USD
GDP - composition, by sector of origin:
agriculture: 9%
industry: 26 %
services: 65% (2013 est.)
Income status Upper middle income
country (World bank)
Ease of doing 37
Business
2013
2014
Export
Main Import commodities:
machinery and equipment, chemicals, petroleum
products, scientific instruments, foodstuffs
Main export commodities: gold, diamonds, platinum, other
metals and minerals, machinery and equipment
1
1.1 Economic Overview
South Africa is a middle-income, emerging market with an abundant supply of natural resources; welldeveloped financial, legal, communications, energy, and transport sectors and a stock exchange that is
the 16th largest in the world. Even though the country's modern infrastructure supports a relatively
efficient distribution of goods to major urban centres throughout the region, unstable electricity
supplies tend to retard growth.
The South African economy contributes 19% to the total African economy, one-third of sub-Saharan
Africa’s and nearly two-thirds of the Southern African Development Community (SADC) gross domestic
product (GDP).
2015-2016 Economic Forecast
South Africa’s growth fell from 2.2 percent in 2013 to 1.5 percent in 2014, “on account of mining strikes
and electricity supply constraints”, according to IMF. This year, the country’s growth is expected to rise
to 2.0 percent and to 2.1 percent in 2016.
1.2
Import Duty in South Africa under the SADC Regime.
The duty structure on goods imported in RSA is summarized below:
Product
Yarn and Fabric
Clothing
Except 6211320
Footwear
Paper and product
Printing
Wooden product
Jewellery and related products
General
0-22
20-45
free
15-30%
0-20
0-15
0-30%
0-20
SADC
Free
Free
Free
Free
Free
0
Free
Free
Subject to conditions: restricted to single transformation
1.3
Additional taxes
A value-added tax (VAT) of 14% is payable on all imports. VAT is levied on the value for customs duty,
which is the fob value plus 10% of the fob value plus any additional duties paid. For goods imported
from within the SACU region no customs duties apply and the 10% uplift in value is waived provided
that the goods originate from a SACU member country. However, VAT is still payable on the
importation of the goods into South Africa at 14% of the value for customs purposes.
2
1.4 DISTRIBUTION OF TOTAL AND PERCENTAGE HOUSEHOLD INCOME BY INCOME
GROUPS
1.4.1 The Black Diamond- Emerging middle class
In South Africa, the black diamond, an emerging middle class segment is driving economic growth
which has created a fundamental shift in the economy. According to the UCT Unilever Institute of
Strategic Marketing, the black middle class recently reached 4 million people and is rising. South
Africa’s black middle class has now more spending power than the white middle class.
From an exceptionally low base, South Africa’s black middle class has grown by 250% from 1.7-million
in 2004 to an estimated 4.2-million last year. The adult population of the white middle class grew from
2.8-million in 2004 to 3-million last year.
The figure below shows the distribution of household income by income group.
About
22.4%
of
total
household income accrued
to the emerging middle class,
namely households with an
annual income that ranges
from R151 728 to R363 930
per annum. The affluent
group’s
total
household
income amounted to just
over
R200
billion.
This
represented just 10% of total
household income in the
country.
An analysis of the distribution of the expenditure by income group, shows that households in the
poorest income group spend nearly half (47.7%) of their income on food. On the other hand, those in
the affluent category spend only 7% of the total income on similar items.
3
2.0 SOUTH AFRICA - TRADE FIGURES
Import and Export of South Africa
120,000,000
Value 000 USD
100,000,000
80,000,000
60,000,000
40,000,000
20,000,000
0
2010
2011
2012
2013
2014
Year
Import
Export
2.1 South Africa imports from the region

The RSA imported USD 99.9 Bn worth of goods in the last five years with an average growth of 5%.

The ECOWAS recorded the highest growth in the import share of South Africa registering an average
growth of 36% over the last five years while imports from SADC and COMESA grew by a mere 4% and
6% respectively.

From the chart below, we note that while South Africa's trade with African countries is growing. The
trading patterns reveal concentrated trade with a few countries and a few products which are mainly
primary in nature. Trade in value added products remains weak, especially in imports from African
countries, highlighting their heavy reliance on trade in primary commodities.
4
Import Value (000 USD)
South Import from regional and world
9,000,000
8,000,000
7,000,000
6,000,000
5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
-
SADC
ECOWAS
COMESA
2010
2011
2012
2013
2014
Export

The main exports products are pearls, precious stones metals, ores, slag and ash, mineral fuels, oils,
distillation products, vehicles other than railway, tramway, Iron and steel, Machinery, Edible fruit,
electrical and electronic equipment.

The main export destinations of South Africa are China 12.7%, United States of America 7.2%, Japan
5.8% and Botswana 4.8%.
Import

The Main products imported in 2013 are petroleum products, cars, electronic and electrical
appliances, medical mixtures.

The Main suppliers are China 15.5%, Germany 10.3%,Saudi Arabia 7.8,USA 6.3 %, India 5.2%
5
2.2 South Africa – SADC Trade

South Africa’s exports to SADC countries is almost four times higher than its import from SADC
countries.

In 2014 South Africa imported $ 6.8 billion from SADC registering a growth of 7% over the last 4
years. The main suppliers are Angola 30%, Swaziland 17%, Namibia 15% and Botswana 7%.

Mauritius ranks 9th with an average market share of 0.2% of total South African import growing
at the rate of 37% for the last 4 years.
South Africa Intra SADC TRADE (000 USD)
30,000,000
25,000,000
20,000,000
15,000,000
10,000,000
5,000,000
2011
2012
SA import from SADC
2013
2014
SA export to SADC
6
2.3 Bilateral Trade -Mauritius and South Africa
With the crisis in Europe during the last few years, South Africa has emerged as an alternative export market
for Mauritian exporters. Exports to South Africa reached Rs. 5.1 billion, registering an impressive export
growth of 58% in the last five years.
Export Value 000 OSD
Mauritius Exports to South Africa
250,000
200,000
150,000
100,000
50,000
0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Year
Source : Trademap
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
0
-50,000
-100,000
-150,000
-200,000
-250,000
-300,000
TRade Balance (000 USD)
Value (000 USD)
Bilateral Trade Between Mauritius and South Africa (000 USD)
-350,000
2010
2011
2012
2013
2014
Axis Title
Mauritius's imports from South Africa 000 USD
Mauritius's exports to South Africa 000 USD
Trade Balance 000 USD
Source Trade map: Bilateral trade between Mauritius and South Africa
The trade between Mauritius and South Africa is more favourable to South Africa. However, the percentage
trade deficit of Mauritius has decreased considerably over the last 4 years.
7
2.4 South Africa exports to Mauritius – Top 10 (4 digit HS code)
Product
Code
Product Label
TOTAL
All products
'27
South Africa's exports to Mauritius
Equivalent
Annual
ad
growth in Share in
Value in
valorem
value
South
2013,
tariff
between
Africa's
USD
applied by
2009exports,
thousand
Mauritius
2013, %,
%
to South
p.a.
Africa
304,731
0
0.3
Mineral fuels, oils, distillation products, etc
48,661
-2
0.5
0
'85
Electrical, electronic equipment
26,280
21
1.2
0
'84
Machinery, nuclear reactors, boilers, etc
23,907
-9
0.4
0
'87
Vehicles other than railway, tramway
19,815
20
0.2
0
'39
Plastics and articles thereof
12,449
2
0.8
0
'08
Edible fruit, nuts, peel of citrus fruit, melons
11,757
6
0.4
0
'30
Pharmaceutical products
11,151
7
2.6
0
'20
Vegetable, fruit, nut, etc food preparations
8,693
4
1.4
0
'01
Live animals
8,466
2
17.1
0
'72
Iron and steel
8,041
-31
0.1
0
In 2013, South Africa exported $304 million worth of products to Mauritius consisting primarily of Mineral
fuels, oils, distillation products, Electrical equipment machinery and vehicles.
It is important to note that South African export of electrical and electronic equipment (HS85) and vehicles
(HS 87) have recorded a remarkable performance in Mauritius occupying almost 7.6% and 7.3% of share
respectively in Mauritius.
8
2.5
Selling into the South African Retail Sector/ Distribution channels
2.5.1
Food, Beverage and Grocery Items
The food retail market is dominated by four operators: Pick ‘n Pay, Shoprite-Checkers, Spar and Woolworths.
Supermarkets account for approximately 55% of national food sales in South Africa, but make up only 2% of
all food retail outlets. The remaining market share is held by wholesalers, traditional spazas (independent
retailers in largely African townships and suburbs), tuck shops, and small independent retailers.
The large retailers import both directly and indirectly through local agents and specialist importers and
traders. Imports of perishable products such as vegetables, fruit, fish and meat require special treatment in
that the maintenance of the cold chain is essential and companies dealing in these products require
refrigerated warehouses and transport.
Due to the relatively short shelf-life of fresh fruits and vegetables, retailers tend to purchase their
requirements directly. Woolworths is particularly active in this area and a trip to a Woolworths store will
reveal a range of imported produce including grapes from Spain and Egypt, Asparagus from Peru,
Strawberries from Egypt and Sharon Fruit from Israel.
Although South Africa is relatively self-sufficient in fruits and vegetables, as the population becomes more
sophisticated and global in its buying patterns, retailers such as Woolworths will try to ensure continued
supply in South Africa’s.
Fish and Meat products are generally imported by a handful of specialist importers that have the requisite
infrastructure available to deal in these products. These companies will purchase what they can locally and
will import the rest of their requirements. These companies then sell to the major fish wholesalers that will
in turn supply caterers, small wholesalers, hotels, restaurants and retail outlets. The large retailers such as
Woolworths have a direct relationship with the importers who will source their specific requirements
internationally. Pick ‘n Pay has also outsourced supply into their fresh fish markets to a specialist wholesale
distributor.
9
2.5.2 Clothing, Footwear, Housewares
As outlined earlier, a characteristic of the South African retail sector is that a handful of retail groups operate
a large number of brand formats. A trip to a South African shopping mall will reveal a relatively large number
of retail brands. However, on closer inspection these retail brands belong to a handful of operators.
Given the decline in local production of footwear and clothing coupled with South African consumer demand
for a wide range of styles and colours, the large retail groups import a great deal of their requirements.
Whilst China dominates this market segment, there is a market for high-quality, well-designed product from
markets such as Italy.
The large retailers will often prefer to deal directly with suppliers especially on large volume items where
they like to be in control of production and delivery cycles. It is also important for retailers to understand the
quality and employment standards of their suppliers and a face-to-face relationship allows this
understanding. On smaller and more niche items or on big brand items such as Nike or The Gap, the retailers
are happy to deal with a local agent.
THE SOUTH AFRICAN MARKET
2.6 Clothing imports of South Africa from SADC countries
Import of South Africa from SADC countries 000 USD
Exporters
2010
2011
World
1,520,177
Rank
SADC
233,423
310,028
393,983
436,782
460,640
1
Swaziland
57,074
78,604
100,138
110,442
133,259
1,787,509
2012
1,665,168
2013
1,761,792
2014
1,725,308
10
2
Mauritius
69,123
103,181
147,656
146,119
130,317
3
Lesotho
44,383
59,983
63,283
73,368
93,450
4
Madagascar
18,205
40,203
62,152
84,065
84,891
Others
44,638
28,057
20,754
22,788
18,723
17.6%
-6.8%
5.8%
-2.1%
Growth

South Africa imports $1.7bn of clothing products from the world

$ 460.6mn of clothing originates from SADC out which $130.3 mn comes from Mauritius
2.6.1 South African market for Textile and clothing
Textile and Clothing Market in South Africa
2,011
Clothing
2,012
2,013
2,014
1,787,509
1,665,168
1,761,792
1,725,308
Fibre and yarn
961,028
878,847
858,298
835,070
Knitted or crocheted fabric
117,710
126,483
146,804
166,373
Other fabric
280,476
262,322
251,734
247,794
Total
3,146,723
Growth

2,932,820
-6.80%
3,018,628
2.93%
2,974,545
-1.46%
South Africa is the biggest importer of textile and clothing material in the African region with imports
of $ 2.97bn in 2014.
11

13% growth in import of knitted fabric

South Africa has registered a decline in growth for HS 61 and HS 62 recording a -1% and –3% which
are the star products of Mauritius.
2.6.2 Top 4 clothing products in South Africa
Value 000
HS
Description
USD
'6203
Men's suits, jackets, trousers etc. & shorts
282,613
'6204
Women's suits, jackets, dresses skirts etc. & shorts
237,956
'6109
T-shirts and other vests, knitted or crocheted
241,445
'6110
Jerseys, pullovers, cardigans, knitted or crocheted
127,412
An assessment of the composition of imports in 2013 (table 3.2) reveals that four product categories account
for over 50% of total clothing imports in South Africa. These are women‘s jackets, dresses, skirts, trousers,
shorts (HS 6204); men's and boys' jackets, trousers, shorts (HS 6203); T-shirts (HS 6109); knitted jerseys and
cardigans (HS 6110).
The highest ranking imports consist of Men's suits, jackets, trousers etc & shorts, which accounted for 16% of
clothing imports in 2013. The next most important items are knitted shirts which accounted for a further
13.7%, closely followed by Women's suits, jackets, dresses skirts & shorts (13.5%) and knitted jerseys and
cardigans (7.3%).
2.7 Using the services of Agents and Distributors
12
The use of agents to promote and represent non-perishable grocery items, footwear, clothing and other
consumer goods is quite common in the South African retail sector and in some cases retailers prefer to deal
with local companies that are familiar with their processes. Most often, goods represented by agents have
brand value either internationally or at least in the country of origin.
Agents generally take on the task of not only negotiating an order with a major retailer, but they would also
take care of other tasks related to getting the product on the shelf. This would include taking care of customs
clearance, port and rail charges, and documentation, warehousing, and financing arrangements. They would
also be responsible for adhering to regulations and control imposed on imported products. With some of the
retail groups this role will include getting the products delivered to the particular store, and merchandising
in-store.
2.8 The Retail industry in South Africa
Six major retail groups dominate the clothing sector: Edcon, Foschini, Truworths, Pepkor, Woolworths and
Mr Price.
The Group are as follows:
Retail Group
Number of stores
Target Segment of the market
Edcon (clothing, footwear &
1228
Mid segment
940
Medium
Truworths
523
Medium
The Foschini Group
1539
High-end
Pepkor & Ackermans
1394
Low to medium segment
Edgars Stores
157
Medium to upper segment
Jet & Jet mart
422
Mass market
Legit
153
Low end segment
textiles group present in South
Africa, Botswana, Lesotho,
Namibia & Swaziland)
Woolworths (present in 19
countries)
13
Outside the market served by the major groups, there is a smaller, higher-end market for speciality stores.
These stores either form part of a group or are independently owned and managed like the Platinum Group
which has 57 stores and Queenspark group operates about 40 stores in the country catering for the needs of
the older, more fashionable woman.
14