Economy, sector
and investment
overview of the
North West
Province of
South Africa
1
PRESENTATION OUTLINE:
•
•
•
•
•
SA Global Competitiveness 2014
NWP and SA Quick Facts
Economic Profile
Sector Analysis
North West Province Industrialisation investment
projects
2
SA GLOBAL COMPETITIVENESS
The Global Competitiveness Report 2014 – 2015 by the World Economic Forum’s (WEF) assesses
the competitiveness landscape of 144 economies, providing insight into the drivers of their
productivity and prosperity and measures over 100 indicators. South Africa ranked no 56 in 2014 :
Positive rankings include:
 Quality of its institutions (36th)
 Including intellectual property protection (22nd),
 Property rights (20th),
 Efficiency of its legal framework in challenging and settling disputes (ninth and 15th,
respectively),
 Accountability of private institutions (2nd )
 Financial market development remained impressive at seventh place, although their data
pointed to "more difficulties" in all channels of obtaining finance
 Efficient market for goods and services, business sophistication and innovation, benefiting from
good scientific research institutions, and
 Strong collaboration between universities and the business sector in innovation were also
identified as points supporting competitiveness.
3
QUICK FACTS: SA and NORTH WEST
OFFICIAL NAM
HEAD OF STATE:
PROVINCIAL
PREMIER:
CAPITAL CITIES:
POPULATION:
AREA:
TOTAL GDP-R:
Constant 2005
prices (R 1000)
GDP GROWTH:
Constant 2005
prices
GDP PER CAPITA:
SOUTH AFRICA
Republic of South Africa
President Jacob Zuma
Bloemfontein (Judicial)
Cape Town (Legislative)
Pretoria (Administrative)
52970624 (2013) IHS
Global Insight
1 200 000 KM²
R 1 993 432 664 (2013)
IHS Global Insight
1.9% (2013) IHS Global
Insight
R37 632 (2013) IHS
Global Insight
INFLATION:
5.7% ( Dec 2013)
STATSSA
UNEMPLOYMENT 25.5% ( June 2014)
RATE
STATSSA
NORTH WEST
North West Province
Supra Obakeng
Ramoeletsi
Mahumapelo
Mahikeng
3611176 (2013) IHS
Global Insight
116 320KM²
R 102 693 066
(2013) IHS Global
Insight
1.6% (2013) IHS
Global Insight
6.82%
R28 437 (2013) IHS
Global Insight
5.7% (Dec 2013)
STATSSA
26% ( June 2014)
STATSSA
75.5%
4
9.69%
5.15%
QUICK FACTS: SA and NORTH WEST
SOUTH AFRICA
NORTH WEST
NW as %
of SA
R 20,2 Billion (2013) 2.18%
IHS Global Insight
R 6 Billion (2013)
0.6%
IHS Global Insight
EXPORTS VALUE: R 924,5 Billion (2013)
IHS Global Insight
IMPORTS VALUE: R 991,2 Billion (2013)
IHS Global Insight
EXPORT
China 11.8%
PARTNERS:
USA 8.3%
Japan 6%
Germany 5.7%
India 4.2%
(2012) (The World Fact book)
EXPORT
Gold, diamonds, platinum, other metals and minerals,
PRODUCTS
machinery and equipment(2012) (The World Factbook)
IMPORT
China 14.4%
PARNERS
Germany 10.1%
Saudi Arabia 7.7%
Japan 4.6%
India 4.5% (2012) (The World Factbook)
IMPORT
Machinery and equipment, chemicals, petroleum
PRODUCTS
products, scientific instruments, foodstuffs (2012) (The
World Factbook)
5
ECONOMIC PROFILE: SECTORS
Gross Value Added per Region (GVA-R) Broad Economic Sectors (9 sectors) Sector's
Share of Regional Total % 2013
(Source: IHS Global Insight Regional eXplorer 745 (2.5q)
Sector's Share of Regional Total %
45.0%
40.0%
35.0%
30.0%
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
2013 South Africa
2013 North West
Agricultur
e
Mining
2.4%
2.5%
9.2%
41.7%
Manufact
Construct
Electricity
uring
ion
11.6%
3.3%
3.0%
1.6%
3.7%
2.0%
Trade
Transport
Finance
Communi
ty
services
16.6%
10.8%
8.9%
5.7%
21.5%
12.7%
23.1%
19.7%
6
ECONOMIC PROFILE: SECTORS
Gross Value Added by Region (GVA-R)
Primary, Secondary & Tertiary Sectors as % of Total
Constant 2005 prices (R 1000) 2013
 Contribution from the primary sector
is equivalent to 18.87% of SA’s primary
sector GVA-R, which is the largest
contribution of all nine provinces.
80.00
70.00
60.00
50.00
%
 Contribution from the tertiary sector
is, equivalent to only 4.52% of SA’s
tertiary sector GVA-R.
(Source: IHS Global Insight Regional eXplorer 745 (2.5q)
40.00
30.00
 Contribution from the secondary
sector is equivalent to only 2.32% of
SA’s secondary sector GVA-R. Given the
developments in Africa’s economic
powerhouse, Gauteng, A STRATEGIC
OPPORTUNITY exists for the expansion
of the secondary sector in North West
20.00
10.00
0.00
South Africa
0.08
Secondary
sector
22.23
North West
29.18
9.94
Primary sector
7
Tertiary sector
69.75
60.88
ECONOMIC PROFILE AND INDUSTRY:
INDUSTRY OVERVIEW
 MINING: 50% of world’s platinum. Also gold, diamonds, chrome, vanadium, granite, slate,
limestone, dimension stone, nickel, silica, manganese, phosphate, fluorspar, zinc and andulasite.
 AGRICULTURE: North West is the food basket of Southern Africa. More than 20% of RSA maize
crop. Also livestock (cattle & poultry), sunflower seeds and oils; nuts; citrus, tobacco (all GMO free).
 MANUFACTURING: Automobile/ non-metallic minerals, fabricated metals, food processing, Soya
protein, etc.
 TOURISM: Cultural, Natural and Historical Heritage
 SERVICES: Business and financial services contributes 14% to provincial GDP and accounts for 5% of
employment. Significant opportunities for BPO&O exists within the sector.
 GREEN ECONOMY: High potential renewable energy opportunities exist within Municipal Waste
conversion, Biomass (converting alien invasive plants into energy) and Solar Technologies including
Off-grid energy for rural areas
8
NORTH WEST PROVINCE SECTOR
ANALYSIS: RECCOMMENDED SECTORS
PROJECTS WITH FOLLOWING CHARACTERISTICS ARE RECOMMENDED
 High Tress Index indicates strategic investment opportunity in most districts
 High comparative advantage as indicated by Location Quotient
 Most sectors identified have high growth performance index
 Aligned with national policies and also scores highly on the different economic
metrics designed to evaluate potential
 Sectors offer good prospects on market potential based on recent growth,
improving employment to GDP ratios and large international optimism in the
sector.
9
IPAP FOOTPRINT IN NORTH WEST
PROVINCE
The table shows the scope of the IPAP-2 sectors in the Province:
GVA
EMPLOYMENT
GOS
0.8%
0.4%
1.4%
1.0%
0.5%
1.2%
0.6%
0.3%
1.3%
0.9%
0.6%
0.8%
CLOTHING, TEXTILES, FOOTWEAR & LEATHER
0.1%
0.4%
0.0%
FORESTRY, PAPER, PULP & FURNITURE
0.7%
1.0%
0.7%
CULTURAL INDUSTRIES AND TOURISM
1.3%
3.2%
1.7%
CLUSTER 1
METAL FABRICATION
CAPITAL & TRANSPORT EQUIPMENT
AGRO-PROCESSING
CLUSTER 2
PLASTICS, PHARMACEUTICALS AND
CHEMICALS
10
NORTH WEST PROVINCE SECTOR ANALYSIS:
COMPARISON OF SECTORS BY MARKET
ATTRACTIVENESS
The sectors with the strongest
backward linkage (inputs sourced
from local producers in other sectors)
opportunities in the NWP are:
• Food;
• Construction;
• Metals;
• Automotives;
• Clothing; and
• Furniture sectors.
The sectors with the strongest forward
linkage opportunities are:
• Plastics and chemicals;
• Metals;
• Construction; and
• Automotives
More sectors in the NWP use the outputs
of metals and chemicals as inputs into
their own processes than the outputs of
all other sectors, and hence stimulating or
investing in the metals and chemicals
sectors might alleviate supply constraints
and/or stimulate the downstream
industries.
11
ATTRACTIVE INVESTMENT OPPORTUNITITES
PROJECT 1: INFRASTRUCTURE PROJECTS
PROJECT DESCRIPTION
PROJECT MOTIVATION
Various construction and
SIP 4: Unlocking the economic opportunities in NWP
infrastructure projects
•
required to unlock
economic potential
Acceleration of investments in road, rail, bulk water, water treatment and
transmission infrastructure
•
Enabling reliable supply and basic service delivery
•
Facilitate development of mining, agricultural activities and tourism
opportunities
PROPOSED LOCATION
• Province Wide
• Open up beneficiation opportunities in mining and agriculture in the North
West Province
The construction sector plays a pivotal role in the development of the provinces
infrastructure, which is necessary to create an enabling environment for
economic growth and development. Currently the NWP offers investment
opportunities relating to road, rail and air transport, bulk water and electricity
transmission infrastructure
12
ATTRACTIVE INVESTMENT OPPORTUNITITES
PROJECT 2: Platinum Valley SEZ
PROJECT DESCRIPTION
PROJECT MOTIVATION
The SEZ is a joint socio-economic
The NWP is reported to produce 94%, 46% and 25% of South Africa’s
development project involving key mines
platinum, granite and gold production, and accordingly has a concentration
and the NWP government, to develop a
of mining companies.
purpose built industrial and commercial
facility that will be allocated to the
production of localised mining goods and
the provision of mining related business
services. The integrated infrastructure is
also expected to provide economic and
social opportunities and benefits to the
industrial area and its community, through
the attraction and concentration of existing
mining suppliers and new businesses.
PROPOSED LOCATION
• Bojanala Platinum District
Strategic short term objectives of the Mining Supply Park are:
• To provide a low risk start-up solution
• To provide a structured accelerated environment where local Black
Economic Empowerment (BEE) development could take place
• To provide factory space for mining suppliers in an under developed
environment
•
To develop on economic principals
•
To ensure the placement of an independent entity to develop the park
Strategic long term objectives of the Mining Supply Park are:
•
To provide an integrated manufacturing and business service logistics
park for the mining industry based on commercial
principles
13
ATTRACTIVE INVESTMENT OPPORTUNITITES
PROJECT 3: AGRO PROCESSING
PROJECT DESCRIPTION
PROJECT MOTIVATION
Establishment of the Cattle Beneficiation Industrial Park, 70% of the value of NWP live animal and animal
including industrial and commercial facilities that products exports during 2009 comprised live
dedicated for production and business services to attract animals, and only 14% of the value of NWP
new businesses, by providing integrated infrastructure in exports comprised meat and edible meat
one location and providing localized environmental products.
controls that are specific to the needs of the industrial
area.
•
This
represents
a
significant
beneficiation
Support the beneficiation of cattle through a world opportunity for the NWP, given that 13% of SA’s
class economy of scale abattoir, meat processing and cattle herd is located in NWP, with beef cattle
packaging plant and cold storage facilities
•
comprising 60% of the NWP livestock output.
Support the beneficiation of cattle hides through an PROPOSED LOCATION
economy of tannery, leather furniture manufacturing
plant, leather footwear manufacturing plant, etc
• Dr. Ruth S Mompati District
14
ATTRACTIVE INVESTMENT OPPORTUNITITES
PROJECT 4: SMALL SCALE MILLING
PROJECT DESCRIPTION
PROJECT MOTIVATION
Establishment and development of the A third of South Africa’s maize is grown in the NWP. Maize is
Small Scale Maize Milling Industry to allocated to various consumption categories in SA with 50%
facilitate the entry of small scale maize used for human consumption, 40% for animal feed and 10%
millers to the NWP rural areas where they for Bio-fuels etc.
are expected to be competitive, given that
high logistics and transport costs raise the There is currently a surplus of maize production estimated at
price of basic food and maize products.
4 million tons.
This intervention thus aims to also sustainably reduce the
PROPOSED LOCATION
• Dr. Ngaka Modiri Molema District
current high cost of basic milled products, which would
contribute to poverty reduction in the NWP.
15
ATTRACTIVE INVESTMENT OPPORTUNITITES
PROJECT 5: METAL FABRICATION
PROJECT DESCRIPTION
PROJECT MOTIVATION
Development of a Metal fabrication, Capital
The Metal fabrication, Capital and Transport Equipment cluster of sectors is
and Transport Equipment sector
vital to economic development as they produce products, applications and
development zone through the facilitation of
services that are used throughout the NWP and SA economy in
general and specific industrial infrastructure,
infrastructure programmes, general construction, engineering, mining,
technical workforce and business support
packaging and automotives.
services to manufacture:
The aim is thus to strategically position the NWP to develop industrial
• Metal fabricated components,
capacity and capability to leverage off the National Infrastructure capital
• Machinery and equipment,
expenditure programme as well as the growth in Renewable Energy and
• Other transport equipment,
Energy Efficiency equipment manufacturing.
• Electrical machinery and apparatus,
Current opportunities include manufacturing to supply:
PROPOSED LOCATION
•
• Dr. Kenneth Kaunda District
• Bojanala Platinum District
Public infrastructure and beneficiation chains through
components/systems designated for local procurement
•
White goods industry, which is being repositioned for growth
•
Solar Water Heaters
16
ATTRACTIVE INVESTMENT OPPORTUNITITES
PROJECT 6: AUTOMOTIVE COMPONENTS
PROJECT DESCRIPTION
PROJECT MOTIVATION
Establishment of an automotive component The APDP has key objectives to:
sector development zone for supply to • Raise vehicle production volumes to 1,2 million vehicles per
local, regional and international markets.
annum by 2020
The DTI indicates that the policy shift from • Substantially diversify and deepen the components supply
the
Motor
Industry
Development
chain
Programme (MIDP) to the Automotive To achieve this, there will need to be ongoing increases in
Production
Development
Programme minimum plant volume thresholds and vehicle OEMs will need
(APDP) in 2013 serves to unlock various to work closely with existing and new component OEMs to
opportunities
for
vehicle
Original identify areas where greater economies of scale in component
Equipment Manufacturers (OEMs) as well sourcing and/or value chain development will be possible.
component OEMs
PROPOSED LOCATION
• Bojanala Platinum District
This presents an opportunity to grow the component supply
base through the expansion of the existing NWP Brits
17 Original Equipment and
automotive component hub for both
ATTRACTIVE INVESTMENT OPPORTUNITITES
PROJECT 7: PLATINUM BENEFICIATION
PROJECT DESCRIPTION
Establishment
of
a
PROJECT MOTIVATION
platinum Increasing global energy requirements necessitate the identification
beneficiation sector development and development of environmentally friendly renewable energy. The
zone to support the technology North West University is currently leading in this field. Establishing the
development,
pilot
production, Platinum beneficiation sector development zone through the
testing and commercialization of facilitation
hydrogen
Group
production,
Metals
components
general
and
specific
research
and
industrial
Platinum infrastructure, technical workforce and business support service to
(PGM)
and
of
catalysis support the technology development, pilot production and testing,
fuel
cell commercialization and manufacturing of:
components
•
Hydrogen production and storage components, sub assemblies and
complete systems;
PROPOSED LOCATION
•
PGM catalysis components, sub assemblies and complete systems;
• Bojanala Platinum District
•
Niche application Fuel Cell components, sub assemblies and
18
complete systems to address regional development
challenges
ATTRACTIVE INVESTMENT OPPORTUNITITES
PROJECT 8: RENEWABLE ENERGY
PROJECT DESCRIPTION
PROJECT MOTIVATION
Although SA has an abundance of RE resources The Renewable Energy (RE) strategy of the North West
available, the applicability of these for the NWP Province (NWP) was developed in response to a need for
depend
on
a
number
of
factors,
and the NWP to participate meaningfully within the RE sector
consequently not all are equally viable for the of South Africa. The North West provincial RE strategy
NWP. RE sources that were identified to hold provides guidance to stakeholders and assigns roles and
the most potential and a competitive strength responsibilities for the development and production of RE
for the NWP are:
in a sustainable manner across the NWP. The RE strategy
• Solar energy (Photovoltaics (PV) as well as aims to:
Solar Water Heaters (SWH),
•
Improve the NWP’s environment;
• Municipal solid waste,
•
Reduce its contribution to climate change;
• Hydrogen and fuel cell technologies,
•
Alleviate energy poverty;
• Biomass, and
•
Promote economic development;
• Energy Efficiency (EE).
•
Facilitate job creation; and19
ATTRACTIVE INVESTMENT OPPORTUNITITES
PROJECT 9: MAFIKENG INTERNATIONAL AIRPORT
PROJECT FEATURES
PROJECT FEATURES
Manufacturing and export hub
Multimodal Transport System
Leather processing
Airport Development and Management
Tiles manufacturing
Airplane repair and maintenance services
High Tech Manufactured
Aviation Academy
Central Business services
Cargo Freight Management
Duty free zone
International entry for non scheduled cargo air services
Banking
Rail and road network system
Retail and Shopping
Passenger flight services
Restaurant
Convention Centre
Business Processing Outsourcing
Hotels
Office Park
20
WHY NORTH WEST PROVINCE? EASY ACCESS TO
MARKETS AND GATE WAY TO AFRICA

K EN YA
R W AN D A
CONGO

D E M O C R A T IC
R E P U B L IC O F
CONGO

B UR UN DI
T A N Z A N IA













MALAW I
AN GLO A
Z A M B IA






Z IM B A B W E
N A M IB I A

B O T SW ANA







S O U T H A F R IC A
Bordering Botswana, the NWP is ideally positioned to
access the 14 countries comprising the Southern African
Development Community (SADC) as well as the islands
off Africa's east coast, and even the Gulf States and India.
the NWPs well developed road and rail links provide the
platform and infrastructure for ground transportation
deep into sub-Saharan Africa.
The SADC FTA signed in August 2008 provides access to a
market of over 250 MILLION CONSUMERS
Future FTA with SADC,COMESA & EAC will provide access
to a market of over 700 MILLION CONSUMERS
NWP offers easily available skills and distribution
channels imperative for commercial ventures into Africa.
NWP plays a significant role in the supply of energy, relief
aid, transport and communications to the continent.
NWP is well positioned to be used as a shared services
hub for companies’ African operations, especially for SubSaharan countries.


22
WHY NORTH WEST PROVINCE? :
MARKET AND PRODUCT POTENTIAL
SOUTH AFRICAN TRADE AGREEMENTS
 South Africa – European Union (EU) Trade,
Development and Co-operation
Agreement (TDCA)
 Southern African Development Community
(SADC) FTA
 Southern African Customs Union (SACU) –
India Preferential Trade Agreement (PTA)
 Southern African Customs Union (SACU) European Free Trade Association (EFTA)
FTA
 Africa Growth and Opportunity Act (AGOA)
 SACU – Southern Common Market
(Mercosur) Preferential Trade Agreement
 BRICS multilateral 2010
North West
University
Decision
Support
Model
• Team of PhD researchers
• Intellectual Property
• Model Development
• Assesses the commercial and political risks of doing
business in all countries
• Market potential of the various product groups for
the remaining countries are assessed by analyzing
the growth of imports of a given product and related
import market size
• Examines the accessibility of each market (barriers to
entry and the degree of market concentration)
• Priorities export promotion activities
• Potential export markets based on the strength of
South Africa’s current exports to the identified
Identification markets, the potential market’s market size, market
of Export
growth and import market accessibility.
market
• DEMAND FOR 5500 SA PRODUCTS IDENTIFIED
Potential
NORTH WEST ADVANTAGE
Resource
Base
Advantage
Production
Cost
Advantage
Location
Advantage
23
Market
Access
Advantage
WHY NORTH WEST PROVINCE: EXPORT
POSSIBILITIES - TOP 10 POTENTIAL EXPORT
PRODUCTS FOR NWP
RANK
PRODUCT DESCRIPTION
1
710239 - Diamonds (jewellery) worked but
not mounted or set
2
720241 - Ferro-chromium, >4% carbon
3
841391 - Parts of pumps for liquids
4
9
261000 - Chromium ores and concentrates
730840 - Props etc for scaffold, shuttering,
pits, iron/steel
730830 - Doors, windows, frames of iron or
steel
970500 - Collections and collectors pieces
721090 - Flat rolled iron or non-alloy steel,
clad/plated/coated,
080290 - Nuts edible, fresh or dried
10
391729 - Plastic tube, pipe or hose, rigid, nes
5
6
7
8
IPAP-2 CLUSTER
Metal Fabrication, Capital
and Transport Equipment
Metal Fabrication, Capital
and Transport Equipment
Metal Fabrication, Capital
and Transport Equipment
Metal Fabrication, Capital
and Transport Equipment
Metal Fabrication, Capital
and Transport Equipment
Plastics, Pharmaceuticals24
TOTAL POTENTIAL
EXPORT VALUE
(US$ ‘000)
11 742 358
2 227 206
958 094
452 706
398 120
226 781
184 827
164 383
159 390
71 830
WHY NORTH WEST PROVINCE? :
RATIONALE FOR MARKET ENTRY MODEL
LOCAL FIRM’S RESOURCES
MNE’S RESOURCES




Innovative capabilities
Advanced technology and
know-how
Industry-specific marketing
expertise
Organization structure and
systems









JV


Imitating capabilities
Older technology and knowhow
Country-specific marketing
expertise
Country specific organization
skills
Access to partner’s local knowledge
Local expertise - marketing, government relations, etc
Reduction of concern about overpayment
Both parties have some performance incentives
Significant control over operation
Both partners contribute hard-to-measure inputs
Large expected mutual gains in the long-run
25
AREAS OF ASSISTANCE FROM PARTNERING
COUNTRY
 Information about doing business in country
 Investment and Export opportunities
 Market, market access and trade intelligence
 Business partner identification (investment and trade)
 Supporting trade missions and visits to country
 Networking and other opportunities
 Problem solving
26
NORTH WEST DEVELOPMENT CORPORATION
SERVICES
 Facilitating joint venture and equity partnerships
 Providing information on financing options and investment incentives
 Providing advice on feasibility studies and business plans
 Assisting investors to obtain work and business permits
 Providing assistance in obtaining suitable factory space
 Assisting existing firms to expand and re-invest
 Assisting companies to find export markets for their products
 Advisory services to improve company growth and performance
 Competitiveness improvement support
 Advice on productivity and process improvement
27
Contact the NWDC for more
information or to explore investment
opportunities
NWDC Rustenburg
Trade, investment & industry development office:
+27 (0)14 594 257
28
Headquarters
22 James Watt Crescent Industrial Site
Mahikeng, 2745
TEL: 18 381 3663
Fax: 18 381 2041
Email: [email protected]
Trade and Investment
1ST Floor Old Mutual Building
171 Beyers Naude Drive, Rustenburg
TEL: +27(0) 14 594 2570
Fax: +27(0) 14 594 2570
29