GGDA Binder Cover Final 6/21/13 4:49 PM Page 1
C
M
Y
CM
MY
CY CMY
K
Gauteng Investment
Handbook 2013
Tel: +27 (0) 11 085 2400
Web: www.ggda.co.za
Composite
Gauteng Investment
Handbook 2013
TABLE OF CONTENTS
Acronyms and Abbreviations
2
1. Introduction
1.1
Foreword from the GGDA
1.2
Overview of the Handbook
1.3
Introducing the GGDA
5
5
7
8
2. An Overview of Gauteng
11
3. Why Invest in Gauteng?
21
4. Cost of Doing Business
57
5. Gauteng Economic Sectors and Opportunities
69
6. Metropolitan and District Municipalities
87
7. Gauteng Lifestyle
91
8. Statistics
8.1
Global Statistics and Country Comparisons
8.2
South African Statistics and Provincial Comparisons
8.3
Gauteng Statistics
99
99
109
119
9. Key Contact Numbers
123
10. Maps
125
www.ggda.co.za I 1
ACRONYMS AND ABBREVIATIONS
AGOA
AIDC
ANC
APDP
ARC
ARV
ASP
B-BBEE
BBSDP
BEE
BPeSA
BPO
BRIC
BRICS
BRT
CBD
CCA
CCTV
CIPC
CIS
ConHill
CSIR
CTCIP
DBSA
DEVCO
dti
DRC
EFTA
EMIA
EU
FABI
FDI
FIG
GBCSA
GDED
African Growth and Opportunity Act
Automotive Industry Development Centre
African National Congress
Automotive Production and Development Programme
Agricultural Research Council
Antiretroviral
Automotive Supplier Park
Broad-Based Black Economic Empowerment
Black Business Supplier Development Programme
Black Economic Empowerment
Business Processing enabling South Africa
Business Process Outsourcing
Brazil, Russia, India and China
Brazil, Russia, India, China and South Africa
Bus Rapid Transport
Central Business District
Customs Controlled Areas
Close-circuit television
Companies and Intellectual Property Commission
Co-operative Incentive Scheme
Constitution Hill
Council for Scientific and Industrial Research
Clothing and Textile Competitiveness Improvement Programme
Development Bank of South Africa
Gauteng IDZ Development Company
Department of Trade and Industry
Democratic Republic of Congo
European Free Trade Association
Export Marketing and Investment Assistance
European Union
Forestry and Agricultural Biotechnology Institute
Foreign Direct Investment
Foreign Investment Grant
Green Building Council of South Africa
Gauteng Department of Economic Development
2 I www.ggda.co.za
GDP
GEDA
GFIP
GFA
GGDA
GGDS
GSP
GTA
IBM
ICL
ICT
IDC
IDZ
IP
IT
JDA
JMP
JSE
KWh
MFN
NCPC-SA
NERSA
OEM
PI
PIC
PPP
PRASA
QSAPE
R&D
SAB
SABC
SABS
SACU
SADC
SAISI
SANRAL
SARS
SEDA
Gross Domestic Product
Gauteng Economic Development Agency
Gauteng Freeway Improvement Project
Gauteng Funding Agency
Gauteng Growth and Development Agency
Gauteng Growth and Development Strategy
Generalised System of Preferences
Gauteng Tourism Authority
International Business Machines
International Computers Limited
Information and Communication Technology
Industrial Development Corporation
Industrial Development Zone
Intellectual Property
Information Technology
Johannesburg Development Agency
Jewellery Manufacturing Precinct
Johannesburg Stock Exchange
Kilowatt Hour
Most Favoured Nation
National Cleaner Production Centre of South Africa
National Energy Regulator of South Africa
Original Equipment Manufacturer
Production Incentive
Public Investment Corporation
Price Power Parity
Passenger Rail Agency of South Africa
Qualifying South African Production Expenditure
Research and Development
South African Breweries
South African Broadcasting Corporation
South African Bureau of Standards
Southern African Customs Union
Southern African Development Community
South African Iron and Steel Institute
South African National Roads Agency Limited
South African Revenue Service
Small Enterprise Development Agency
www.ggda.co.za I 3
SEZ
SME
SMME
SPDC
SPII
STP
TDCA
TEP
THRIP
TIH
UDZ
UIF
UNESCO
VAT
ZAR
Special Economic Zone
Small and Medium Enterprise
Small, Medium and Micro Enterprise
Supplier Park Development Company
Support Programme for Industrial Innovation
SEDA Technology Programme
Trade, Development and Cooperation Agreement
Tourism Enterprise Support Programme
Technology and Human Resources for Industry Programme
The Innovation Hub
Urban Development Zone
Unemployment Insurance
United Nations Educational, Scientific and Cultural Organization
Value Added Tax
Rand
4 I www.ggda.co.za
GGDA Binder Divider 1-D1 6/22/13 8:39 PM Page 1
C
M
Y
CM
MY
CY CMY
K
1
Introduction
Composite
1. INTRODUCTION
Gauteng: Epicentre for Growth
Welcome to Gauteng – Home for Smart Opportunity Development!
Gauteng is as rich in history as it is in
minerals and other natural resources
and it has evolved to become the economic hub of the African continent. The
provincial economy is the one of the
leading economies in Africa, accounting
for 10 percent of the continent’s gross
domestic product (GDP). Although, in
area, Gauteng is the smallest province in
South Africa, it remains a leader across
the board: it hosts the headquarters of
South Africa’s top four banks as well as the headquarters of many local and
multinational commercial, industrial and mining companies; and three of
South Africa’s six metropolitan municipalities are located within the province.
The provincial economy is open and internationally competitive, and has much
to offer to companies and investors alike. The province is home to a first-class
stock exchange, the Johannesburg Stock Exchange (JSE), and there is much
scope to initiate or expand mutually beneficial public-private partnerships
with large and small businesses, entrepreneurs and developers. In addition,
Gauteng enjoys a commanding geographical location, ambitious eco-tourism
and heritage-tourism programmes and vibrant lifestyle opportunities. As
many investors have come to realise: as Gauteng grows, so grows the South
African economy! Any entrepreneur or investor looking to do business in
Gauteng has already made a good choice. As an epicentre for growth, Gauteng
is leading innovation in the South African economy.
A multitude of advantages and incentives are available for investors looking
to do business in Gauteng. Ready to assist, the Gauteng Growth and
Development Agency (GGDA) is the first port of call for any investor or
entrepreneur who is seeking to capitalise on the many profitable opportunities
available in the province.
INTRODUCTION I www.ggda.co.za I 5
On 1 June 2012, the GGDA was established following a merger between the
Gauteng Economic Development Agency (GEDA) and Blue IQ Holdings (Pty)
Ltd. As a major contributor to development in Gauteng, Blue IQ was involved
in numerous investment projects, including the Greater Kliptown Regeneration Development, Greater Newtown Development, Gauteng Rapid Rail Link,
City Deep Terminal Industrial Development Zone, Constitutional Hill, OR
Tambo International Airport Industrial Development Zone, and Wadeville Alrode Industrial Corridor.
The GGDA recognises the importance of investment in driving job creation,
skills development and the establishment of new companies (or expansion
of existing companies) for economic growth and development, both within
the province and throughout South Africa. With this in mind, the GGDA’s principal objectives are to ensure that investors receive all the support and information that they require in order to maximise the gains from their
investments, as well as to facilitate strategic infrastructure development
within the Gauteng province.
6 I INTRODUCTION I www.ggda.co.za
1.1 Overview of the Handbook
This Handbook is the first point of reference for everything you need to know
about doing business and investing in Gauteng. It begins by presenting an
overview (Section 2) of the key facts and figures that make Gauteng a worldclass province. This is followed in Section 3 by a discussion of potential
opportunities and benefits available to firms and investors looking to do
business in Gauteng. This section also outlines the incentive programmes
that are available to investors at the level of individual metropolitan and
district municipalities. Moreover, it explains the business culture and
climate in Gauteng, along with relevant laws which may be of interest to
discerning investors.
The GGDA has a key role in positioning Gauteng as a Globally Competitive
City Region. Section 4 shows that Gauteng already has much to offer in this
regard. Comparisons in this section with leading African countries and South
Africa’s BRIC (Brazil, Russia, India and China) counterparts show that both
South Africa and Gauteng are top destinations for investment. The figures
are backed by the country’s favourable regulatory framework for investment
— South Africa boasts a top-ranked credit policy and offers a competitively
ranked investor protection policy.
Section 5 focuses on sectoral performance, opportunities and unique
strengths in each of South Africa’s top 12 economic sectors. This information,
coupled with the analysis of the strengths of Gauteng’s metropolitan and
district municipalities (in Section 6), will assist domestic and international
investors to recognise and understand the opportunities available to initiate
profitable investments or establish thriving enterprises in Gauteng.
Not only is the province economically rich, it offers a variety of lifestyle and
tourist attractions for every age group and palate. The Handbook also
outlines the province’s lifestyle opportunities (Section 7), including information on sporting facilities, things to see and places to visit. Key statistics
are presented in Section 8, providing information across a range of variables,
from prices and labour statistics to the delivery of social services in Gauteng.
The Handbook concludes with important contact details as well as global
and domestic maps for potential investors.
INTRODUCTION I www.ggda.co.za I 7
1.2 Introducing the GGDA
As noted in the introduction, the GGDA was established in 2012 following a
merger between GEDA and Blue IQ Holdings (Pty) Ltd. Both these
organisations had previously provided a unique bouquet of services (see Table
1). The move to merge the two entities formed part of a broader restructuring
operation aimed at enhancing the role of the Gauteng Provincial Government
in driving investment, growth and innovation in the provincial economy.
Table 1: Services previously provided by Geda and Blue IQ Holdings
(Pty) Ltd in their individual capacities
Services previously provided by GEDA
Services previously provided by Blue IQ
Assist local manufacturers and exporters
to establish global trade contacts.
Provide project management services to
fast track the delivery of infrastructure and
institutional arrangements related to the
development and finalisation of projects.
Conduct international market and
industry research for country profiling
and the collection of market data.
Serve as an industry support catalyst by
playing a role in realising the true potential
of industry support initiatives, and creating
viable mechanisms for businesses to
interact more successfully.
Identify and plan outward and inward
trade missions.
• Identify and invite companies to
participate in trade shows.
• Identify and invite potential foreign
buyers to the stand.
Play the role of asset
manager/stakeholder focusing on the
commercialisation of projects that have
reached maturity.
Facilitate access to export
incentive programmes.
Blue IQ operated in four key focus areas:
Infrastructure, Advanced Manufacturing,
Business Tourism and Innovation.
Facilitate export development
and promotions.
Facilitate projects (FDI and DDI) and
promote investments to Gauteng.
SOURCE: GGDA, 2013
Mandate of the GGDA
To be the implementation arm of the Gauteng Department of Economic
Development and to assist the department to lead, facilitate and manage
sustainable job creation and inclusive economic growth and development in
the Gauteng City Region.
8 I INTRODUCTION I www.ggda.co.za
Vision of the GGDA
To be the premier catalyst of innovative and sustainable growth and socioeconomic development within the Southern African region.
Mission of the GGDA
The GGDA creates an enabling environment for growth through targeted
investment facilitation, strategic infrastructure development and social
transformation, thus positioning Gauteng as a leading Global City Region.
The GGDA provides the following services to a diverse client base:
• facilitating the development and enhancement of strategic economic
infrastructure within the Gauteng province;
• working with development finance partners in a project appraisal capacity
to assess the case for proceeding with specific projects or proposals;
• undertaking the co-ordination, pre-planning and evaluation of sites for
clients, and conducting post-investment site visits;
• providing and disseminating market intelligence in the form of sectoral
and regional economic data;
• assisting with company registrations and helping businesses to obtain
work permits and visas;
• facilitating access to national and local government investment incentives;
• facilitating local and foreign business retention, expansion and after-care
services;
• hosting and coordinating inbound foreign and local business delegations
and undertaking outbound missions to promote Gauteng as a premier
investment destination;
• providing export development and facilitation assistance.
1.3 The GGDA's subsidiaries
Four subsidiary organisations fall under the umbrella of the GGDA. These
organisations and their respective mandates are outlined below.
1.
Automotive Industry Development Centre (AIDC): The AIDC was
established in 2000 as a supporting organisation to provide effective
project delivery assistance in line with the province’s industrial policy
and other strategic initiatives within the automotive sector in Gauteng.
On 1 April 2013, the Supplier Park Development Company, a subsidiary
INTRODUCTION I www.ggda.co.za I 9
of the GGDA, merged with the AIDC to form one entity. The new entity will
continue to operate under the name of the AIDC but will focus more
comprehensively on the automotive and advanced manufacturing
sectors, including the expansion of the Automotive Supplier Park (ASP)
in Rosslyn.
2.
Constitution Hill (ConHill): ConHill was established in 2000 to provide
the appropriate management arrangement to ensure the delivery of
heritage, education and tourism programmes in Gauteng.
3.
Gauteng IDZ Development Company (DEVCO): Established in 2009,
DEVCO’s main objective will be the management of the Jewellery
Manufacturing Precinct (JMP), once this is fully established.
4.
The Innovation Hub (TIH): The TIH was set up in 2001 to foster the
development of smart industries (high technology sectors) in Gauteng.
Additional information on GGDA’s investment projects can be found in
Section 3.
10 I INTRODUCTION I www.ggda.co.za
GGDA Binder Divider 2-D1 6/22/13 8:40 PM Page 1
C
M
Y
CM
MY
CY CMY
K
An Overview of Gauteng
Composite
2
2. AN OVERVIEW OF GAUTENG
Gauteng is South Africa’s economic engine, contributing more than one third
to the national GDP. The province is the central hub for commercial activity
in the country, with most mining, manufacturing and financial services
headquartered within its boundaries. Despite the large scale of economic
activity within the province, the cost of living is still relatively low in major
cities like Johannesburg in comparison to first world cities such as London
— with food, luxury items and services, and electronics as much as 50 percent
cheaper. Gauteng offers investors great opportunities through multiple
locations for industrial and commercial business and well-developed
infrastructure. Gauteng is the epicentre of Africa — good business starts here!
“Gauteng is a unique business environment in that it represents both
the South African political and economic centre within 1.4% of the
country’s surface area. Its size and influence lends to its role as a
prominent national business and entrepreneurial ecosystem with its
close accessibility of labour, manufacturing prowess and significant
consumer spending. The province is a well-connected transport hub,
both internationally and particularly to African destinations while it’s
local road and rapid rail infrastructure add to the ease of getting
around the province. Gauteng represents a cosmopolitan and
pioneering hub that is at the tipping point of South African society —
whether from the stock exchange to leafy suburbs and vibrant
townships. (Julian Hewitt — Programme Director: Gauteng, Allan Gray Foundation)
Geography
Gauteng is South Africa’s smallest province, occupying just 1.4 percent of
the total land area of South Africa. The province is located in the Highveld
region of South Africa, approximately 1 700 metres above sea-level. It is a
landlocked province, surrounded by four other provinces. The Vaal River
forms a natural border with the Free State, which lies south of Gauteng, while
the North West province is located to the west, Limpopo to the north and
Mpumalanga to the east. The geography of Gauteng includes low parallel
ridges, mountain ranges and undulating hills.
AN OVERVIEW OF GAUTENG I www.ggda.co.za I 11
Gross Domestic Product
With Gauteng’s GDP valued at R811 billion (US$112 billion), the province
contributes as much as 33 percent of South Africa’s total national economic
output. The Gauteng economy is also a major player in Africa, accounting
for 10 percent of the GDP of the entire African continent.
Main cities and towns
Johannesburg is the capital of the Gauteng province, while Pretoria (also
situated in Gauteng) is the administrative capital of South Africa. Other major
urban areas include Roodepoort and Krugersdorp to the west of
Johannesburg; and Germiston, Springs, Benoni and Brakpan to the east.
Soweto, renowned as a focal point in the struggle against apartheid and
home to more than 2 million people, is situated south of Johannesburg.
Vereeniging and Vanderbijlpark are important industrial and coal-mining
towns which lie in southern Gauteng, on the Vaal River.
People
The Gauteng province is home to a vibrant and diverse population, reflected
in a multitude of races, religions, cultures and ethnicities. More than 12
million people live within the province’s borders, accounting for almost one
quarter (23.7 percent) of the total South African population. Unsurprisingly,
given its relatively small geographic area, Gauteng has the largest
12 I AN OVERVIEW OF GAUTENG I www.ggda.co.za
population density of all provinces in South Africa, with approximately 675
people per square kilometre. It is also the province of choice for migrant
labourers — 9.5 percent of residents were born outside the province and
7.4 percent are not South African citizens. It is truly the province of
opportunity for many people.
Main languages
The most widely spoken languages in Gauteng are isiZulu, English, Afrikaans
and Sesotho, with 19.8 percent, 13.3 percent, 12.4 percent and 11.6 percent
of the provincial population speaking these languages in their homes,
respectively. English is the main language of commerce. In addition to the
most prevalent languages, all of South Africa’s remaining official languages
are spoken in Gauteng, together with a diverse range of international
languages including Mandarin, Swahili, French, Portuguese and German.
Climate
Gauteng is a summer rainfall area, and thunderstorms are common in the
summer months. Nevertheless, summers in the province are hot and the
ultraviolet radiation sunburn index can be very high during the summer
months. In turn, the winter months, from June to September, are typically
cold and frosty. The average summer and winter maximum and minimum
temperatures (in degrees Celsius) in Gauteng’s two commercial centres
(Johannesburg and Pretoria) are presented in Table 2.
Table 2: Average Temperatures (in Celsius)
City
Summer Average Temperature
Winter Average Temperature
Maximum
Minimum
Maximum
Minimum
JHB
26
15
17
4
PTA
29
18
20
5
SOURCE: GCIS, 2011
The toll-free Weather Line (082 162) can be contacted for a three-day
weather forecast.
AN OVERVIEW OF GAUTENG I www.ggda.co.za I 13
Currency
South Africa’s currency unit is the rand (ZAR), which is divided into 100 cents
(c). Rands are available as banknotes in R10, R20, R50, R100 and R200
denominations, while coins come in denominations of R1, R2 and R5, as well
as 5c, 10c, 20c and 50c. There are no foreign currency restrictions for people
entering South Africa.
Exchange rates fluctuate daily. The following average exchange rates
between the rand and major international currencies were recorded in the
2012/13 year:
• Rand-US Dollar exchange rate: R8.19/$;
• Rand-Euro exchange rate: R11/€;
• Rand-GB Pound exchange rate: R12.97/£.
Administration
The South African Constitution provides for three levels of local government:
metropolitan, district and local. Gauteng is divided into three metropolitan
municipalities: City of Johannesburg, City of Tshwane and Ekurhuleni. In turn,
there are two district municipalities within the boundaries of the province,
which are divided further into a number of local municipalities as follows:
• Sedibeng District Municipality (encompassing the Emfuleni, Lesedi and
Midvaal local municipalities);
• West Rand District Municipality (encompassing the Merafong City, Mogale
City, Randfontein and Westonaria local municipalities).
Governance
Gauteng is governed by a Premier and an Executive Council. The current
Premier of Gauteng is Nomvula Mokonyane of the African National Congress.
Each metropolitan municipality manages affairs related to local governance
within its area of jurisdiction through branches and departments that see to
service delivery. The current mayors of the three metropolitan areas are:
14 I AN OVERVIEW OF GAUTENG I www.ggda.co.za
• Parks Tau (City of Johannesburg);
• Kgosientso Ramokgopa (City of Tshwane);
• Mondli Gungubele (Ekurhuleni).
Provincial powers
In accordance with the South African Constitution, each province has its own
government, with parliamentary power vested in a provincial legislature and
executive power entrenched in the Premier and exercised in collaboration
with the other members of a Provincial Executive Council.
Based at the Johannesburg City Hall, the Gauteng Provincial Legislature is
made up of between 30 and 80 members who are elected for a five-year term,
with the number of seats awarded to each political party being proportional to
the outcome of the provincial election. The Members of Provincial Legislature
are divided into 14 committees according to the distribution of political parties.
The committees assemble regularly to debate and pass Bills (proposed
legislation), and to interact with Provincial Government Departments.
AN OVERVIEW OF GAUTENG I www.ggda.co.za I 15
Provincial budget
The Gauteng Provincial Government receives most of its revenue from the
national government, primarily in the form of grants. In this respect,
approximately 95 percent of provincial income is obtained through national
budget allocations, with the balance earned in revenue obtained from
sources such as vehicle licensing and taxes.
For the 2013/14 financial year, the Gauteng province has budgeted
expenditure of R77.309 billion. A large share of the budgeted expenditure is
directed towards health and education — the provincial Department of Health
receives 37 percent of the budget and the Department of Education receives
38 percent.
Water
Around 88 percent of the province’s water is sourced from the Vaal River,
with the balance supplemented by transfers from the Thukela River and the
Lesotho Highlands Water Project. The Ekurhuleni Metropolitan Municipality
was South Africa’s top water supplier in 2012.
16 I AN OVERVIEW OF GAUTENG I www.ggda.co.za
Land and buildings
City Improvement Districts within the Johannesburg CBD and the Braamfontein area have been set up by the Central Johannesburg Partnership in
collaboration with the Johannesburg Development Agency (JDA). These districts have been established as part of a campaign to upgrade the Johannesburg city centre. As part of the upgrade programme, property owners
agreed to pay for enhanced services to supplement those provided by the
local municipality.
Moreover, there are multiple sites for commercial and industrial development widely available in and around commercial hubs such as Sandton,
Randburg, Fourways, Midrand, the West Rand and Pretoria.
Conference facilities
Gauteng has over 80 venues suitable for hosting conferences of varying sizes,
expos, concerts, weddings and other events.
The following venues, among others, can be used for large exhibitions,
concerts or conferences:
•
•
•
•
•
Johannesburg Expo Centre (Nasrec) with a capacity of 15,000;
Coca-Cola Dome (Randburg) with a capacity of 14,000;
Gallagher Convention Centre (Midrand) with a capacity of 12,000;
Standard Bank Arena (New Doornfontein) with a capacity of 6,300;
Sandton Convention Centre (Sandton) with a capacity of 4,000.
Other popular venues in the City of Tshwane and Ekurhuleni metropolitan
area include:
•
•
•
•
Eskom Megawatt Park Conference Centre;
Absa Convention Centre in the Magaliesberg area;
The University of Pretoria’s Muckleneuk Ridge Conference Centre;
OR Tambo Building in Pretoria (Department of International Relations
and Cooperation);
• The Airport Grand Hotel and Conference Centre;
• The Turbine Hall of Johannesburg’s old power station in Newtown, run by
The Forum (ideal for smaller conferences).
AN OVERVIEW OF GAUTENG I www.ggda.co.za I 17
Distances
Table 3 outlines distances (in kilometres) between Johannesburg and
Pretoria and key urban centres in provinces outside of Gauteng.
Table 3: Distances between main cities in South Africa
Bfn
CT
Dbn
Jhb Kimb
PE
Pta
Plk Mbom
Bloemfontein
•
Cape Town
998
•
Durban
628
1660
•
Johannesburg
396
1405
598
•
Kimberley
175
960
842
467
•
Port Elizabeth
676
756
927
1062
763
•
Pretoria
454
1463
656
58
525
1119
•
Polokwane
727
1736
929
331
789
1393
273
•
Mbombela (Nelspruit)
754
1779
689
358
832
1373
315
328
•
Note: To measure distance between two cities, start with a city in the top row and follow the column
down to the required city in the left hand column that you wish to measure distance for.
SOURCE: AUTOMOBILE ASSOCIATION OF SOUTH AFRICA, 2013
Transport
There are a number of airports located within Gauteng. The largest, OR
Tambo International Airport (formerly known as Johannesburg
International), is South Africa’s main international and domestic airport.
Smaller airports within the province include Lanseria, Rand, and Grand
Central, all of which are equipped for both international and domestic flights.
The province boasts a network of newly-upgraded road infrastructure, and
routes are well sign-posted. South Africans drive on the left-hand side of the
road. Car drivers must have an international driver’s licence and a minimum
of five years’ driving experience to hire a car in South Africa.
18 I AN OVERVIEW OF GAUTENG I www.ggda.co.za
Public transport systems in Gauteng are well established. The public
transport network includes the Gautrain (rapid rail link), Gautrain bus
services, trains, and meter cabs, as well as Metrobus services and minibus
taxis (which are less regulated). In addition, the City of Johannesburg and
Tshwane now benefit from a newly introduced Bus Rapid Transport (BRT)
system (phase 1 of the BRT system has been rolled out successfully).
Holidays
There are 12 annual public holidays in South Africa. The 2014 calendar of
public holidays is outlined below.
•
•
•
•
•
•
•
•
•
•
•
•
1 January
21 March
18 April
21 April
27 April
1 May
16 June
9 August
24 September
16 December
25 December
26 December
New Year’s Day
Human Rights Day
Good Friday (Friday before Easter Sunday)
Family Day (Monday after Easter Sunday)
Freedom Day
Workers’ Day
Youth Day
Women’s Day
Heritage Day
Day of Reconciliation
Christmas Day
Day of Goodwill
AN OVERVIEW OF GAUTENG I www.ggda.co.za I 19
Provincial economic policies and strategies
Provincial priorities
The Gauteng Provincial Government has set out a number of policy priorities
designed to drive economic growth and development within the province.
These include:
• prioritising the creation of decent work;
• facilitating, managing and overseeing initiatives that contribute to
economic growth and the creation of employment opportunities;
• investing in public infrastructure;
• creating an enabling environment for infrastructure improvement;
• implementing an appropriate response to the economic crisis;
• improving the functioning of economic development entities
and agencies;
• reviewing and implementing the revised Gauteng Employment Growth
and Development Strategy (GEGDS);
• developing and maintaining provincial road networks and the province’s
transportation system.
Strategic priorities
The provincial government’s policy agenda is complemented by a number of
strategic priorities:
•
•
•
•
•
•
•
promoting quality education and skills development;
creating decent work and building a growing, inclusive economy;
improving healthcare for all;
stimulating rural development and food security;
intensifying the fight against crime and corruption;
building cohesive and sustainable communities;
strengthening the developmental state and good governance.
20 I AN OVERVIEW OF GAUTENG I www.ggda.co.za
GGDA Binder Divider 3-D1 6/22/13 8:43 PM Page 1
C
M
Y
CM
MY
CY CMY
K
Why invest in Gauteng?
3
Composite
3. WHY INVEST IN GAUTENG?
There are many reasons why Gauteng has become known as a “Gateway to
Africa,” an attractive place for investments on the continent. The province offers:
•
•
•
•
•
•
•
access to African markets;
functional national institutions protecting the right of investors;
clear and consistent economic policies in line with national policies;
good infrastructure and facilities;
world-class road, rail and air networks;
an investor-friendly environment;
a large pool of young, highly skilled labourers, whose skill sets match the
needs of modern manufacturing, finance, and engineering industries; as
well as a large pool of unskilled labour for the manufacturing, trade and
transport sectors;
• low land and commercial building costs;
• electricity among the cheapest in the world.
The following pages focus on the opportunities available to investors in
Gauteng, as well as the incentive schemes available to attract investment.
“Gauteng has positioned itself as a vibrant city and the economic hub
of South Africa and Africa. It is a proposition that is well supported by
the many initiatives from the province and the municipalities to
support economic growth and explore new economic opportunities.”
(Leonard Volschenk — General Manager, South African Breweries)
WHY INVEST IN GAUTENG? I www.ggda.co.za I 21
Economic Performance
Gauteng outflanks other provinces in a number of key economic metrics.
Gauteng has continuously outperformed South Africa’s other eight provinces
when measured in terms of their respective provincial contributions to
national GDP and in comparisons of provincial real annual economic growth
rates. In 2011, Gauteng contributed 34.5 percent to national GDP (up from
33.8 percent in 2006) — well above the second and third largest contributions
from KwaZulu-Natal (15.7 percent) and the Western Cape (14.2 percent),
respectively. The contributions of the remaining six provinces to national GDP
were all below 10 percent. Furthermore, average growth rates in Gauteng
have comfortably exceeded the national average in the past decade — the
province’s annual average growth rate between 2001 and 2011 was 4.6
percent, above the national average of 4 percent. Gauteng is South Africa’s
strongest economic performer! In addition, the province boasts a
comparatively wealthy consumer base, with a population that has, on average,
both the highest earners and biggest consumers on the continent. According
to the 2011 Census, annual average household incomes in Gauteng (R156,243)
far exceed the national average of R38,734.
Trade Trends
South Africa benefits from a large base of key trade partners, which is
becoming increasingly diversified.
The profile of South Africa’s trade patterns has begun to shift away from
traditional partners in Europe and the United States and towards new
markets in Asia and the rest of Africa, yet trade with Europe and the United
States still dominates. The African continent now absorbs around 18 percent
of South Africa’s total exports, and nearly one-quarter of the country’s
manufactured exports. South Africa is renowned for its rich and expansive
mineral and metal base. A significant proportion of the country’s mining
activities are undertaken within Gauteng. Specifically, 80 percent of
Gauteng’s mining output is gold, and 44 out of the 159 mines in the province
are gold mines. Mining generates 6 percent of Gauteng's total income and 31
percent of the province’s export earnings. Indeed, the metals and minerals
sectors are major sources of exports from South Africa. The country’s top
exports include gold, diamonds, platinum group metals, other metals and
22 I WHY INVEST IN GAUTENG? I www.ggda.co.za
minerals, and machinery and equipment. South Africa’s major imports
include machinery and equipment, chemicals, petroleum products, scientific
instruments and food materials. Table 4 presents South Africa’s top trade
partners together with the top three exports/imports to and from South Africa
for each country in 2011.
Table 4: South Africa’s top export and import partners by share of total
exports/imports and top three exports/imports per country
Top 5 Export Partners and Exports
Top 5 Import Partners and Imports
1. China (12.8 percent)
• Mineral products (77.6 percent)
• Base metals and articles of base
metals (13.7 percent)
• Natural or cultured pearls, precious
or semi-precious stones
(2 percent)
1. China (14.2 percent)
• Machinery and mechanical
appliances (29.9 percent)
• Textile and textile articles
(11.9 percent)
• Base metals and articles of base
metals (8.8 percent)
2. United States (8.6 percent)
• Vehicles, aircraft, vessels
(29.6 percent)
• Natural or cultured pearls, precious
or semi-precious stones
(26.1 percent)
• Base metals and articles of base
metals (15.3 percent)
2. Germany (10.7 percent)
• Machinery and mechanical
appliances (26 percent)
• Special classification of original
equipment components
(21.1 percent)
• Vehicles, aircraft, vessels
(20.6 percent)
3. Japan (7.9 percent)
• Natural or cultured pearls, precious
or semi-precious stones
(54.6 percent)
• Mineral products (17.4 percent)
• Base metals and articles of base
metals (13.3 percent)
3. United States (7.9 percent)
• Machinery and mechanical
appliances (28 percent)
• Vehicles, aircraft, vessels
(24.9 percent)
• Products of the chemical or allied
industries (12.7 percent)
4. Germany (6 percent)
• Machinery and mechanical
appliances (23.1 percent)
• Vehicles, aircraft, vessels
(23 percent)
• Natural or cultured pearls, precious
or semi-precious stones
(20.8 percent)
4. Japan (4.7 percent)
• Special classification of original
equipment components
(32.6 percent)
• Machinery and mechanical
appliances (29.3 percent)
• Vehicles, aircraft, vessels
(18.4 percent)
5. United Kingdom (4.1 percent)
• Natural or cultured pearls, precious
or semi-precious stones (53 percent)
• Machinery and mechanical
appliances (10.6 percent)
• Mineral products (9.6 percent)
5. India (4 percent)
• Mineral Products (35.8 percent)
• Vehicles, aircraft, vessels
(16.5 percent)
• Products of the chemical or allied
industries (12.7 percent)
SOURCE: SARS, 2011 AND dti, 2013
WHY INVEST IN GAUTENG? I www.ggda.co.za I 23
South Africa is a signatory to a number of multilateral and bilateral trade
and investment agreements that can be leveraged by firms and investors.
South Africa is a signatory to numerous trade agreements with other African
states, as well as with global partners. The country is a member of two major
trading communities, namely the Southern African Customs Union (SACU)
and the Southern African Development Community (SADC). In addition, a
number of other regional and bilateral trade agreements are in force
between South Africa and key trading partners. Table 5 provides a summary
of the main trade agreements or groupings to which South Africa is party.
Table 5: South Africa’s membership in trade agreements and regional
economic communities
Agreement, Grouping or Regional
Economic Community
Details
SACU
Allows for duty-free movement of all goods
between the SACU member states (Botswana,
Lesotho, Namibia, South Africa and Swaziland).
SACU-Southern Common Market
(Mercosur)
Preferential trade agreement with tariff
reductions on the trade of around 1 000 products
between SACU and Mercosur.
SACU and the European Free Trade
Association (EFTA)
Has facilitated tariff reductions on
selected goods.
Trade, Investment and
Development Cooperation
Agreement (TIDCA)
Cooperative framework agreement between
SACU and the US relating to sanitary and phytosanitary measures, customs cooperation and
technical barriers to trade.
SADC Free Trade Agreement
Free trade agreement with 85 percent dutyfree trade achieved in 2008 between the
15 member states.
European Union (EU)-South Africa
Trade, Development and
Cooperation Agreement (TDCA)
The TDCA was concluded with the EU in 1999
and has facilitated the liberalisation of duties
on South African products exported to the EU
and vice versa. As a result, a large share of
trade between the EU and South Africa is now
subject to preferential rates.
Zimbabwe-South Africa bilateral
trade agreement
Provides preferential rates of duty, rebates and
quotas on certain goods traded between the
two countries.
24 I WHY INVEST IN GAUTENG? I www.ggda.co.za
Generalised System of Preferences
(GSP)
Specific industrial and agricultural products
are exempt from the WTO's Most Favoured
Nation (MFN) principle in order to facilitate
lower tariffs to developing countries. As a
developing country under the GSP, South Africa
benefits from unilateral trade preferences from
Japan, the EU, Norway, Switzerland, Russia,
Turkey, the United States and Canada.
Africa Growth and Opportunity Act
(AGOA)
AGOA is a unilateral assistance measure
between the United States and 39 Sub-Saharan
Africa countries, including South Africa. It aims
to provide duty-free access to the
American market.
Trade and Investment Framework
Agreement
Bilateral agreement to provide a forum for
South Africa and the United States to discuss
issues of interest, including AGOA, the TDCA,
and, more generally, trade and
investment promotion.
Comprehensive Strategic
Partnership between South Africa
and China
Partnership to strengthen ties between the two
countries in areas such as bilateral trade and
investment, energy cooperation and the
optimisation of financial services. Under the
auspices of the partnership, both South Africa
and China have agreed to improve the current
structure of trade between the two countries.
SOURCE: dti, 2013
In addition to these agreements, the SACU and India are in the process of
exchanging tariff requests to establish a preferential trade agreement.
Furthermore, a free trade agreement is currently under negotiation between
the SADC, the Common Market for Eastern and Southern Africa, and the
East African Community to conclude a continent-wide Tripartite Free Trade
Agreement. Such agreements have assisted with reducing the barriers to
trade between South Africa and its partners, protecting the members’
domestic economy and increasing exports from South Africa to partner
countries. There are also several provincial and regional trade agreements
in place, as listed in the table below.
WHY INVEST IN GAUTENG? I www.ggda.co.za I 25
Table 6: Provincial/regional trade agreements involving Gauteng
Province
Province, Country
Signed
Gauteng
Bavaria, Germany
1995
Gauteng
Gyeonggi Province, Korea
1995
Gauteng
Malaysia
1995
Gauteng
Havana, Cuba
1996
Gauteng
Ile-De-France
1997
Gauteng
Beijing, People’s Republic of China
1998
Gauteng
Ile-De-France
2001
Gauteng
Ontario, Canada
2002
Gauteng
Gyeonggi Province, Korea
2005
Gauteng
Ile-De-France
2007
Gauteng
Katanga, Democratic Republic of Congo (DRC)
2007
Gauteng
Katanga, DRC
2009
Gauteng
Bavaria, Germany
2010
Gauteng
Bavaria, Germany
2011
Gauteng
Katanga, DRC
2012
Gauteng
Chongqing, People’s Republic Of China
2012
SOURCE: GGDA, 2013
26 I WHY INVEST IN GAUTENG? I www.ggda.co.za
Investment Projects and Opportunities
A number of major industrial development and infrastructure investment
initiatives are currently underway in Gauteng, with several projects managed
by the GGDA. For the latest information about investment opportunities
related to any of the following projects, please contact the GGDA directly at
+27 (0) 11 085 2400.
City Deep Transport Logistics Hub
City Deep, located in Greater Johannesburg, is South Africa’s leading container depot and the largest inland port in Africa (as well as the fifth largest
in the world). Despite its obvious potential, the depot remains underutilised.
Nevertheless, it presents a number of advantages for discerning investors
and businesses, including:
• an effective transport and logistics platform for containers;
• outstanding export infrastructure to support major export operations;
• time-sensitive product manufacturing, logistics, freight and transport
services for businesses exporting to neighbouring countries.
Opportunities: Investment opportunities in the City Deep
Transport Logistics Hub include infrastructure upgrading,
especially roads for the use of heavy vehicles, as well as
venture capital funds and high-tech enterprises.
Wadeville Alrode Corridor
The Wadeville Alrode Industrial Corridor project aims to create an integrated
platform from which to facilitate the expansion of the tradeable goods sector
and support exports, with a particular focus on sub-Saharan Africa. The
Corridor is strategically located and boasts excellent infrastructure together
with competitively priced land, rates and services.
Opportunities: Within the Corridor there are promising
opportunities for investment in metal production, containers
and packaging, chemicals, machinery, logistics, transport,
warehousing and distribution.
WHY INVEST IN GAUTENG? I www.ggda.co.za I 27
Tshwane Automotive City
The concept of the Tshwane Automotive City was developed by the AIDC with
a view to assisting the automotive industry to become globally competitive.
The strategic approach behind the development of the Tshwane Automotive
City centres on ensuring that critical mass is achieved in order to reap the
potential benefits of subsidised utilities, reduced rental, consolidated
logistical flows, bulk infrastructure improvements and dedicated logistics
hubs. The presence of the Automotive City will elevate Gauteng’s status as a
key candidate for FDI and the province of choice for the automotive
manufacturing sector. Currently the Gauteng Province’s Automotive Supplier
Park sits in the heart of the proposed Tshwane Automotive City.
GGDA Investment Project
Automotive Supplier Park: R2 billion Expansion Plan
Aim of the project:
The ASP is a Gauteng Provincial Government initiative aimed at stimulating economic growth and job creation in the automotive industry
through large-scale investment in strategic economic infrastructure.
The ASP is managed by the Automotive Industry Development Centre
(AIDC), and is located in Rosslyn, north of Tshwane, a region boasting
the highest concentration of vehicle manufacturers in the country.
Modeled on leading supplier parks in Europe, Japan and the USA, the
ASP concentrates automotive component manufacturers, suppliers
and service providers in one location to achieve synergies and cost
benefits. The ASP is an international benchmark project that has
contributed significantly to the global competitiveness of the South
African automotive industry. The development enjoys strong support
from Local and Provincial Government, the automotive industry and
service providers.
Opportunities/services for investors:
• customised factories;
• office space;
• logistics services;
• information and Communication Technology (ICT) services;
• conference facilities.
28 I WHY INVEST IN GAUTENG? I www.ggda.co.za
Status to date:
• the ASP houses seventeen (17) various automotive component
manufacturers already supplying components to BMW, NISSAN
and Ford to name the OEMs in close proximity;
• biggest concentration of automotive component suppliers of which
Rosslyn is the hub in South Africa, representing +/- 35% of the
component suppliers;
• government is currently investigating long-term strategic plans to
declare the City of Tshwane as the Automotive City of South Africa
and the ASP has been identified as strategic infrastructure that will
be considered for Special Economic Zone (SEZ) status;
• the ASP is ideally located for OEMs interested to export into the
African markets as the Platinum Corridor (N4 Platinum Highway)
is the main route into the rest of Africa;
• the Wonderboom Airport in close proximity to Rosslyn, approximately 13 kilometres from the ASP, has expansion plans to support
cargo flights;
• Gauteng Automotive Training Academy will be operational in 2013;
• the zone is part of a priority electricity grid recognised by City of
Tshwane;
• within a 30 kilometre radius of all major research and educational
institutions including the Gerotek test tracks, as well as the South
African Bureau of Standards (SABS) and the Council for Scientific
and Industrial Research (CSIR).
Project Manager:
Zirk Jansen: +27 12 564 5000; info@spdc.co.za
Opportunities: Against the backdrop of a rapidly growing
industry, the Automotive Supplier Park and the proposed
Tshwane Automotive City will offer interested investors worldclass facilities for research and development (R&D) and
human resource development, and an excellent platform from
which to launch cost-effective engineering, design and testing
projects, and technology and licensing agreements with local
component manufacturers.
WHY INVEST IN GAUTENG? I www.ggda.co.za I 29
The Gauteng Industrial Development Zone
Development Company (Devco)
The OR Tambo Industrial Development Zone (IDZ) programme plans to
develop 725 hectares of land situated around the OR Tambo International
Airport. It is envisaged that this initiative will help to stimulate economic
development through the use of the IDZ mechanism. The programme
includes a strong focus on support for the development of beneficiation
capacity related to the precious metals and minerals sector. More
specifically, the programme is directed to light, high-margin, export-oriented
manufacturing of South African precious and semi-precious metals. The
multi-site development consists of several industry-specific areas to be
developed in phases over a 10 to 15 year period. Various skills development
programmes will be implemented to enhance skills in the sector.
In line with the programme’s objectives, Phase 1 of the IDZ Programme
involves the development of the JMP. The JMP will be a fully operational
programme, set on 6.1 hectares of land with a mixture of facilities for
storage, design, manufacturing and retail businesses.
Opportunities: Investment opportunities related to the IDZ programme include ICT production and distribution, aerospace,
electronics and avionics, and related industries. The JMP further offers investors the opportunity to get involved with the
mineral beneficiation sector in South Africa, whilst receiving
special export conditions and business incentives.
Enhancing the economic competitiveness of Special Economic Zones
The move to establish SEZs is designed to promote competitiveness among
enterprises through the export of value-added manufactured products within
zone-based industries. Moreover, it seeks to encourage domestic and FDI
for Township Industrial Hubs. It is expected that the intervention will
contribute to job creation while also reducing the cost of doing business in
SEZs and industrial hubs.
30 I WHY INVEST IN GAUTENG? I www.ggda.co.za
Opportunities: Once developed, the SEZs will provide
significant opportunities in terms of:
• attracting domestic investment and FDI in manufacturing
and tradeable services;
• providing non-core services, such as transport and
distribution, to the SEZ;
• providing increased export opportunities through export
incentives;
• green industries, oil and gas services investors,
aquaculture projects, as well as a possible mineral sand
beneficiation investment.
Constitution Hill
Constitution Hill is a city precinct anchored by the South African Constitutional
Court. Constitution Hill is located on the site of Johannesburg’s infamous Old
Fort Prison Complex, where many apartheid struggle heroes were
persecuted. The site also houses the Women’s Gaol Museum, Number Four
Museum and the Old Fort Museum. The Constitution Hill Development
Company (ConHill) was established with a view to setting up an appropriate
management system to ensure the delivery of heritage, education and tourism
programmes in Gauteng, while also contributing to the revitalisation of the
Johannesburg inner city.
Opportunities: A number of potential investment opportunities
are available within the Constitution Hill precinct, including:
• heritage tourism through the proposed establishment of
the Judicial College, a Struggle Hero Visitor’s Centre and a
boutique hotel;
• the development of a Justice Precinct;
• other commercial and housing developments, cultural
tourism initiatives, archives and libraries, and
recreational facilities.
WHY INVEST IN GAUTENG? I www.ggda.co.za I 31
GGDA Investment Project
Constitution Hill Redevelopment
Aim of the project:
A proposal was submitted to develop the site with a Justice Precinct
that will include various offices for the Chief Justice, Chapter 9
Institutions, the Judicial Institute and the Court Management Agency
and other related activities. An agreement has been reached at the
highest levels to ensure that the Justice Precinct should be located on
the site where the Gauteng Provincial Government has made R400
million investment in super basements and foundations. The development is proposed to be approximately 105 000 square metres in area.
This development will become a national icon and is directly related
to the location of the Constitutional Court. It will also ensure
development in the Inner City of Johannesburg.
Potential number of jobs to be created:
Estimated 250 construction jobs to be created
Status to date:
• initial spatial planning of site completed;
• basement parking, foundation and some infrastructure in place;
• support from Department of Justice and Justices of
Constitutional Court to develop Justice Precinct, however formal
uptake agreement has not been secured;
• Land Survey, Traffic Impact, and Geo Technical Study completed;
• Initial financial analysis completed for development;
• HET portion subject to township application — submitted
to municipality.
Possible partners:
National Treasury, Independent Development Corporation (IDC),
Development Bank of Southern Africa (DBSA), Public Investment
Corporation (PIC), National Department of Arts & Culture, City of
Johannesburg, JDA, Chief Justice office
Project Manager:
Seadimo Sindane: +27 11 085 2400; seadimos@ggda.co.za
32 I WHY INVEST IN GAUTENG? I www.ggda.co.za
The Innovation Hub
TIH is the first international standard Science and Technology Park in
Southern Africa. It was established with a view to driving the development of
smart industries (high technology sectors) in Gauteng. In this respect, in line
with the focus of the GGDS, TIH serves as a catalyst for innovation and a key
driver of the knowledge economy. More specifically, key focus areas for
innovation include ICT, biotechnology, renewable energies and low-carbon
economy technologies (green economy). Significant projects underway in
TIH include the Moringa Oleifera project, Hartebeesport Dam Rehabilitation
Hydroelectric Installation Study and an Energy Security Project.
Opportunities: The Hub provides investment opportunities in
the form of an enabling environment for the stimulation and
growth of technology-driven business as well as for the development of R&D facilities, hi-tech incubators, and corporate
headquarters for hi-tech companies, and venture capitalists.
WHY INVEST IN GAUTENG? I www.ggda.co.za I 33
GGDA Investment Project
The Innovation Hub: Enterprise Building 2
Aim of the Project:
Construction of the Enterprise Building 2 at The Innovation Hub.
Potential number of jobs to be created:
80 jobs (construction).
Status to date:
• feasibility study completed;
• needs analysis completed;
• financial model completed;
• Public Private Partnership (PPP) Project registration was made
to National Treasury’s PPP unit.
Possible partners:
National Treasury, IDC, DBSA, Department of Science and
Technology, City of Johannesburg and City of Tshwane.
Project Manager:
Tsietsi Maleho: +27 12 844 0000; tmaleho@theinnovationhub.com
34 I WHY INVEST IN GAUTENG? I www.ggda.co.za
GGDA Investment Project
Biomass Gasification
Aim of the Project:
The primary objective of this project is to promote innovation by having
locally owned Intellectual Property (IP) technology from Biomass
Gasification, while boosting electricity service coverage within
Gauteng contributing to clean energy generation, security and selfefficiency as outlined in the Gauteng Green Economy Strategy. The
plant should ideally be co-located with a saw-mill, or in an area that
has a lot of alien vegetation, which would need to be cleared.
Potential number of jobs to be created:
The clearing of alien vegetation can create between 10 to 20 jobs in an
area of 100 square kilometres. The operation of the plant will also
result in the creation of another 14 jobs, bringing the total to over 34
jobs in an area that would otherwise not see any investment.
Status to date: Concept development
Project Manager:
Tsietsi Maleho: +27 12 844 0000; tmaleho@theinnovationhub.com
WHY INVEST IN GAUTENG? I www.ggda.co.za I 35
GGDA Investment Project
BioSciences Park (Bio-Park)
Aim of the Project:
Bio-Park will aim to provide a nurturing environment for biotechnology start-ups to develop, thrive, and eventually become important
commercial players, contributing to economic growth.
Potential number of jobs to be created:
80 jobs (construction).
Status to date:
Concept development
Project Manager:
Tsietsi Maleho: +27 12 844 0000; tmaleho@theinnovationhub.com
Opportunities within Metropolitan and District Municipalities
There are countless opportunities for businesses to explore across various
economic sectors in each of Gauteng’s metropolitan and district municipalities. The table below provides a selection of the key economic opportunities
that firms and investors can look to capitalise on within each municipality.
Table 7: Key opportunities for businesses by municipality in Gauteng
City
Opportunities
City of Johannesburg
• Power generation through renewable energies.
• Developing new natural systems to minimise the impact
of urban flooding.
• Improving rail freight into the city.
• Strengthening the emerging ICT sector.
• Partnerships with government to provide services (such
as refuse collection and security) as well as investment
in low cost housing and public transport.
• The recycling of solid waste.
36 I WHY INVEST IN GAUTENG? I www.ggda.co.za
City of Tshwane
•
•
•
•
Automotive and components industry.
Aerospace village for manufacturing components.
R&D (i.e. Biotechnology Laboratories).
Broadband network opportunities.
Ekurhuleni
• The OR Tambo International Airport and the N12
Johannesburg-Maputo Corridor create economic
opportunities in logistics and transport, business tourism
and high value added manufacturing.
• Intensive agricultural production and food processing
and packaging.
• Environmental opportunities in wetlands, ridges and
agriculture potential.
• The Aerotropolis, close to the OR Tambo International
Airport, for aviation intense businesses and
related enterprises.
West Rand
• Due to the availability of vacant land, the West Rand
municipality provides many opportunities for
property development.
• Environmental opportunities related to the area’s
agricultural potential.
• The geographical location (in close proximity to Lanseria
airport, Johannesburg and major access routes) presents
opportunities in terms of economic diversification within
the municipality.
Sedibeng
• Tourism development opportunities along the Vaal River.
• Environmental opportunities around the existing nature
reserves, conservancies and watercourses.
• Processing of agricultural produce.
SOURCE: POLITICS WEB, 2013
WHY INVEST IN GAUTENG? I www.ggda.co.za I 37
Business culture
English is the main language of commerce in Gauteng. Nevertheless,
business people and investors should expect different usage of the English
language depending upon who one is dealing with. While many South
Africans prefer plain-speaking to an overly diplomatic approach, some
cultures tend to emphasise diplomacy in communication. More generally
across the various cultures, humour is often used by South Africans as a
communication device and can be used in almost all situations – it is very
often used as a tension release mechanism.
Generally, people are addressed using first names in typical business
situations. It is fairly uncommon to use formal titles such as Doctor or
Professor outside of academic circles. South Africans, across the ethnic subgroups, tend to be tactile. Back-slapping, firm handshakes (often quite
lengthy) are common and it can be regarded as a sign of aloofness if
investors or business people back away from this approach.
The South African business environment is relatively conservative. In order
to avoid offending people unintentionally, it is recommended that men should
wear a collared shirt and tie and smart trousers and women should wear a
smart dress or suit.
38 I WHY INVEST IN GAUTENG? I www.ggda.co.za
Legal framework
South Africa has a well-developed legal and regulatory framework which is
consistently applied. This should bring peace of mind to potential investors
and firms looking to operate within Gauteng. The main laws of relevance to
the business community include:
Table 8: South African legal framework
Labour
Basic Conditions of
Employment Act
Applies to all employers and workers and prescribes the
minimum criteria for leave, working hours, employment
contracts, deductions, pay slips, and the termination
of employment.
Labour Relations Act
Aims to promote economic development, social justice,
labour peace, and democracy in the workplace. The Act
also serves as a framework for the management of labour
issues and dispute resolution.
Employment
Relations Act
Promotes a more equitable workforce that is
representative of the country’s population. The Act
endorses racial quotas for companies with more than
50 employees.
Skills
Development Act
Aims to develop skills and increase investment in human
capital training and development.
Occupational
Health and Safety Act
Ensures that the work environment is safe and
without risks.
Consumers
Consumer
Protection Act
Sets out the minimum measures for adequate consumer
protection that suppliers of goods and services must
adhere to.
National Credit Act
Aims to provide assistance and relief to financially overextended consumers as an alternative to having them
declare insolvency.
Corporate Regulations
The Companies Act
Classifies companies into profit or non-profit companies
and a set of principles for each company classification. It
provides regulations on registration, organisation and
management of companies.
WHY INVEST IN GAUTENG? I www.ggda.co.za I 39
Broad-Based
Black Economic
Empowerment Act
Aims to drive and encourage economic transformation by
empowering black people and those previously
disadvantaged. Women of all races are seen as
previously disadvantaged.
Competition Act
Regulates prohibited practices by decreasing the abuse
of dominant market share in the market. It also regulates
mergers within the market.
Intellectual Property
Patents Act
Grants the patentee the right to an invention for a specific
time period.
Trade Marks Act
Registers trade marks in relation to goods and services
for a period of 10 years (it is renewable after 10 years).
Design Act
Protects aesthetic and functional designs to the
appearance of an article.
Counterfeit Goods Act
Provides protection against counterfeit goods.
Copyright Act
Plant Breeders'
Rights Act
Provides exclusive rights of 50 years on copyright goods.
Intellectual property rights on any variety of plants which
are new and distinct.
SOURCE: ADAPTED FROM SOUTH AFRICAN DEPARTMENT OF LABOUR, 2012; SAICA, 2013; SOUTH AFRICA INVESTMENT HANDBOOK, 2012
Incentives
Incentive schemes are designed to motivate firms and investors to invest in,
or undertake, economic activities within a specific region or industry. It is
important to note that the Gauteng province has no exclusive incentives, and
thus all incentives are available for investors across South Africa. There are,
however, incentives offered by local municipalities within Gauteng, which are
only available to investors within the relevant district or municipality. The
following pages provide a broad overview of the incentives that are available.
For more detailed information and the application process for each incentive,
please refer to the Gauteng Incentives Handbook, available from the GGDA,
online at www.ggda.co.za, or by contacting the GGDA at +27 11 085 2400.
IDZ-SEZ Incentives
IDZs in South Africa are purpose-built industrial estates designed to promote
manufacturing activity, attract foreign and local investment and raise the
40 I WHY INVEST IN GAUTENG? I www.ggda.co.za
competitiveness of South Africa’s manufacturing exports. The GGDA is actively
involved in the JMP IDZ located at the O.R. Tambo International Airport.
There are two incentives specifically designed for IDZs:
1)
The South African Value Added Tax (VAT) Act allows a vendor to charge
VAT at the zero rate on various types of supplies of goods or services to
an enterprise located within a Customs Controlled Area (CCA) or
operating in an IDZ. The VAT Interpretation clarifies the VAT treatment
of supply of goods and/or services to and from a CCA enterprise or IDZ
operator in an IDZ. In practical terms, this means that these enterprises
qualify for:
a) exemption from VAT on imported goods, raw materials and
components used in the manufacturing and processing of goods
for export;
b) exemption from VAT on services provided.
Looking ahead, the South African Government is giving consideration to
expanding incentives for labour-intensive projects undertaken within IDZs.
2)
Businesses and investors that make Greenfield and Brownfield
investments in South Africa qualify for tax incentives (in the form of tax
relief) subject to approval from the Department of Trade and Industry
(dti), and are also eligible for support for both capital investment and
training. These incentives have been made available with a view to:
a) support investment in manufacturing assets in order to improve
the productivity of the South African manufacturing sector;
b) facilitate the training of personnel in order to improve labour
productivity and the skills profile of the labour force.
SEZs, on the other hand, are extensions of IDZs, and focus on promoting innovation and development as a means to drive sectoral and regional development. It is envisaged that the SEZs to be developed in South Africa will
take the form of science parks, industrial parks and sector development
zones. At present, the national government is working with the provinces to
identify potential SEZs. National, provincial and local government departments, as well as public-private partnerships, can apply to establish an SEZ.
WHY INVEST IN GAUTENG? I www.ggda.co.za I 41
Tax Incentives
1. Preferential Corporate Tax Rate for Small Business Corporations
Small and medium enterprises (SMEs) whose gross annual income does
not exceed R14 million are eligible for income tax deductions. The tax
rates applicable to qualifying enterprises vary depending on their level of
income as detailed in Table 9.
Table 9: Taxable income thresholds for SMEs in South Africa
Annual Income
Taxable Income
Between R0 and R59 750
0 percent
Between R59 751 and R300 000
10 percent
R300 001 and above
R24 025 plus 28 percent of amount greater
than R300 000
SOURCE: SOUTH AFRICA INVESTMENT HANDBOOK, 2012
2. Research and Development
Tax deductions of up to 150 percent are available for operational
expenditure incurred during the discovery of new information, as well as
in developing, designing and inventing programmes of a scientific or
technological nature.
42 I WHY INVEST IN GAUTENG? I www.ggda.co.za
3. Depreciation Allowances
A depreciation allowance is available on plant, machinery and buildings. The
allowance is designed to stimulate investment in capital assets. The
following depreciation allowances are available for applicable capital assets:
Table 10: Depreciation allowances for applicable capital assets
Plant and machinery
40 percent per annum for the 1st year
20 percent per annum for the 2nd, 3rd and 4th years
Hotel equipment
20 percent per annum
Farming and production
of renewable energy
50 percent per annum for the 1st year
30 percent per annum for the 2nd year
20 percent per annum for the 3rd year
Hotel refurbishment
5 percent per annum for external refurbishment
20 percent per annum for internal refurbishment
Building construction
Varies between 2 percent and 10 percent per annum
SOURCE: SOUTH AFRICA INVESTMENT HANDBOOK, 2012
In the case of commercial buildings, depreciation of 5 percent per annum is
allowed on new or unused buildings, as well as for improvements used in
the production of income. To qualify for the depreciation allowance, the
building must be owned by a taxpayer. Notably, this incentive excludes
buildings used in the provision of residential accommodation.
WHY INVEST IN GAUTENG? I www.ggda.co.za I 43
4. Urban Development Allowances
For the construction of buildings, investors and firms can benefit from
deductible allowances of up to 20 percent of the costs incurred in the
development of new buildings or the refurbishment of existing buildings
in designated urban development zones. For the construction of new
commercial or residential buildings or the extension of existing buildings,
deductible allowances are available to the value of up to 20 percent of
the cost incurred upfront, and a further 8 percent of the total cost in each
of the following 16 years of assessment. In the case of the renovation of
existing buildings, an upfront allowance of 20 percent of the cost incurred
is available, followed by a further 20 percent of the cost for each
succeeding year of assessment for a maximum period of 5 years.
5. Infrastructure Development
In the case of infrastructure investments, a tax deduction of assets owned
for the erection of pipelines, transmission lines and railway lines is
available to encourage investment in infrastructure. For instance, in the
case of pipelines used to transport natural oil, a tax deduction of up to 10
percent of the cost per annum is allowed, and all other affected assets
are eligible for a deduction of 5 percent of the cost per annum.
44 I WHY INVEST IN GAUTENG? I www.ggda.co.za
6. Public Private Partnerships
Tax exemptions are provided for qualifying government grants that are
utilised for the improvement of state-owned property. The objective of
these exemptions is to encourage the private sector to invest in
infrastructure in partnership with the public sector. The exemptions are,
however, only applicable in cases where the envisaged improvements are
aligned with the conditions of the relevant lease agreement with the state.
The tax allowance is available for 25 years or, alternatively, is spread over
the period of the lease.
7. Rolling Stock Depreciation
Tax deductions of 20 percent per annum are available for costs incurred
in respect of rolling stock (trains, carriages and similar transportation
modes) brought into use on or after 1 January 2008. The principal
objective of allowable deductions on expenditure on rolling stock is to
encourage the development of rail transportation infrastructure.
8. Environmental Expenditure Deductions and Allowances
Expenditures on a range of environmentally friendly equipment also
qualify for tax incentives. For instance, expenditure on environmental
treatment, recycling assets and environmental waste disposal assets that
are supplemental to a particular manufacturing process is eligible for a
tax deduction of between 5 and 40 percent per annum.
Similarly, an allowance of up to 15 percent of expenditure on energyefficient equipment is available. These allowances are designed to
provide relief for the depreciation of energy-efficient equipment. Income
tax incentives are available for oil and gas companies involved in
incidental trades within South Africa. Lastly, the depreciation allowance
for underwater telecommunication cables is a 5 percent write-off over a
period of 20 years.
9. Carbon Reducing Changes
A tax exemption is available for companies whose revenues are derived
from primary Certified Emission Reductions. It is applicable for all
revenues received in respect of disposal on or after 11 February 2009.
WHY INVEST IN GAUTENG? I www.ggda.co.za I 45
Research and Development Incentives
The Support Programme for Industrial Innovation (SPII) provides financial
assistance to all manufacturing or software development enterprises that
are registered in South Africa and engage in the development of innovative,
competitive products and/or processes that promote technology development in the country. The support provided to these enterprises through the
SPII is available in the form of a:
• Matching Scheme: Grants, to a maximum value of R3 million per project,
are designed to cover costs incurred in the technical development of
products;
• Partnership Scheme: Provides a conditional grant of 50 percent repayable
upon the successful commercialisation of the project;
• Product Process Development Scheme: Provides grants to small and
micro private sector enterprises — employing fewer than 50 workers,
having a turnover of less than R13 million, and with total gross assets
worth less than R5 million — that are engaged in a project related to
manufacturing or information technology (IT).
The Technology and Human Resources for Industry Programme (THRIP) is
designed to assist companies undertaking science, engineering and
technology research in collaboration with education institutions. THRIP will
contribute between 30 and 50 percent of the funds invested by a company
towards research projects. In the case of SMMEs or SMME and Black
Economic Empowerment partners, the value of the THIRP contribution is
between 100 and 200 percent of the funds invested. The maximum level of
THRIP funding available to an individual grant holder is set at R8 million per
annum across any number of projects.
The Innovation Fund was established to support the development and
commercialisation of new technology in South Africa. The Fund uses a
flexible returns structure that is appropriate for each investment. The
programmes that are grouped under the Innovation Fund include the
Technology Advancement Programme; the Missions in Technology
Programme; Seed Funds; Patent Support Fund for SMEs; Patent Support
Fund-Technopreneur; Patent Support Fund for Research institutions; and
the Patent Incentive Scheme.
46 I WHY INVEST IN GAUTENG? I www.ggda.co.za
Enterprise Development Incentives
1. Grants - Critical Infrastructure Programme
Through the Critical Infrastructure Programme, cash grants amounting
to between 10 and 30 percent of infrastructure development costs are
available for new or expanding enterprises that invest in infrastructure
such as roads, railways, electricity transmission and distribution, water
pipelines, telecommunication networks and sewage systems. The value
of the grant ranges from a minimum of 10 percent to a maximum of 30
percent of qualifying infrastructure development costs; and each grant is
capped at a maximum value of R30 million.
Technical assistance and capital assistance grants are also available to
municipalities that implement projects (not funded through equitable
share or other grants) to upgrade community facilities.
2. Grants - Local Economic Development Programme
Through the Local Economic Development Programme, grants of up to
70 percent are available for projects that create an enabling environment
for investment in key areas. This is seen as critical to the development of
markets that facilitate linkages between established and emerging
sectors in these areas. The grants are available to local governments,
private sector enterprises, enterprises forming partnerships with
government agencies and donors.
WHY INVEST IN GAUTENG? I www.ggda.co.za I 47
3. Grants – Business Process Service Sector
In order to attract investment into the Business Process Service sector,
grants of up to R112 000 per offshore job created, and an additional bonus
structure is available to local and foreign investors that create jobs in
South Africa to serve offshore clients. A base incentive in the form of a
tax-exempt grant is paid over three years for each offshore job created
and maintained. In addition, a graduated bonus incentive is paid in the
form of a 20 percent bonus for more than 4 000 but fewer than 8 000
offshore jobs (paid once-off in the year in which the bonus level is
reached), and a 30 percent bonus for more than 8 000 offshore jobs (paid
once-off in the year in which the bonus level is reached).
4. Tax Exemptions – Manufacturing Investment Programme
In order to stimulate local and foreign capital investment in productive
qualifying assets and manufacturing, a tax-exempt reimbursable cash
grant is available through the Manufacturing Investment Programme for
investors in new or expansion projects in the South African
manufacturing sector. The total amount available through the grant is
contingent on the total cost incurred in investment in qualifying assets
(which include machinery and equipment, buildings and commercial
vehicles). Specifically, in the case of investments in qualifying assets for
new or expansion projects where the total cost is less than R5 million,
grants of 30 percent of the investment cost are available. In turn, where
the total investment cost of qualifying assets for new or expansion
projects exceeds R5 million, the value of the available grants ranges
between 15 and 30 percent of the investment cost.
5. Grants - Foreign Investment Grant
The Foreign Investment Grant is designed to encourage foreign
businesses to invest in manufacturing companies in South Africa by
assisting in the cost of transporting productive qualifying assets to the
country. In practical terms, the grant covers either the value of the actual
qualifying transportation costs or 15 percent of the cost of new plant and
machinery acquired abroad (whichever is lower) for South African
incorporated companies with a foreign direct shareholding of at least 50
percent. The total value of the grant is limited to R10 million.
48 I WHY INVEST IN GAUTENG? I www.ggda.co.za
6. Tax Exemptions - Local and Foreign Direct Investment in Industrial
Policy Projects
A tax incentive — in the form of an additional tax allowance — is available
to promote local and foreign direct investment in industrial policy projects
in South Africa. The additional tax allowance is provided for up to 55
percent of the cost of any manufacturing asset used in a qualifying
industrial policy project allocated preferred status (the allowance is 35
percent for other projects).
7. Grants - Automotive Investment Scheme
With a view to expanding and developing South Africa’s automotive sector,
taxable grants ranging between 20 and 30 percent of the value of qualifying
investments in productive assets for light motor vehicle and automotive
component manufacturers are provided through the Automotive
Investment Scheme.
8. Rebate - Location Film and Television Production Incentive
The Location Film and Television Production Incentive is provided by the
dti with the aim of attracting large budget films and television productions
to South Africa. Under the terms of the incentive, eligible foreign-owned
productions qualify for a rebate of 15 percent of Qualifying South African
Production Expenditure (QSAPE).
WHY INVEST IN GAUTENG? I www.ggda.co.za I 49
9. Rebates on Expenditure Incurred in Local Film and
Television Products
Rebates on expenditure incurred in local film and television products are
provided in order to support the local film industry and to contribute
towards the creation of employment opportunities in South Africa. The
rebates are available to qualifying South African productions and are
valued at between 35 and 60 percent of qualifying production expenditure
for local productions and official treaty co-productions with a total
production budget of R2.5 million and above.
10. Grants - Tourism Enterprise Support Programme (TEP)
The TEP assists large operators, investors, SMMEs and historically
disadvantaged entrepreneurs and enterprises in obtaining the requisite
professional services such as ISO/SABS quality certification, debt and
equity finance, proper business planning, packaging, legal advice,
technology needs and marketing. The TEP also provides aftercare to
SMMEs to ensure that they possess the requisite planning, production
and management capacity.
A reimbursable cash grant for investment in qualifying assets related to the
establishment or expansion of tourism operations — such as accommodation services, passenger transport services, tour operations, and cultural
services and recreational entertainment services — is provided through the
TEP to support investment in the South African tourism industry. The qualifying assets include furniture, equipment, buildings and tourism vehicles for
new establishments or expansions. The value of the cash grant is contingent
on the total cost of the project. Dutch companies who wish to invest in South
Africa in partnership with a local South African company can benefit from
grants contributing up to 50 percent of total project costs.
50 I WHY INVEST IN GAUTENG? I www.ggda.co.za
Competitiveness Enhancement Incentives
1. Grants - Black Business Supplier Development Programme (BBSDP)
The BBSDP aims to improve the competitiveness and sustainability of
black-owned enterprises so that they can become better integrated into
the formal economy in South Africa and contribute more effectively to job
creation. The BBSDP provides cost-sharing grants to companies that are
majority black-owned. The programme provides grants up to a maximum
value of R1 million, which are limited to a payment of R800 000 for tools,
machinery, and equipment and R200 000 for business development and
training interventions.
2. Grants - Co-operative Incentive Scheme (CIS)
Cost-sharing grants are provided through the CIS to co-operative
enterprises with a view to enhancing the competitiveness and viability of
these enterprises. The CIS programme provides matching grants of 90
percent (up to a maximum of R300 000) for costs related to business
development, the establishment or enhancement of a business profile,
market research and feasibility studies, and start-up requirements.
3. Grants - Clothing and Textile Competitiveness Programme (CTCP)
In order to drive structural change in South Africa’s clothing and textile industry, the Clothing and Textile Competitiveness Programme provides
funding for enterprises to invest in interventions designed to improve competitiveness. The enterprises eligible for funding support through the programme include clothing manufacturers; textile manufacturers; cut, make
and trim operators; footwear manufacturers; leather goods manufacturers; and leather processors. The grant is limited to a benefit ceiling, which
is calculated at 10 percent of a company’s manufacturing value added.
WHY INVEST IN GAUTENG? I www.ggda.co.za I 51
4. Grants - Small Enterprise Development Agency (SEDA) Technology
Programme (STP)
The STP offers a range of services and financial assistance to small
enterprises, particularly those operating in the informal sector. The
programme focuses, in particular, on providing support to the following
types of small enterprises:
• those that struggle to access funds and markets;
• those that have limited business skills and technical know-how;
• those with restricted access to appropriate technology.
Much of the non-financial support provided through the STP is focused on
the provision of technology transfer services to small enterprises and
technological support to women-owned enterprises (with more than 50
percent woman ownership).
Export Incentives — Non-Industry-specific
1. Grants - Emerging Exporters Development Programme
The Emerging Exporters Development Programme offers financial
support to export councils, industry associations, provincial investment
promotion and economic development agencies, business chambers, and
SEDA with a view to assisting these organisations to promote the
development of emerging exporters.
2. Assistance - Export Marketing and Investment Assistance (EMIA)
The EMIA scheme was established to aid the development of export
markets for South African products and services and to recruit new FDI
into the country.
52 I WHY INVEST IN GAUTENG? I www.ggda.co.za
3. Grants - Capital Projects Feasibility Programme
The Capital Projects Feasibility Programme provides grants to South
African registered companies to undertake feasibility studies. The value
of the grants range between R100 000 and R5 million; and, in the case of
feasibility studies for projects outside of Africa, are capped at a maximum
of 55 percent of the total cost of the study. South African enterprises are
eligible for the grants, and the studies undertaken by these enterprises
must be aimed at achieving local content of 50 percent.
4. Rebates - Imported goods, raw materials and components used in the
manufacture or processing of goods for export
In order to promote manufacturing and exports of South African
manufactured goods, rebates and drawbacks on customs duties are
provided for imported goods, raw materials and components used in the
manufacture or processing of goods for export. These provisions are
available for importers, exporters and manufacturers.
5. Tax Exemptions - Limiting the VAT registration and administrative
burden faced by non-residents
VAT exemptions are available through licensed customs and excise storage
warehouses in South Africa in order to limit the VAT registration and
administrative burden faced by non-residents. Specifically, the supply of
goods by a non-resident of South Africa which have been entered for storage
into a licensed customs and excise storage warehouse, but have not yet
been cleared for home consumption, is exempt from VAT unless the nonresident applies in writing to SARS to be allowed to zero-rate the supply.
Export Incentives — Industry-specific
The primary objective of the Clothing and Textile Competitiveness
Improvement Programme (CTCIP) is to build capacity in manufacturing and
in other areas of the apparel value chain in South Africa. The incentives are
provided in the form of a matching grant of 75 percent of project costs on
cluster projects and 65 percent of project costs for company level projects.
However, the grant excludes costs related to machinery, equipment,
commercial vehicles, as well as to land and buildings in an existing clothing
and textile production facility. In the case of company level projects, the
matching grant is capped at a maximum value of R2.5 million over five years.
The cluster grant provides, matching grants in a 75 : 25 ratio, where 75
percent of the project costs are provided through the CTCIP grant and the
balance is provided by the cluster participants. Grant support for each
WHY INVEST IN GAUTENG? I www.ggda.co.za I 53
approved partnership will be limited to a cumulative ceiling of R25 million.
Grants allocated through the programme will be made exclusive of VAT.
The Automotive Production and Development Programme (APDP) seeks to
boost productivity in the local automotive industry by encouraging the
production of a smaller number of model variations; raising the international
competitiveness of the South African motor industry by helping to reduce the
cost of inputs through import duty savings; increasing exports; and
promoting foreign investment.
Social Responsibility
The Danida Business to Business Programme provides assistance to cover
expenses relating to the transfer of management and business skills and
technology from Danish to South African companies. The programme also
provides access to finance for the South African recipients of the skills and
technology transfer.
The DEG Public-Private Partnership provides financial support for projects
that lead to, or accompany, investment, the transfer of technology and
entrepreneurial know-how, training of employees, and improvements in
social and environmental standards.
Industrial Financing
Finance is available through the Industrial Development Corporation (IDC)
at a competitive risk-relative interest rate to promote the establishment of
permanent infrastructure in the following industries:
•
•
•
•
•
•
•
•
agriculture and aquaculture;
food and beverages;
chemicals, textiles and allied industries;
media and motion pictures;
mining and beneficiation activities/jewellery manufacturing;
forest products;
healthcare and education;
downstream metal producers (with a focus on the automotive, other
transport, structural and fabricated metal and machinery sectors);
• ICT, telecommunication, electronic or electrical industries;
• tourism;
• transportation.
54 I WHY INVEST IN GAUTENG? I www.ggda.co.za
The minimum finance requirement is more than R1 million in debt and/or
more than R5 million in equity. New or existing South African and African
companies can apply for the finance. The size of the project for African
companies must be:
• at least R5 million for SACU members;
• at least US$3 million for countries within the SADC;
• for countries outside of the SADC, at least US$10 million.
Equity funding amounting to between R1 million and R30 million per project
(with maximum first-round funding of R15 million and the right, but not
obligation, to provide follow-on funding up to maximum of R30 million) is
available from the IDC to facilitate the development and commercialisation
of technology-rich South African Intellectual Property that is unique at the
global level.
Municipal Incentives
Certain municipalities within Gauteng provide additional incentives that are
specific to the municipal area. In this respect, location-specific incentives
are available in both the City of Tshwane and the City of Johannesburg
metropolitan municipalities, the details of which are outlined below. By
contrast, the Ekurhuleni Metropolitan Municipality, Sedibeng District
Municipality and West Rand District Municipality currently do not offer any
incentive schemes. However, they are open to discuss potential opportunities
with firms and investors.
City of Tshwane
The City of Tshwane is looking to stimulate and develop investment within the
municipality by prioritising projects within the following eight categories:
• industrial development for manufacturing plants with a value exceeding
R75 million;
• commercial property (office parks) worth more than R35 million;
• shopping malls where the total investment exceeds R20 million;
• biotechnology laboratories worth more than R50 million;
• hospitality, game farms and call centres with an investment value of more
than R25 million;
• SEZs and industrial developments where the total investment exceeds
R25 million;
WHY INVEST IN GAUTENG? I www.ggda.co.za I 55
• investments worth more than R15 million in Ekandustria, Babelegi and
Garankuwa Industrial Estate;
• SMMEs with investments of more than R1.5 million.
Investments must not only fall within the priority areas listed above, but must
also meet specific criteria related to their job creation potential, the type of
investment and the potential for skills development. Investments in the
priority areas, and that meet the specified criteria, will be fast-tracked by the
municipality through the provision of incentive packages. Each incentive
package is limited to three years, and is capped at:
• 50 percent of utility cost for normal investment projects;
• between 51 and 69 percent for Flagship/SEZ/IDZ projects;
• between 70 and 89 percent for Nodal Development and
Regeneration Projects.
City of Johannesburg
The City of Johannesburg offers a rates rebate incentive to property owners
and developers associated with higher density residential buildings. An
additional rebate of 20 percent is provided to developers of high density
properties with 70 dwellings or more per hectare. Sectional title owners also
qualify for a 20 percent rebate for sectional titles. In addition, rebates of 40
percent are offered to developers who redevelop property in the inner city
allowing for 20 percent commercial use and 80 percent residential use.
56 I WHY INVEST IN GAUTENG? I www.ggda.co.za
GGDA Binder Divider 4-D1 6/22/13 9:07 PM Page 1
C
M
Y
CM
MY
CY CMY
K
Cost of Doing Business
4
Composite
4. COST OF DOING BUSINESS
This chapter examines the cost of doing business in Gauteng. The focus is on
the cost of office hire, transport and electricity. Wherever possible, cost
comparisons are drawn between Gauteng and the other provinces in South
Africa. In addition, in certain instances where data is available, costs related
to doing business in Gauteng are compared with costs in other African
cities/districts and in international locations on other continents.
“In relation to other cities, Gauteng is an ideal geographical location
for our business with regards to transportation. Another good aspect
is its population size. It has the highest number of South Africans
living there and therefore provides access to markets.”
(Sibani Mngadi — Corporate Affairs Director, Brandhouse)
Office rentals
Rental rates for commercial property in South Africa are relatively affordable
by most international comparisons. In 2010, the cost of rent for the average
store owner in Johannesburg amounted to just 4 percent of that paid by his
or her counterpart in London’s West End. In that same year, Johannesburg,
together with Durban and Cape Town, were ranked as the most affordable
destinations in terms of the cost of office rentals out of 55 cities worldwide,
with rental rates varying between R110 per square metre and R140 per
square metre.
There is significant demand for prime-grade office space ranging in size
between 150 and 2 000 square metres in Gauteng. There has also been a
notable increase in the owner-occupier market in Johannesburg. At the
same time, the commercial property rental market in Pretoria has benefited
from the integration of the Gautrain infrastructure in the city and the increase
in business activity in the vicinity of the Gautrain stations.
COST OF DOING BUSINESS I www.ggda.co.za I 57
Petrol prices and other transport costs
Petrol prices
With an average petrol price of US$5.06 per gallon (approximately R11.75
per litre), South Africa ranked 19th out of 60 countries in a 2013 study comparing petrol prices. According to the study, petrol in South Africa is more expensive in comparison to Egypt (ranked 3rd) and Nigeria (ranked 6th), the
other African countries included on the list. South Africa fares somewhat
more favourably when compared with her BRIC counterparts (except Russia):
petrol prices are higher in Brazil (ranked 21st at R12.54 per litre), similar in
India (ranked 18th at R11.61 per litre) and China (ranked 15th at R11 per litre),
and considerably lower in Russia (ranked 10th at R8.06 per litre). On average,
petrol prices in South Africa are substantially lower than in Turkey, where
petrol costs US$9.89 per gallon (approximately R22.97 per litre).
Transport options
1. Motor vehicle
As much as R23 billion has been spent on upgrading the road network in
Gauteng. South African National Roads Agency Limited’s (SANRAL)
Gauteng Freeway Improvement Project (GFIP) represents a key element
of this programme of upgrades, and is set to drastically reduce travel
times and traffic congestion along key routes within the province’s urban
centres. It will also improve accessibility into Gauteng and inject
approximately R29 billion into the economy.
The expenditure on improving the road network in the province will be
financed, in part, through toll fees, which will be levied on certain roads
through an advanced e-tolling system. The cost in toll fees for registered
motorists using national freeways in and around Gauteng’s metropolitan
regions is estimated to be less than R200 per month. Infrequent visitors
can purchase a day pass at a cost of between R30 and R50 from an e-toll
Customer Service outlet (see sanral.co.za for outlet listings). Those hiring
vehicles can expect the cost of e-tolling to be included in the fee. The
benefit of e-tolls, unlike standard boom tollgates, is that they do not
inconvenience motorists by forcing them to waste time in queues and
congested traffic at tollgates. In addition, users are charged only for the
portion of the roads that they use.
58 I COST OF DOING BUSINESS I www.ggda.co.za
2. Rail
In recent years, a great deal of attention has been placed on upgrading
the capacity of South Africa’s rail network and infrastructure. The
Passenger Rail Agency of South Africa (PRASA) is set to spend R123
billion in the acquisition of 7 224 new trains, which will be added to its
fleet at a proportional rate every year over the next two decades. General
Electric is also partnering with Transnet to produce new locomotives for
use within South Africa.
One-way economy class tickets on Metrorail passenger trains typically
cost between R6.50 and R16.50 depending on the route, whereas a oneway journey on the luxury Metro Plus class costs between R8.70 and R22.
Fees on Gauteng's rapid rail link, the Gautrain, range from R21 to R145
for a single trip, depending on the chosen route. The Gautrain operates
between Sandton, OR Tambo International Airport, Midrand and Pretoria.
Although the Gautrain fare is more expensive than the fares charged by
minibus taxis, Metro buses and Metrorail (the alternative train operator
in Gauteng), it offers greater convenience and efficiency (with trains to
OR Tambo International Airport every 12 minutes); enhanced safety and
security (with highly trained staff and CCTV and satellite monitoring); and
is more environmentally friendly than transport options that make use of
a motor vehicle (rail transport is regarded as the most “earth-friendly”
mass transportation system). Furthermore, the Gautrain fare is typically
lower than the cost of hiring a private vehicle for the same route.
COST OF DOING BUSINESS I www.ggda.co.za I 59
3. Bus
A variety of public transport bus services are available in major urban
centres within Gauteng. These include the Rea Vaya BRT System,
Metrobus and Gautrain bus services.
In Johannesburg, the one-way cost of a Rea Vaya bus ticket ranges from
R5.50 on inner city circular routes and R8.50 on trunk routes (the main
routes from one destination to another), to R12.00 for the full trip from the
feeder routes to the Central Business District (CBD).
Rea Vaya buses travel along three routes — trunk, complementary and feeder.
• Trunk routes (main routes):
- Soweto to Johannesburg CBD;
- Soweto to Ellis Park East.
• Complementary routes (extended, circular routes):
- Johannesburg CBD to Dobsonville;
- route through Sowetan suburbs (Dobsonville to Maponya Mall
in Pimville);
- circular route through inner city.
• Some of the feeder routes (routes from outer suburbs which link to
the trunk route at key stations) include:
- the routes starting at various stations in Soweto and ending at the
Johannesburg CBD or Ellis Park stations and all going via central stops
including Thokoza Park in Rockville, Soweto, Lakeview and Boomtown;
- one of the routes starting in Eldorado Park and ending at Ellis Park,
via Lakeview.
The City of Tshwane has also launched a rapid bus transport system aptly
named A Re Yeng (Let’s Go). The inception phase is due to be launched
in April 2014, with the entire system set up for operation in 2016 or 2017.
The cost of the cheapest Metro bus ticket (stage 1 Adult) in the City of
Johannesburg is R7.90 for a single trip, with ticket prices rising
incrementally on a sliding scale, depending on how many zones the
commuter crosses. The City of Johannesburg Metro buses travel along
six major routes, based on concentric zones extending from the CBD:
60 I COST OF DOING BUSINESS I www.ggda.co.za
a)
b)
c)
d)
e)
f)
Zone 1:
Zone 2:
Zone 3:
Zone 4:
Zone 5:
Zone 6:
City centre to Parktown and Upper Houghton/ Berea;
Braamfontein to Rosebank;
Rosebank to Craighall Park;
Craighall Park to Randburg CBD;
Randburg CBD to Beverley Gardens;
Beverley Gardens to Northgate.
In addition, Metro Bus also run a number of cross-city routes between
Naturena and Randburg CBD, Westgate Shopping Centre and Randburg
Centre (via Strijdom Park), Bellevue and Auckland Park, Bellevue and
Fairlands, Yeoville and Northgate, and Yeoville and Strijdom Park.
Metro Bus fares in the City of Tshwane are set at R5 for trips in and
around the CBD, and rise to R10 for a single trip beyond the CBD. The
main City of Tshwane Metro routes travel clockwise from Colbyn, Church
Street East onwards. The Olievenhoutbosch bus route offers 12 routes
which service Pretoria Central and surrounding suburbs.
a)
b)
c)
d)
e)
f)
g)
h)
i)
j)
k)
l)
Route 1:
Route 3:
Route 4:
Route 5:
Route 6:
Route 7:
Route 8:
Route 9:
Route 10:
Route 11:
Route 12:
Route 13:
Midstream — Gateway;
Centurion — Metsing — Station;
Centurion via Highveld — Echopark — Southdowns;
Thatchfield — The Reeds — Rooihuiskraal;
The Reds Mall;
Wierda Park— Eldoraine — Clubview;
Willem Botha;
Bronberrick — Wierda Park — Centurion;
Sunderland Ridge Mercedes Benz and Valhalla;
Kalafong;
Pretoria via Highway (Church Square);
Marabastad.
The Gautrain bus currently services Sandton, Rosebank, Midrand,
Centurion, Pretoria, Hatfield and Rhodesfield stations. A trip on the
Gautrain bus costs R6 single for rail users and R20 for non-rail users.
COST OF DOING BUSINESS I www.ggda.co.za I 61
4. Taxi
Metered taxi cabs in Gauteng typically charge R10 per kilometre with a
flag rate of up to R50, although this can vary significantly depending on
the company. This is relatively expensive when compared with equivalent
fares charged by taxi cabs in other large cities internationally. For
instance, the standard taxi fare in New York City is around US$2.50 upon
entry and an additional US$0.5 for each one-fifth of a mile, which equates
to a flag rate of approximately R23 and an additional charge of R5 for
every 1.6 kilometres.
Informal minibus taxis provide an alternative to metered taxi cabs on all
routes in Gauteng. The minibus taxi fare depends both on the distance to
be travelled and the locality. For instance, minibus taxi trips cost between
R9 and R12 within Pretoria’s townships and up to R16 for trips to the CBD.
In and around the Johannesburg metropolitan area, minibus taxi fares
range between R10.50 and R20 for trips from townships or major suburbs
to the CBD.
62 I COST OF DOING BUSINESS I www.ggda.co.za
Electricity supply and tariffs
In recent years, South Africa’s electricity supply capacity has come under
increasing pressure, with moribund infrastructure and capacity shortages
necessitating the introduction of load-shedding around two years ago. As a
result, Eskom, South Africa’s state-owned power generator and transmitter,
has faced growing pressure amid ever-increasing demand for electricity. The
National Energy Regulator of South Africa estimated in 2011 that South Africa’s
electricity demand would rise to about 40 000MW in the medium term and to
as much as 80 000MW over the longer term. To deal with the burgeoning
demand, a process of acquiring sustainable independent power producers has
begun, with the first project underway at Coega in the Eastern Cape.
While electricity tariffs in South Africa are rising steadily, they remain relatively
low by international standards. In a 55-country survey presented by Eskom in
2010, industrial tariffs in Johannesburg (and across South Africa) were ranked
amongst the lowest in the world. The countries surveyed were at various
stages of development and included the BRIC countries, Kazakhstan, Canada,
Thailand, Estonia, New Zealand, the United Kingdom and the United Sates.
The Johannesburg rate is only marginally greater than the average South
African rate. The rates are competitively priced compared to developing
economies such as Argentina, Paraguay and Latvia. Compared to international
averages and developed economies, the electricity tariffs are far lower.
The report also showed that sectoral electricity tariffs were far below
residential rates. In 2012, South Africa was ranked 11th (up from 16th
position in 2011 i.e. country offering the lowest electricity rate) in an
international comparison of electricity prices undertaken by the NUS
Consulting Group. The 16 countries included in the NUS price comparison
were mostly first-world countries such as the United Kingdom, the United
States, France, Canada and Italy. The average electricity tariff in South Africa
has been calculated at US$9.13 per kilowatt hour (kWh), equating to
approximately R78.37 per kWh. Of the countries included in the international
price comparison, electricity tariffs were lowest in Canada at US$7.58
(R65.04) per kWh and highest in Italy, where electricity cost US$20.23 (R
173.57) per kWh as at 1 June 2012. The report projected that electricity and
gas pricing in South Africa would follow the inflation rate closely.
COST OF DOING BUSINESS I www.ggda.co.za I 63
Labour, water and communication costs
A 2012 report by UBS indicated that in 2009, Paris (France) had the shortest
annual working hours of 1 558 hours a year. Johannesburg (South Africa)
reported an average 1 887 hours a year, whereas Seoul reported 2 308
working hours a year. Johannesburg had, on the other hand, 15 paid vacation
days during 2009, whereas Mexico City only had six, and, at the opposite end
of the spectrum, Paris had 30 vacation days.
In terms of labour costs, Johannesburg averaged US$14 per hour for Gross
Annual Income in 2012, compared to New York (US$33 per hour), Sydney
(US$31 per hour) and Tokyo (US$30 per hour) on the upper end, and Mumbai
(US$3 per hour), Mexico City (US$5 per hour) and Shanghai (US$7 per hour)
on the lower end.
Comparing telephone costs for local calls globally, South Africa charged 7 US
cents per three-minute call. The United Kingdom, on the other hand, charged
17 US cents for the same call. Ukraine, Uzbekistan, Macedonia, Burma,
Nepal, Russia, Saudi Arabia, Syria are the most competitive in the world,
charging 1 US cent per three-minute call. The worst performer is Ecuador,
charging 60 US cents per three-minute call. The weighted average costs are
10 US cents per three-minute call, indicating that South Africa is below the
global average. Finally, water charges by US dollar per cubic metric
comparisons for 2012 show that South Africa charged US$1.52. The best
water prices in the world in 2012 were found in India at US$0.15, while
charges were highest in Denmark at US$8.11 per cubic metre.
64 I COST OF DOING BUSINESS I www.ggda.co.za
Ease of doing business comparisons with other countries
At the global level, South Africa performs relatively well along a number of
cross-country measures of competitiveness and the ease of doing business.
In 2010/11, the World Economic Forum's Global Competitiveness Report
ranked South Africa in 54th position out of 139 countries. In the latest Doing
Business report produced by the World Bank, South Africa was ranked first
out of 185 countries for the ease of acquiring credit; and also ranked
relatively highly in terms of investor protection (10th). More generally, South
Africa was ranked in 39th position (up from 41st in the previous year) with
respect to the overall ease of doing business. South Africa draws strength
from macroeconomic stability, an ability to meet the specific trade and
investment requirements of potential investors, competitive labour costs,
and world-class financial and ICT sectors.16
Table 11 shows the relative rankings of each of the BRICS countries along
each of the indicators used to measure the relative ease of doing business.
Protecting
investors
Paying taxes
Trading across
borders
Enforcing
contracts
Resolving
insolvency
156
123
116
143
46
104 117
64
162
11
116
105
94
23
49
152
127
184
116
181
114
44
70
100 122
68
19
82
39
150
79
1
10
115
82
84
130 121
131
60
109 104
Russia
112 101
178
184
India
132 173
182
China
91
151
South Africa
39
53
Registering
property
Brazil
Starting a
business
Getting
electricity
Getting credit
82
Dealing with
construction
permits
Overall ranking
Table 11: Ease of Doing Business — BRICS Countries 2013
32
SOURCE: WORLD BANK 2013
South Africa outranks her BRIC counterparts in terms of the overall ease of
doing business. China (91st), Russia (112th), Brazil (130th) and India (132nd)
are all ranked well below South Africa on the World Bank’s ease of doing
business index. South Africa also outranks each of these countries along a
number of more specific doing business dimensions.
COST OF DOING BUSINESS I www.ggda.co.za I 65
South Africa is the leading economy in Africa, in terms of relative GDP and
contribution to sectors and Africa’s GDP, ahead of major competitors such
as Nigeria, Egypt, Algeria and Morocco. Morocco (97th), Egypt (109th),
Nigeria (131st) and Algeria (152nd) are all ranked well below South Africa in
terms of the overall ease of doing business; while South Africa outranks each
of these countries along a number of more specific doing business
dimensions as well.
Within South Africa, Gauteng boasts a highly attractive environment in which
to do business. Gauteng has the largest sub-national economy in Africa.
Johannesburg, Gauteng’s most populous city, is widely recognised as Africa’s
economic hub due to its inventive leadership, fast-growing sectors, high
levels of socio-economic development and favourable environment for FDI.
Many of the world’s leading banks, law firms and accounting companies have
a presence within the province and are available to service the needs of an
expanding investor community. Gauteng also attracts the largest percentage
of domestic business tourists (who are known to spend more than leisure
tourists) of all provinces in South Africa. Furthermore, there is a strong
consumer base within Gauteng — residents in Gauteng have, on average, the
highest per capita incomes in South Africa. The province’s ICT framework
and GGDS aim to maintain as well as promote further opportunities for
sustained economic growth and investment.
66 I COST OF DOING BUSINESS I www.ggda.co.za
Starting a business in Gauteng
There are various types of business structures available in South Africa,
namely sole proprietor, private company, public company, partnership,
business trust, non-profit organisations, joint ventures and an external
company (which is a branch of a foreign company).
The two most common option types of businesses in South Africa available
for investors are discussed next. Firstly, a sole proprietary business can be
started. This business type means that you are a sole trader, or in other
words, the owner also conducts the business activities. For this business
type, there is no registration required, yet the South African Revenue Service
(SARS) needs to be informed about the extra income. However, if the
business requires a business name (hence not trading under the owner’s
name), it needs to be registered with the Companies and Intellectual Property
Commission (CIPC).
Secondly, a private company (Pty Ltd.) can be established. This type of
company needs to be registered with the CIPC and the annual return needs
to be submitted to them. Foreigners require business permits in order to
start a private company in Gauteng. The Department of Home Affairs issues
these permits based on the following criteria:
1.
2.
3.
the applicant has at least R2.5 million worth of foreign currency; or
the applicant has made a capital contribution of at least R2.5 million; or
the applicant has made a capital contribution of R500 000, and has 2.5
million cash denominated in foreign currency.
The applicant must submit a business plan, proof that s/he will employ at
least five (5) South Africans or permanent residents, and be about to register
with SARS.
Once foreigners have obtained the required business permit (locals do not
need any permits), the following steps need to be taken:
a) the company has to be registered with the South African Registrar
of Companies in Pretoria;
b) registration with SARS needs to be completed;
c) the company has to register with the local district council;
COST OF DOING BUSINESS I www.ggda.co.za I 67
d) registration with the Department of Labour is needed to comply
with the mandatory contributions of the Unemployment Insurance
Fund (UIF).
Various other procedures are required, dependent on the type of business.
For example, businesses conducting activities within the fresh foods or
health related sectors must register with a local authority. Furthermore,
export and import control procedures, applications for incentives and
approvals for building plans are among the other procedures that certain
businesses must follow.
68 I COST OF DOING BUSINESS I www.ggda.co.za
GGDA Binder Divider 5-D1 6/22/13 9:06 PM Page 1
C
M
Y
CM
MY
CY CMY
K
Gauteng Economic Sectors
and Opportunities
5
Composite
5. GAUTENG ECONOMIC SECTORS AND
OPPORTUNITIES
This section highlights the most prominent economic sectors in Gauteng
through an analysis of each sector’s unique strengths.
“Gauteng is a very supportive province in terms of business. It’s more
than the financial hub of the country. It’s a global province — there is
a global footprint in Gauteng. Large corporates from around the world
have their headquarters in Gauteng.”
(Reshma Madho — Legal and Government Affairs Manager, Ford)
Agriculture and Agro-processing
Agriculture
Gauteng is home to some of South Africa’s largest agricultural companies,
including AFGRI, a listed agriculture services and foods company, which
specialises in animal feed production. A significant share of agricultural
activity within the province is concentrated on the production of vegetables.
GAUTENG ECONOMIC SECTORS AND OPPORTUNITIES I www.ggda.co.za I 69
Fruit, dairy products, eggs, maize and grain are also produced in large
volumes within the province. Agricultural activity is quite specialised in
certain areas of Gauteng. For instance, farming activity in regions near
Bronkhorstspruit (in the east) and Heidelberg (in the south) centres
predominantly on cotton, groundnuts and sorghum production. Heidelberg
is also a home to Africa’s largest feedlot for cattle. More exotic agricultural
products are also farmed and produced in certain areas. For example,
crocodiles are farmed at Izintaba farm outside Pretoria. These are used
primarily for the production of crocodile skins — South Africa has three
tanneries and produces about 55 000 crocodile skins every year.
The Gauteng Provincial Government, together with the Sedibeng and West
Rand district municipalities, are actively promoting the development of
small-scale farming and agricultural co-operatives within the province with
a view to addressing food security concerns and promoting sustainable
development. There has also been a shift in focus in government policies
towards the promotion of agro-processing activities and the production of
value-added agricultural products. This is seen as a key mechanism to
eradicate poverty and inequality within the province. Investment in agroprocessing is focused on the production of strategic value-added products
such as soya beans, rooibos tea, beverages, fruit and vegetables.
A number of agriculture-focused research institutions are based in the
province, providing critical support to agricultural production. For instance,
the Agricultural Research Council’s (ARC) national research facilities are
located in Pretoria, and include the Roodeplaat Vegetable and Ornamental
Plant Institute and the Onderstepoort Veterinary Institute. In addition, the
Forestry and Agricultural Biotechnology Institute (FABI) is located at the
University of Pretoria.
Food and Beverage
Close to half of the companies operating in the food and beverage sector in
South Africa are located in Gauteng, including Nestlé, Tiger Brands, Pioneer
Foods, AVI and Astral. There are approximately 4 000 food processing
companies operating in the province, employing roughly 50 000 workers and
contributing more than R10 billion to Gauteng’s GDP.
70 I GAUTENG ECONOMIC SECTORS AND OPPORTUNITIES I www.ggda.co.za
Many major food and beverage processing brands have a significant
presence in Gauteng. For instance, Nestlé operates four manufacturing
plants in the province. The company has spent R505 million on increasing
its production capacity within South Africa, with the majority of this
expenditure incurred within Gauteng. Pioneer Foods has spent R150 million
on a biscuit-making facility in Clayville. Astral Foods owns two broiler
production operations located just east of Johannesburg, and two of its eight
feed mills are located in Randfontein (to the west) and Delmas (to the east).
Tiger Brands runs six plants in Germiston that produce a range of meat
products, and the establishment of a new tomato sauce plant and pasta plant
rank among the company’s recent investments in the province. McCain
Foods, located in Springs, produces frozen vegetables for the Gauteng
market. Finally, a variety of the beverages in AVI’s portfolio (including Ciro)
are produced at the group’s Kempton Park facilities.
The poultry business in Gauteng presents significant opportunities for future
investment. Earlybird Farm, one of Astral’s operations, processes 800 tons
of chicken per day at its two factories at Olifantsfontein. Rainbow, the second
biggest poultry producer, operates 18 farms and two feed mills in Gauteng
alone. Daybreak Farms, an AFGRI operation, is located in Springs and
produces about 650 000 broilers every week.
GAUTENG ECONOMIC SECTORS AND OPPORTUNITIES I www.ggda.co.za I 71
Beer and Malt
The alcoholic beverages industry is a significant contributor to national GDP
in South Africa. An estimated R94.2 billion (or 4.4 percent of GDP) can be
traced back to the industry’s manufacturing operations and capital
expenditure. The industry is also a major employer within the country,
employing an estimated 21 300 workers in 2009, and supporting an additional
66 000 jobs directly through suppliers. Key players in the industry in South
Africa include South Africa Breweries (SAB) (malt beer), United National
Breweries (sorghum beer), Distell (spirits and flavoured alcoholic beverages
(FABs)) and Brandhouse (malt beer, spirits and FABs). Each of these firms
holds a substantial share of the respective segments of the market in which
they operate. Brandhouse, the Heineken-Diageo-Namibian Breweries joint
venture, is SAB’s main competitor in the malt beer market, and the third
largest liquor company in South Africa by value of sales. In the case of the
wine industry, Distell, KWV and DGB control a number of brands, while there
are also a large number of smaller “independent” producers actively
competing in the industry in South Africa.
Gauteng is a key centre for the production of beer and malt within South
Africa. United National Breweries produces Umqomboti, a traditional African
beer, in northern Gauteng. The Amalgamated Beverage Industries, a
subsidiary of SAB, has a manufacturing plant in Midrand which makes use
of advanced technology. It also operates plants in Devland and Pretoria.
Three of the seven breweries operated by SAB in South Africa are located in
Gauteng, and various complementary industries, activities and facilities (such
as bottling plants and distribution hubs) have grown as a result of the
company’s presence within the province. In addition, Heineken launched a
new brewery in southern Gauteng in 2010, where it will brew 400 million litres
of beer per annum.
Opportunities for investors:
• investment in the production of ground-nuts, sunflowers,
cotton and sorghum;
• investments in agro-processing products such as soya
beans, rooibos, beverages, fruit, vegetables, and forestry;
• essential oil extraction from herbs and indigenous plants;
• expanding the ‘exotic’ meat (kudu, ostrich and springbok)
market, locally and globally;
72 I GAUTENG ECONOMIC SECTORS AND OPPORTUNITIES I www.ggda.co.za
•
•
•
•
packaging of agro-processed goods;
development of additional agro-processing facilities,
R&D in medicinal plant production;
the proposed Green Hub in the West Rand District
Municipality, which will aim at promoting the growth of
sustainable, green industries;
• opportunities in the non-core activities of the agricultural
sector, such as transport, packaging and distribution;
• R&D related to organic food production, as well as health
foods and natural remedies;
• small business opportunities within the brewing industry,
through development training.
GAUTENG ECONOMIC SECTORS AND OPPORTUNITIES I www.ggda.co.za I 73
Finance and Business Services
Despite the debilitating effects of the recent financial crisis, South African
banks remain in good health. National banking assets stood at R3.4 trillion in
December 2011; and operating profits for banks increased by 30 percent in
2010/11 to reach R49 billion. In the same year, the amount of money loaned out
by banks also increased by nearly 9 percent to reach a total of R2.5 trillion.
“Gauteng is the economic and financial hub of South Africa. Gauteng
customers are strongly inclined to online use for transacting,
socializing and e-commerce… ambitious to succeed with their
careers… very conscious of the need to build financial wealth…
generally have an above average consumer knowledge of the world of
finance. The banks have a strong foothold in Gauteng, there is a
convergence of retail, private banking and some elements of private
client management.” (Godwin Perils — Head of Marketing: Gauteng, Old Mutual)
Financial Services
A full range of services is provided in South Africa’s financial services sector
— including commercial, retail and merchant banking, mortgage lending,
insurance and investment — through a range of domestic and foreign
institutions. Major participants within the South African financial sector
include Absa, Nedbank, Standard Bank, First National Bank, the
Johannesburg Stock Exchange (JSE), Investec and Rand Merchant Bank.
Gauteng is the financial capital of Africa: the continental head offices of more
than 70 foreign banks (including the Bank of China, Bank of Taiwan, Citibank,
Deutsche Bank AG and HSBC Bank) are located in the province, together with
at least as many South African banks, stockbrokers and insurance giants. The
JSE, Africa’s largest stock exchange, is also located in Gauteng. Each year,
the financial services sector contributes 21 percent to the province’s GDP.
Gauteng is a dominant location for the insurance industry on the African
continent. French reinsurer Scor Group has established a presence in
Johannesburg in order to target the English and Portuguese speaking
74 I GAUTENG ECONOMIC SECTORS AND OPPORTUNITIES I www.ggda.co.za
markets on the continent, specifically Nigeria and Angola. In addition, one of
the biggest new buildings to be constructed in Johannesburg’s CBD will
house the new headquarters for the Zurich Insurance Company.
Business Process Outsourcing (BPO) and Call Centres
Benefiting from a range of incentive schemes offered by the national
government through the dti, the BPO sector contributed R1.7 billion to South
Africa’s economy in 2010. Call centres catering for the United Kingdom
account for more than half (54 percent) of South Africa’s overseas business
within the BPO sector. Customer service is the most significant segment of
the domestic call-centre industry. Billing and account-handling is the
second-largest service area, followed by technical support, telemarketing
and telesales, and reservations.
Gauteng is home to more than 70 percent of South Africa’s call centres. The
sector’s strong presence in Gauteng is expected to continue to grow —
Business Processing enabling South Africa (BPeSA) predicts that the sector
will grow at between 9 and 14 percent between now and 2014. Confident of
the sector’s future growth prospects, the IT firm Wipro opened a 1 000 seat
call-centre in Johannesburg in 2011. More centres are likely to open in the
future. The province has high volumes of vacant prime office space in periurban areas, and Johannesburg’s Urban Development Zone (UDZ) has been
earmarked for the development of ICT firms (including call centres) and
subsidises rent, utilities and services.
Opportunities for investors:
• the banking industry presents investors with the
opportunity to engage in world-class corporate services, as
well as providing access to mortgage financing for starting
a business;
• the call centre industry is ever expanding, and this
provides investors with the opportunity to invest in the
development of the industry, particularly in areas such as
infrastructure and telecommunications.
GAUTENG ECONOMIC SECTORS AND OPPORTUNITIES I www.ggda.co.za I 75
Green Economy
Increasingly, new building developments aim to become more environmentally friendly in order to comply with new legislation, reduce costs and ensure
the sustainability of buildings in a time of diminishing resources. According
to the Green Building Council of South Africa (GBCSA), a green building is a
building which is ‘energy efficient, resource efficient and environmentally responsible’ — it incorporates design, construction and operational practices.
According to the MasterCard Insights Report on Urbanisation and
Environmental Challenges, Johannesburg ranked second among countries
from Asia/Pacific, Middle East and Africa in dealing with urbanisation and
environmental challenges. One example of a newly erected environmentally
friendly building in Gauteng is the Nedbank head office in Sandton. This is the
first building in South Africa to win a four-star rating from the Green Building
Council of South Africa. The rating encompasses key elements such as
energy-efficient lighting, an excellent waste recycling system and a fulleconomy air-conditioning system. Altogether the building is set to use 30
percent less energy than a conventional building. Another ‘green’ building is
Absa’s huge new office complex in downtown Johannesburg — Absa Towers
West. The building has incorporated green design elements including the
largest grey-water system ever installed in South Africa with a capacity of
43 000 litres of water per day.
76 I GAUTENG ECONOMIC SECTORS AND OPPORTUNITIES I www.ggda.co.za
In terms of national support, the Industrial Development Corporation has
pledged to spend R25 billion on the green economy in the five years to 2016,
with a major focus on solar panels, technology to extract carbon from the
smoke emitted by power stations, and other technologies. Furthermore, the
National Cleaner Production Centre (NCPC-SA), which is funded by the dti
and hosted by the CSIR, aims to boost the competitiveness and productive
capacity of industry in South Africa through cleaner production methods.
Opportunities for investors:
• development of environmentally friendly infrastructure;
• R&D into more efficient environmentally friendly practices
and technology;
• establishment of appropriate waste management and
waste disposal;
• production of fertilisers from chemical waste;
• recycling (bottles, tyres , etc.).
Manufacturing
Automotive parts and components
Some of the world’s largest and most famous motor vehicle brands, including
BMW, Ford, Nissan and Tata, have established manufacturing facilities in
Gauteng. The province is also home to a thriving automotive components
industry, together with several bus and truck assembly plants. These include
Scania, TFM Industries and MAN Truck and Bus South Africa, as well as the
Chinese truck manufacturer FAW, which owns an assembly plant in Isando.
FAW has joint venture operations with many of the world’s leading vehicle
manufacturers including Volkswagen, Toyota and Mazda. In 2010, over one
million automobiles were sold through these joint venture operations.
A number of different types of vehicles — including armoured cars and
standard passenger vehicles — are produced within Gauteng. DCD Protected
Mobility manufactures armoured cars in Boksburg, which are branded as
Vehicle Mounted Mine Detectors. In nearby Benoni, BAE Systems OMC
designs and manufactures protected vehicles. Turning to passenger vehicles,
the Nissan/Renault plant at Rosslyn, Pretoria, produces the Renault Sondero
hatchback, Nissan light commercial vehicles and the Tiida and Livina
GAUTENG ECONOMIC SECTORS AND OPPORTUNITIES I www.ggda.co.za I 77
models. Overall production levels at this plant are expected to double to
approximately 100 000 units by 2014, creating around 800 jobs. The BMW
facility at Rosslyn is a top manufacturer of the German marque’s famous 3
Series cars and recently won a contract to make the newest model in the
series. BMW’s current production is about 50 000 units per annum,
approximately 80 percent of which is destined for export markets. The Ford
Motor Company of South Africa has an assembly plant in Silverton, Pretoria.
Ford intends to double its production volumes every year until 2016, and
plans to assemble 110 000 Ford Ranger pickup trucks per year at Silverton.
The GGDA has targeted an automotive logistics hub in Tshwane as a priority
area for future growth. The intention is to provide speedy freight links
between Rosslyn (in the northwest), the city centre and Silverton (to the east).
Research and development is also seen as a critical driver of growth within
the automotive industry in the province. The AIDC, GGDA’s subsidiary
company in Pretoria, conducts research into key aspects of the industry and
promotes the sector’s competitiveness through skills development and
training, supplier development and improved supply chain management.
Finally, a range of incentives are available to firms and investors within the
automotive industry in Gauteng. The value of incentives provided through the
national Department of Trade and Industry amounts to around R5.9 million.
Such incentives are a key factor in encouraging firms within the automotive
industry to upgrade or expand their facilities within the province. For
instance, Tata is considering converting its assembly plant in Gauteng into a
full-scale production facility. This would be the company’s first big assembly
plant to be developed outside India.
Opportunities for investors:
• export of automotive components;
• joint ventures with existing manufacturing companies;
• non-core activities such as distribution and transport.
Pharmaceuticals
South Africa’s pharmaceutical sector is worth approximately R20 billion
annually. Although there are more than 200 pharmaceutical firms in the
country, large companies tend to dominate the field, with Aspen (34 percent)
and Adcock Ingram (25 percent) the two key players, followed by Sanofi78 I GAUTENG ECONOMIC SECTORS AND OPPORTUNITIES I www.ggda.co.za
aventis, Pharmaplan and Cipla Medpro. The private sector accounts for 80
percent of pharmaceutical industry sales by value and 20 percent by volume,
while this ratio is reversed in the case of the public sector. The public sector
dispenses comparatively cheap pharmaceutical products to its users in public
hospitals and health care centres within South Africa whereas pharmaceutical
products produced by the private sector in South Africa serve a niche market.
A number of large pharmaceutical firms have made significant investments
in South Africa. Adcock Ingram, for instance, has invested heavily in its South
African operation. The company is planning to spend R1 billion on new
developments and upgrades in Gauteng. This will see the development of a
liquids plant at Clayville, a solids and antiretrovirals (ARVs) plant at Wadeville
(Germiston) and upgrades to the Critical Care Plant at Aeroton, south-west
of Johannesburg. Other large international players in the pharmaceutical
industry also have a strong presence in Gauteng, including Merck (which has
a plant at Modderfontein) and Pfizer SA (which owns a laboratory in Sandton).
Looking ahead, a joint venture between several national government
departments and the Swiss pharmaceutical giant, Lonza, will see the
construction of a plant producing ARVs at Pelindaba outside Pretoria.
Opportunities for investors:
• joint ventures with small manufacturers;
• marketing of pharmaceuticals;
• R&D of new, innovative products;
• scientific services such as clinical trials.
GAUTENG ECONOMIC SECTORS AND OPPORTUNITIES I www.ggda.co.za I 79
Steel-related industries
With domestic production of crude steel amounting to 7.6 million tons in
2010, South Africa was ranked the 21st largest crude steel producing country
in the world by the World Steel Association. South Africa is also the largest
steel producer in Africa, producing nearly half (47 percent) of the continent’s
total crude steel output in 2010.
There is a relatively large domestic market for steel products within South
Africa. Local sales of primary carbon steel products (as reported by SAISI
members) were estimated at 4.2 million tons in 2010. Domestically, the main
consumers of steel products are the mining, manufacturing, building and
construction sectors, while a significant share is destined for the export
market. With respect to the latter, 1.2 million tons of ferrous-scrap was
exported from South Africa in 2010.
Within South Africa, most steel is produced and consumed in Gauteng. Metal
products, machinery and equipment are produced predominantly in the
Emfuleni Local Municipality, which is at the heart of South Africa’s iron and
steel industry. Vanderbijlpark and Vereeniging in southern Gauteng are
synonymous with steel production in South Africa. There are as many as 35
aluminium processing firms operating in Gauteng, involved in both secondary
processing to produce foils, cans, bars, rods and sheets, and final fabrication in
the form of die-casting and sheet metal work. Within Gauteng, the automotive
and packaging industries are the chief consumers of these products.
ArcelorMittal, based in Vanderbijlpark, produces flat iron and has been a
major employer in the province since 1947. Another key industry player, AECI,
is located in Modderfontein near Johannesburg. AECI is comprised of two
principal divisions: AEL Mining Services (with a large factory site) and
Chemical Services, which presides over 20 separate companies (including
Senmin, the group’s mining Chemicals Company).
The national government provides a range of incentives to support steel
related industries in South Africa. These are available through the Investment
Support, Small Business Development, Empowerment Finance,
Competitiveness Improvement, Techno-Industry Development Finance and
Export Assistance programmes. In addition, the COSM Trust has created a
privately owned fund to support exporters of value-added steel products.
80 I GAUTENG ECONOMIC SECTORS AND OPPORTUNITIES I www.ggda.co.za
Opportunities for investors:
• joint ventures with small stainless steel manufacturers;
• marketing and export of stainless steel products;
• manufacturing of final products, such as pipes and tubes;
• non-core activities such as distribution and transport.
Media and Communications
Film and television
The film industry is an important and growing segment within the Gauteng
economy. The industry contributes R2.5 billion to the provincial economy,
and more than 80 percent of the South Africa’s registered film producers
operate in the province. As many as 70 percent of South Africa’s television
productions and 39 percent of all commercials are made in Gauteng. With
respect to the latter, roughly 50 firms are active in the production of
commercials within the province. Among this total, major players include
the Gauteng Film Commission, Picture Tree, Stark Films, Sasani Studios and
Red Pepper Pictures.
There are two major film clusters in Gauteng. One cluster is located around
the South African Broadcasting Corporation studios in Auckland Park, and at
the other is situated around the headquarters of MultiChoice in Randburg.
These clusters are complemented by 19 schools, and a number of colleges
and universities that offer qualifications relevant to the film and television
industry, together with a large pool of skilled technicians within the province.
Efforts to expand the film and television industry are receiving strong support
from the national government, which provides a range of incentives to
investors. These incentives cover any production incurring costs of more R2.5
million, and are provided in the form of tax breaks and a repayment from the
dti of as much as 35 percent of the expenditure incurred. Following the
introduction of these incentives, 20 films were produced in South Africa in
2010, up considerably from just three productions in 2001.
GAUTENG ECONOMIC SECTORS AND OPPORTUNITIES I www.ggda.co.za I 81
Opportunities for investors:
• production of TV commercials, short and feature-length
films and documentaries;
• non-core activities such as transport, supplies (catering)
and accommodation;
• providing services such as sound, props, set design and
construction of film sets.
Information and Communication Technology
Nearly two-thirds of all South African ICT companies are located in Gauteng,
collectively contributing more than 6 percent to regional GDP. A range of ICT
activities is undertaken within the province, including hardware
manufacturing and software design, and various service offerings such as
software management, systems programming and technical support. A
number of international giants, including Microsoft, Hewlett-Packard, IBM,
ICL, Cisco and Unisys, have a strong presence in Gauteng, where they
operate alongside South Africa’s own ICT firms.
The Gauteng province is home to a number of dedicated and specialist data
centres, many of which service specific companies (for instance, the 27 000
square metre Samrand Data Centre is used by Standard Bank). Specialist
data centre operators such as Business Connexion are also located in
82 I GAUTENG ECONOMIC SECTORS AND OPPORTUNITIES I www.ggda.co.za
Gauteng. Metrofibre Networx, a company based in Midrand, is a new entrant
to the market and competes with Vodacom and Neotel in providing metro
Ethernet technology. Ethernet technology is a fibre-based broadband
technology that offers a cheaper alternative to connect subscribers to the
Internet or to connect different offices owned by a single company.
With a view to driving growth within the ICT sector, the Gauteng provincial
government has introduced a programme that provides mentoring support
and venture capital for the commercialisation of technology firms. The
provincial government has also established a science park in the form of The
Innovation Hub. The City of Tshwane has an Innovation Office based at TIH.
The metropolitan municipality already has a fibre optic network
infrastructure that hosts two technology-related projects, TIH and ASP.
Innovation in the sector will be further encouraged by the newly established
mLab, a centre designed to support entrepreneurs in the mobile-technology
field. The CSIR in Pretoria hosts the mLab facility together with TIH. At a
national level, the dti has introduced the South African Vanguard of
Technology (Savant) programme in order to provide marketing support to
the South African ICT and electronics sector and improve the level of
awareness of the local sector.
Opportunities for investors:
• hardware and software consultancy;
• service support for users of ICT;
• sales and export of ICT technology.
GAUTENG ECONOMIC SECTORS AND OPPORTUNITIES I www.ggda.co.za I 83
Tourism and Leisure
Business Tourism
Gauteng is endowed with a range of natural assets which mark it out as a
prime tourist destination. The province is one of the main tourist centres in
South Africa, and attracts significant levels of business and retail tourism
each year. Of the 11.3 million tourists that visited South Africa in 2010, more
than half visited Gauteng. In 2011, total revenue from tourism in Gauteng
reached R27.5 billion (up from R26.9 billion in the previous year).
South Africa’s biggest hotel groups are well represented in Gauteng. For
instance, Tsogo Sun operates 26 hotels under three brands within the
province. Furthermore, two international hotel groups are considering
enlarging their South African footprint. Marriott International is planning to
introduce a three-star brand at a Johannesburg site. Hilton Worldwide is
focused on Cape Town and Johannesburg, and may also introduce two
brands that operate below the five-star level, Doubletree and Garden Inn.
Gauteng is home to a number of popular outdoor destinations, including
Blesbokspruit (near Springs), the Magaliesberg mountain range (which is
within easy driving distance of all the province’s key urban areas), and the
Sterkfontein and Wonder Caves located near the Cradle of Humankind site
on the West Rand. The latter boasts an impressive visitors’ centre at
Maropeng, which represents a highlight for many visitors to the Cradle of
Humankind, one of Gauteng’s most popular tourist sites. This offers a
glimpse of ancient man in 2 500 square metres of exhibition space complete
with modern interactive exhibits. Other attractions include the Johannesburg
Zoo, the Pretoria Zoo (which is the largest zoo in the country), Emmarentia
Dam, Suikerbosrand Nature Reserve (which has excellent facilities for multiday hikes), the Wonderboom Nature Reserve, the Korsman Rondebult Bird
Sanctuaries and Rietvlei Zoo. Dinokeng Game Reserve, launched in 2011, is
a recent addition to Gauteng’s tourism attractions.
Linked to the popularity of outdoor destinations in Gauteng, water sports
represent a tourism niche with significant growth potential. The Vaal River is
just one of many large and safe water bodies in the province that are suitable
for supporting activities related to water sports. In addition, open-top bus
tours will become part of the Johannesburg tourism scene in 2013, with the
arrival of the franchised South African City Sightseeing operation.
84 I GAUTENG ECONOMIC SECTORS AND OPPORTUNITIES I www.ggda.co.za
Events and Conferences
It is estimated that South Africa will host hundreds of events between 2011
and 2016, with over 300 000 delegates expected to visit the country’s major
cities as a result. As Gauteng is one of the main focal points for the business
tourism market, many of these events will take place within the province.
The China Sourcing Fair, for instance, is held in late November each year
and attracts 6 000 buyers to the Gallagher Convention Centre. In addition, the
continental tourism expo, Meetings Africa, is held in Johannesburg on an
annual basis.
The Johannesburg Tourism Company has a dedicated unit, the Johannesburg Convention Bureau (JCB), which works to attract new business to the
city. The JCB provides support to companies in the preparation of bid documents and is on hand to assist by supplying relevant information related to
key areas such as telecommunications and IT services and securing visas
for delegates. The fact that so many of South Africa’s companies have their
headquarters in Gauteng means that the province has an inherent advantage
with respect to attracting domestic conferences and training workshops.
Among the venues that can accommodate large groups in Johannesburg is
the Sandton Convention Centre. Eskom’s Megawatt Park Conference Centre
and the Absa Convention Centre in Tshwane are among the larger venues
located outside Johannesburg. In the Ekurhuleni metropolitan area, the
Airport Grand Hotel and Conference Centre is particularly well situated in
GAUTENG ECONOMIC SECTORS AND OPPORTUNITIES I www.ggda.co.za I 85
relation to the main airport. The revamped Turbine Hall of Johannesburg’s
old power station, run by The Forum, is ideal for smaller conferences,
parties, weddings and as a fashion show venue. Two of the province’s largest
and most popular event venues, Gallagher Estate and Kyalami Events and
Exhibition Venue, are centrally located in Midrand. In addition, the University
of South Africa’s main campus in Pretoria boasts the large and adaptable
Muckleneuk Ridge Conference Centre and some city hotels, such as the
Protea Parktonian Hotel, offer facilities for up to 1 000 delegates.
A new addition to the Pretoria skyline is the OR Tambo Building, a conference
centre designed specifically to cater for the needs of South Africa’s
Department of International Relations and Cooperation.
Opportunities for investors:
• conference organisation, including planning and
event management;
• infrastructure expansion through developing
conference centres;
• non-core activities such as catering, accommodation
and transport;
• business tourist sight-seeing packages; for example,
daytrips to the various game reserves.
86 I GAUTENG ECONOMIC SECTORS AND OPPORTUNITIES I www.ggda.co.za
GGDA Binder Divider 6-D1 6/22/13 9:12 PM Page 1
C
M
Y
CM
MY
CY CMY
K
Metropolitan and
District Municipalities
6
Composite
6. METROPOLITAN AND DISTRICT MUNICIPALITIES
Formerly known as the Transvaal, Gauteng was renamed following South
Africa’s first democratic election in 1994. It is one of the country’s nine
provinces. For administrative purposes, the province is divided into
metropolitan, district and local municipalities. Gauteng contains three
metropolitan municipalities (City of Johannesburg, City of Tshwane and
Ekurhuleni) and two district municipalities (Sedibeng and West Rand). A
further seven local municipalities — Emfuleni, Lesedi, Midvaal, Mogale City,
Randfontein, Westonaria and Merafong City — fall within the jurisdiction of
the two district municipalities.
“Gauteng is the economic hub with the key investment nodes in South
Africa. A lot of upper-end investment and it has the most expensive
nodes for real estate.” (Heidi Rix — Asset Management Division, Broll Property Group)
City of Johannesburg
The City of Johannesburg is the capital of the Gauteng province, and the
headquarters of the metropolitan municipality are located in Braamfontein.
Johannesburg was initially established as a result of the gold rush in the
19th century, but has evolved into a city in which the financial services
industry dominates business activity. Today, Johannesburg is regarded as
the financial capital of South Africa due to the high number of financial
institutions located within the city. The JSE, Africa’s largest stock exchange,
is situated in the heart of Johannesburg’s business district, Sandton. Aside
from the financial services industry, other key sectors of the Johannesburg
economy include trade, manufacturing, advertising and information
technology. South Africa’s Constitutional Court is also located in
Braamfontein, Johannesburg.
The City of Johannesburg is one of the 50 largest metropolitan areas in the
world. Johannesburg’s total GDP amounted to US$ 76 billion (PPP adjusted)
in 2011, and the metropolitan area’s combined 2012/13 budget totalled R37
billion. Approximately 3.9 million individuals reside in Johannesburg, and
the city’s population is growing at an annual rate of 1.3 percent. A recent
drive to invigorate the inner city of Johannesburg has resulted in major
investments in infrastructure.
METROPOLITAN AND DISTRICT MUNICIPALITIES I www.ggda.co.za I 87
City of Tshwane
One of three of South Africa’s capital cities, Pretoria, is located in the City of
Tshwane. Interestingly, every foreign country is represented by an embassy
in Pretoria. Tshwane contributes approximately 27 percent to provincial GDP
in Gauteng, and 9 percent to national output. The metropolitan area boasts
a total population of 2.9 million and a combined budget of R24.9 billion for the
2012/13 financial year. In 2011, the Metsweding District Municipality was
added to the City of Tshwane metropolitan area.
The services sector, which is dominated by government services, is the
largest economic sector in the City of Tshwane, followed by the finance,
manufacturing and trade sectors, respectively.
Ekurhuleni Metropolitan Municipality
The Ekurhuleni metropolitan area includes Germiston, Boksburg, Benoni,
Kempton Park, Brakpan and Springs. Ekurhuleni is home to approximately 3
million people, and the municipality had a combined budget of R21.3 billion in
the 2012/13 financial year. The OR Tambo International Airport, South Africa’s
88 I METROPOLITAN AND DISTRICT MUNICIPALITIES I www.ggda.co.za
premier airport is situated in Kempton Park, and the OR Tambo International
Airport IDZ is also located within the borders of the metropolitan municipality.
The municipality is a focal point for manufacturing within the province, and the
manufacturing enterprises located in the municipal area account for 19.7
percent of Gauteng’s provincial GDP. Despite the level of economic activity
within the metropolitan area, unemployment remains high (the
unemployment rate in the municipality was 28.8 percent in 2011).
Sedibeng District Municipality
The administrative headquarters of the Sedibeng district municipality are
located in Vereeniging. The municipality covers the whole eastern side of
Gauteng and has a population of approximately 920 000 residents.
The economy in Sedibeng is dominated by the manufacturing sector. Major
companies such as Sasol and ArcelorMittal operate within the district, with
the result that the fabricated metal and chemical industries dominate
manufacturing activity in the area. The agriculture and tourism sectors, on
the other hand, present opportunities to further local development within the
municipality.
Three local municipalities (Emfuleni, Lesedi and Midvaal) fall under the
jurisdiction of the Sedibeng District Municipality. The Emfuleni local
municipality is renowned for iron and steel manufacturing which is based
primarily in Vanderbjlpark and Vereeniging. The local municipality has a total
population of approximately 720 000 and contains six large townships:
Evaton, Sebokeng, Sharpeville, Boipatong, Bophelong and Tshepiso.
The administration of the predominantly rural Lesedi local municipality is
headquartered in Heidelberg. The local municipality is home to
approximately 100 000 residents. Economic activity within the boundaries of
the municipality is dominated by the agricultural sector.
The Midvaal local municipality is home to around 90 000 residents and is
regarded as the fastest growing municipality in Gauteng. The municipality’s
economy is dominated by the tourism, recreation and manufacturing sectors.
The internationally renowned Oprah Winfrey School for Girls is located within
the borders of the municipality.
METROPOLITAN AND DISTRICT MUNICIPALITIES I www.ggda.co.za I 89
West Rand District Municipality
Randfontein is the administrative centre of the West Rand district
municipality. Approximately 820 000 individuals reside in the district, which
is home to the Cradle of Humankind (a UNESCO World Heritage Site). Mining
and agriculture constitute the main economic sectors in the district, with the
Western Deep Gold Mine near Carletonville currently the deepest mine in
the world. Lanseria International Airport is situated in the district, providing
an alternative entry point for visitors to Gauteng.
There are four local municipalities within the jurisdiction of the West Rand
district municipality (Merafong City, Mogale City, Randfontein and
Westonaria). Merafong City is the largest of the local municipalities in terms
of land area and is home to approximately 200 000 residents. The
municipality boasts rich gold deposits, especially in the Carletonville area,
and the dominant economic activity in the municipality is mining.
Mogale City has a population of around 360 000. While economic activity
within the municipality is comparatively diversified, manufacturing and agribusiness constitute the leading economic sectors.
The Randfontein local municipality is located adjacent to the North West
province, and represents a major entry point for immigration into Gauteng.
Perhaps as a result, the local municipality is renowned for having high levels
of unemployment and poverty, which could also be an opportunity for
businesses in terms of available manpower. The population of the
Randfontein local municipality is estimated at 150 000 people.
The Westonaria local municipality has a total population of 112 000.
Approximately 25 000 people are employed in Westonaria, with the majority
of those employed in the mining sector. As a means to boost economic
activity within the municipal area, the local municipality is looking at creating
new industries, research centres and tourism hotspots. At the same time, the
quality and availability of hospitality and accommodation, communication,
retail and wholesale storage infrastructure within the municipality are being
improved with a view to creating a more diversified economy.
90 I METROPOLITAN AND DISTRICT MUNICIPALITIES I www.ggda.co.za
GGDA Binder Divider 7-D1 6/22/13 9:24 PM Page 1
C
M
Y
CM
MY
CY CMY
K
Gauteng Lifestyle
7
Composite
7. GAUTENG LIFESTYLE
Gauteng is a Sesotho word meaning “place of gold.” The province’s Witwatersrand region — located on a ridge mostly formed from quartzite — is the
source of 40 percent of all gold ever mined from the Earth. In addition to the
immense mineral wealth within the province’s boundaries, Gauteng also
boasts a highly urbanised environment and a diverse population.
“The province is in many ways a one stop centre for anyone wishing
to see the best of South Africa, boasting a combination of interesting
and contrasting landscapes from a horn-buzzing city, to the tranquility
of the Magaliesburg Mountains and the bush experience of the
Dinokeng game reserve.” (Leonard Volschenk — General Manager, South African Breweries)
Communications
Gauteng is a major hub for the ICT sector in South Africa, and hosts the
majority of the country’s largest media companies. A number of
multinational technology companies — including Microsoft, IBM and Cisco —
have a presence in Gauteng, where they operate alongside South Africa’s
own technology firms. As the industrial and financial heartland of South
Africa, the Gauteng province attracts a multitude of foreign and domestic
ICT-related investment and business. This is backed by a number of multibillion rand support programmes directed towards ICT development by the
Gauteng provincial government.
Gauteng is also home to the SABC, the national broadcaster, and South
Africa’s most competitive newspaper market. South Africa’s largest and first
national newspaper, the Sunday Times, is produced in Gauteng, as are
several other national newspapers and weekly news publications.
Furthermore, the bulk of South Africa’s major publishing and printing
companies are based in Gauteng.
Africa’s biggest subscription satellite television service provider, MultiChoice,
and pay television channel provider, M-Net, are both based in Gauteng.
Numerous radio stations are housed within the province, attracting millions
of weekly listeners from many areas and language groups.
GAUTENG LIFESTYLE I www.ggda.co.za I 91
There are four major cellular network operators in the province: Vodacom,
MTN, Cell C and its partner Virgin Mobile, and Telkom. While significant
investment has been made to improve Internet connectivity in South Africa,
bandwidth is relatively limited and expensive by international standards.
Religion
There are about 12.2 million people living in Gauteng. This population is
marked by incredible diversity, both in terms of ethnicity and religious beliefs.
According to the 2001 census, 76 percent of residents in Gauteng are Christians, 18.4 percent are atheists, 2.6 percent have other or undetermined beliefs,
1.7 percent are Muslims, 0.5 percent are Jewish, and 0.8 percent are Hindus.
Education
There are several educational institutions located in Gauteng, with some
3,374 schools, colleges and universities spread across the province, including
several international schools. The number of institutions is set to grow, with
the Gauteng Department of Education, the DBSA and the Gauteng Funding
Agency (GFA) (an agency of the provincial Finance Department) aiming to
build 79 new schools and renovate a further 300 existing schools. Many of the
numerous education institutions and research units within the province are
highly rated both within South Africa and internationally. For instance,
Gauteng is home to three of South Africa’s five top-ranked business schools.
92 I GAUTENG LIFESTYLE I www.ggda.co.za
Performing arts
The arts and culture scene in Gauteng is a melting pot of talent, passion and
diversity. For many seeking the ultimate arts and culture experience,
Gauteng is the destination of choice, offering a diverse range of stand-up
comedy, musicals, ballet, opera, contemporary art and international and
local productions. Gauteng is home to the State Theatre in Pretoria, the Civic
Theatre in Johannesburg and the Theatre on the Square in Sandton, with
these theatres offering an array of classical music, theatre, opera, ballet,
drama and contemporary political pieces. In addition, there are also a
number of smaller theatres in the province, including the Market Theatre, the
Sound Stages and the Barnyard.
Museums and galleries
There are more than 60 museums and art galleries in Gauteng. The province
is home to a number of South Africa’s most significant historical heritage
museums and venues, including the Apartheid Museum, Museum Africa, the
Transvaal Museum and the National Cultural History Museum. Through
these museums, which cater to every interest from railroads to military
history, visitors to the province are able to learn and experience South African
history and the diversity of this Rainbow Nation. There is a uniquely diverse
range of artworks — from indigenous and classic, to contemporary artwork
— on view across the various art galleries in Gauteng.
GAUTENG LIFESTYLE I www.ggda.co.za I 93
Sporting facilities
The moderate climate in Gauteng, characterised by fair weather all year
round, is ideally suited for sporting and outdoor activities. The province is
home to world-class sports stadiums (including the FNB Stadium, The
Wanderers Club, Ellis Park and SuperSport Park) and exhibition venues, and
has successfully hosted large-scale international events such as the 2010
FIFA World Cup. Soccer, rugby and cricket are the most popular spectator
sports in South Africa, and many of the country’s most popular teams are
based in Gauteng, including South Africa’s two most widely supported soccer
teams — Orlando Pirates and Kaizer Chiefs. Horse racing and equestrian
sports are also popular in Gauteng, and the province is home to three famous
racecourses: Newmarket Turf Club, Turffontein Racecourse and the Vaal
Racecourse. There are a number of golf courses and country clubs in
Gauteng that feature facilities of a high standard. Finally, tourists, visitors
and residents in Gauteng can participate in an abundance of adventure sports
such as skydiving, paragliding and hang-gliding.
94 I GAUTENG LIFESTYLE I www.ggda.co.za
Housing
Gauteng’s property market is internationally competitive. Returns on
commercial property in the province currently outperform those in
international business centres such as New York and London; more
generally, property returns in Gauteng are favourable by many international
comparisons. There is a thriving residential property market in Gauteng,
backed by strong demand for housing in golf estates, cluster houses and
condominiums. As one property expert remarked: “Gauteng is leading the
market in high-end properties with long-term, stable returns on real estate”.
Construction activity in Gauteng remains robust. General building and civil
engineering are currently the largest construction sub-sectors in the
province, and shopping malls and modern buildings continue to be built in
every part of the province. These new buildings tend to be modern, well-built,
and constructed to exacting and internationally competitive standards.
The high level of construction activity has been accompanied by a concerted
effort to improve inner city districts in Gauteng. These efforts have been driven
by a partnership between lobby groups and the Affordable Housing Company,
the JDA, and the Johannesburg Social Housing Company. In addition, the
provincial government’s housing policy includes a strong focus on integrating
human settlements and improving property and housing allocations.
GAUTENG LIFESTYLE I www.ggda.co.za I 95
Health
There is an abundance of medical
facilities in Gauteng. The province
is home to 30 public and 40 private
hospitals providing world-class
healthcare services. The provincial
department benefits from a staff
complement that includes numerous highly-qualified medical professionals and practitioners,
dentists, and specialists. Pharmacies are also available in most
neighbour-hoods within Gauteng.
Crime and security
High levels of crime and concerns related to personal security remain
problematic and emotive in South Africa. Mindful of this, both the national
and provincial governments have prioritised efforts to reduce crime, and
public and private partnerships have been initiated to address crime in many
areas of the province, particularly in central business districts. Visitors and
residents are advised to be aware and take basic safety precautions by
ensuring all doors and windows are locked and secure, not walking alone in
dangerous and dark areas, being wary of sporting flashy jewellery or
cameras, and on the lookout for thieves and pickpockets.
96 I GAUTENG LIFESTYLE I www.ggda.co.za
Dining out
Gauteng is renowned for the quality and breadth of its restaurant and fine
dining options, which include Italian, Portuguese, Chinese, Japanese, Thai,
Indian, Cape Malay and authentic African cuisine. The diversity of the
provincial population has a positive influence on the range of food available
within Gauteng. Authentic South African cuisine is available at a number of
widely hailed restaurants throughout the province. Furthermore, a strong
Portuguese dining influence is evident in many restaurants in Gauteng, and
seafood dishes featuring prawns, calamari and codfish are widely available.
GAUTENG LIFESTYLE I www.ggda.co.za I 97
Things to see and places to visit
South Africa’s most vibrant and exciting province offers numerous sights and
places to visit. Details of the latest events and festivals in the province can be
found in the Gauteng Tourism Authority’s (GTA) monthly publication, Go
Gauteng. Gauteng offers the most diverse selection of arts and entertainment
in the country. From African street markets to café society, upmarket
shebeens and museums, it has it all. A number of vibrant craft markets,
which includes Bruma Market World, African Craft Market, Rosebank
Rooftop Flea Market and Michael Mount Organic Market showcase African
ingenuity through traditional art, curios, carving, colourful caftans, beadwork
and leather.
The Union Buildings, the seat of the national government, is also a popular
destination for locals and tourists alike. The province is home to the Cradle
of Humankind, a world heritage site comprised of thirteen caves that have
yielded anthropological treasures dating back millions of years. For lovers of
wildlife and the outdoors, the Krugersdorp Game Reserve, the Rhino and
Lion Nature Reserve and nature reserves in Randfontein and Roodepoort
provide opportunities to view the Big Five in their natural habitat. Tours of
the province’s famous gold and diamond mines are also available.
98 I GAUTENG LIFESTYLE I www.ggda.co.za
GGDA Binder Divider 8-D1 6/22/13 9:30 PM Page 1
C
M
Y
CM
MY
CY CMY
K
Statistics
8
Composite
8. STATISTICS
8.1 Global Statistics and Country Comparisons
Figure 1: Country Share of World Gold Production, 2011
SOURCE: www.goldsheetlinks.com
Figure 2: Global Inflation Rates, 2011
United States
United Kingdom
Spain
South Africa
Portugal
Japan
Italy
India
Germany
France
China
Brazil
Australia
Argentina
-2
0
2
4
6
8
10
12
Percentage
SOURCE: INTERNATIONAL MONETARY FUND, WORLD ECONOMIC OUTLOOK DATABASE, APRIL 2013
STATISTICS I www.ggda.co.za I 99
Table 12: Global Comparisons of GDP, 2011
Country
GDP
GDP per Capita
PPP1
Real GDP Growth
US$bn
(US$)
US$
%
Argentina
716.410
17516.15
2.57
8.87
Australia
914.48
40234.32
1.58
2.035
Brazil
2294.24
11769.41
1.81
2.733
Canada
1396.13
40541.09
1.23
2.46
China
11299.90
8382.014
4.17
9.237
Czech Republic
284.95
27062.24
13.37
1.655
France
2217.90
35156.45
0.90
1.715
Germany
3099.08
37896.95
0.83
3.056
Hong Kong
351.12
49137.47
5.39
4.972
India
4457.78
3693.529
19.13
7.241
Italy
1846.95
30464.43
0.86
0.431
Japan
4440.38
34739.66
105.49
-0.748
Korea
1554.15
31713.67
796.02
3.634
Kuwait
153.50
41690.64
0.32
8.198
Mexico
1661.6
14609.77
8.63
3.967
Mozambique
23.89
1084.90
15.61
7.145
Nigeria
413.40
2578.25
88.42
7.19
Norway
265.91
53470.70
10.19
1.688
Poland
771.66
20334.19
1.97
4.35
Portugal
248.98
23361.25
0.69
-1.466
Russia
2383.40
16736.05
22.81
4.3
Singapore
314.91
59711.24
1.04
4.889
South Africa
555.13
10973.01
5.33
3.148
Spain
1413.47
30625.75
0.76
0.71
Turkey
1073.56
14517.45
1.22
8.46
United Kingdom
2260.80
36089.60
0.67
0.655
United States
15094.03
48386.69
1.00
1.735
SOURCE: INTERNATIONAL MONETARY FUND, WORLD ECONOMIC OUTLOOK DATABASE, 2012
Note: Implied PPP conversion rate Purchasing Power Parity (PPP)- National currency per
current international dollar to adjust for the cost of living difference by replacing normal
exchange rates with rates designed to equalise the prices of standard ‘basket’ of goods
and services.
100 I STATISTICS I www.ggda.co.za
Figure 3: Human Development Index, 2005-2012
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2005
2007
2006
South Africa
2010
2009
2008
Sub-Saharan Africa
2012
2011
World
SOURCE: HUMAN DEVELOPMENT INDEX, UN, 2012
Figure 4: Foreign Exchange Rates, 2003-2012
16
14
Annual Average
12
10
8
6
4
2
0
2003
2004
2005
2006
2007
R/US$
2008
R/£
2009
2010
2011
2012
R/
SOURCE: INTERNATIONAL MONETARY FUND, WORLD ECONOMIC OUTLOOK DATABASE, APRIL 2013
STATISTICS I www.ggda.co.za I 101
Figure 5: Global Comparison of Gross Hourly Income, 2012
Warsaw
Toronto
Tokyo
Sydney
Stockholm
Shanghai
Sao Paulo
Rome
Paris
New York
Mumbai
Moscow
Mexico City
London
Ljubljana
Kuala Lumpur
Istanbul
Berlin
Barcelona
Johannesburg
$8
$25
$30
$31
$27
$7
$10
$18
$25
$33
$3
$10
$5
$26
$12
$7
$9
$26
$19
$14
$0
$5
$10
$15
$20
$25
$30
$35
US Dollars
SOURCE: UBS PRICES AND EARNINGS, 2012
Figure 6: Global Comparisons of Working Time Required to Buy a Big Mac, 2012
10
Hong Kong
Delhi
Sao Paulo
Warsaw
Toronto
Tokyo
Sydney
Shanghai
Rome
Paris
New York
Mumbai
Moscow
Mexico City
London
Ljubljana
Nairobi
Kuala Lumpur
Istanbul
Berlin
Barcelona
Johannesburg
65
29
36
11
9
12
29
23
16
10
56
18
48
16
25
84
26
42
16
19
0
10
20
26
30
40
50
Minutes Worked
60
70
80
90
SOURCE: UBS PRICES AND EARNINGS, 2012
102 I STATISTICS I www.ggda.co.za
Figure 7: Big Mac Index, 2013
Sweden
Poland
UK
Turkey
USA
Canada
India
South Africa
Brazil
Russia
China
$5.91
$2.58
$3.82
$3.54
$4.20
$4.63
$1.62
$2.45
$5.68
$2.55
$2.44
$0
$1
$2
$3
$4
US Dollars
$5
$6
$7
SOURCE: www.bigmacindex.org
Figure 8: Global Comparisons of a Short Stay in a Major City, 2012
Warsaw
Toronto
Tokyo
Sydney
Stockholm
Shanghai
Sao Paulo
Rome
Paris
New York
Mumbai
Moscow
Mexico City
London
Ljubljana
Kuala Lumpur
Istanbul
Dubai
Berlin
Barcelona
Johannesburg
$0
$650
$680
$1,190
$690
$810
$740
$770
$650
$1,100
$1,180
$400
$970
$440
$930
$550
$500
$720
$1,120
$720
$740
$200
$400
$490
$600
$800
US Dollars
$1,000
$1,200
$1,400
SOURCE: UBS PRICES AND EARNINGS 2012
STATISTICS I www.ggda.co.za I 103
Figure 9: Global Comparisons of Tax and Social Security Contributions*
*These are contributions to social security schemes that are required by law
Warsaw
Toronto
Tokyo
Sydney
Stockholm
Shanghai
Sao Paulo
Rome
Paris
New York
Mumbai
Moscow
Mexico City
London
Ljubljana
Kuala Lumpur
Istanbul
Berlin
Barcelona
Johannesburg
29
28
25
18
26
17
17
32
26
22
11
14
12
26
31
18
21
30
23
22
0
5
10
15
20
% of gross wages
25
30
35
SOURCE: UBS PRICES AND EARNINGS 2012
Figure 10: Global Comparison of Annual Office Rentals, 2012
Cape Town
Durban
Johannesburg
Barcelona
Berlin
Kuala Lumpur
Mexico City
Warsaw
Rome
Toronto
Stockholm
Istanbul
New York
Shanghai
Sydney
Paris
Mumbai
Sao Paulo
London
Moscow
New Delhi
Beijing
Tokyo
12.83
17.56
23.64
34.65
36.57
47.06
51.66
52.59
59.1
68
76.35
82.78
114.3
116.36
119.04
119.78
122.19
130.07
131.76
172.82
183.3
184.95
197.27
0
50
100
150
US$ per square feet
200
250
SOURCE: GLOBAL RESEARCH AND CONSULTING, 2012
104 I STATISTICS I www.ggda.co.za
Figure 11: Global Comparison of Telephone Costs
Average Cost of a Local 3-minute Telephone Call in US¢
South Africa
7
Spain
7
Germany
9
USA
9
Australia
11
Sweden
11
Italy
11
France
14
United Kingdom
17
0
5
10
US cents
15
20
SOURCE: NATIONMASTER, 2013
Figure 12: Global Comparison of Petrol Prices, 2012
Warsaw
Toronto
Tokyo
Sydney
Sao Paulo
Shanghai
Rome
Paris
New York
Nairobi
Mumbai
Moscow
Mexico City
London
Ljubljana
Kuala Lumpur
Johannesburg
Istanbul
Hong Kong
Delhi
Berlin
Barcelona
1.76
1.25
1.62
1.5
1.28
1.26
2.27
1.89
1.15
1.29
0.91
0.93
0.81
2.4
1.71
0.56
1.45
2.37
1.65
0.77
2.1
1.77
0
0.5
1
1.5
US$ per litre
2
2.5
3
SOURCE: PRICES & EARNINGS 2012, UBS
STATISTICS I www.ggda.co.za I 105
Figure 13: Global Comparison of Water Prices, 2012
Spain
1.42
South Africa
1.52
Italy
1.53
Canada
2.45
USA
3.1
UK
3.64
France
3.97
Netherlands
5.09
Germany
6.03
Australia
6.38
0
1
2
3
4
5
6
7
US dollars
SOURCE: GWI GLOBAL WATER TARIFF, 2012
Figure 14: Global Comparison of World Electricity Prices
Canada
Sweden
Finland
France
US
South Africa
Poland
Austria
Netherlands
Australia
Belgium
UK
Spain
Portugal
Germany
Italy
0
5
10
15
20
25
US¢/kWh
SOURCE: NUS CONSULTING GROUP, 2012
106 I STATISTICS I www.ggda.co.za
Table 13: Global Comparison of Food and Rental Prices, 2012
Global Food & Rent Prices, 2012 (US$)
City
Food prices1
Apartment Rentals2
Normal Local Rent3
Barcelona
394
1,270
980
Beijing
463
1,550
310
Berlin
389
2,400
840
Buenos Aires
310
1,360
400
Dubai
485
4,880
2,450
Geneva
714
4,700
1,570
Hong Kong
651
9,660
1,800
Istanbul
430
3,150
1,280
Johannesburg
311
2,160
740
Lisbon
311
1,310
1,100
London
436
4,830
1,980
Mexico City
260
1,400
740
Moscow
314
3,640
850
Mumbai
186
1,680
450
Nairobi
292
2,380
480
New York
552
7,240
3,350
Oslo
599
3,250
1,970
Paris
523
3,250
1,670
Prague
295
1,230
730
Rio de Janeiro
354
3,200
760
Rome
497
3,240
1,810
Seoul
629
3,440
2,180
Shanghai
404
1,420
710
Sao Paulo
397
2,810
850
Sydney
509
4,180
1,640
Tokyo
927
6,180
1,630
Toronto
453
2,560
1,090
Warsaw
291
1,620
710
SOURCE: UBS PRICES AND EARNINGS 2012
1) cost of a basket of goods containing 39 food items;
2) furnished 4-room apartment, medium price range;
3) average monthly gross rent prices.
STATISTICS I www.ggda.co.za I 107
Table 14: Global Comparison of Working Hours and Vacation, 2009
Working Hours and Vacation in 2009
City
Working hours per year
Vacation days per year
Mexico City
2,375
6
Beijing
1,979
9
Hong Kong
2,296
12
Buenos Aires
1,831
13
New York
2,062
13
Toronto
1,847
14
Seoul
2,308
14
Sydney
1,846
15
Johannesburg
1,887
15
Tokyo
2,012
17
Istanbul
2,140
19
Geneva
1,893
20
Mumbai
2,251
20
Prague
1,829
21
Lisbon
1,696
22
Rome
1,899
22
Nairobi
2,197
22
London
1,787
23
Warsaw
1,793
23
Oslo
1,749
25
Moscow
1,800
25
Dubai
2,096
25
Berlin
1,742
29
Barcelona
1,761
29
Paris
1,558
30
Rio de Janeiro
1,895
30
SOURCE: UBS PRICES AND EARNINGS 2012
Notes: Working hours per year refers to working hours of personal assistants to a
department head in an industrial or service company. Vacation days per year refers to paid
working days.
108 I STATISTICS I www.ggda.co.za
8.2 South African Statistics and Provincial Comparisons
Figure 15: South African Foreign Trade by Region, 2012
Total Imports: R831bil Total Exports: R717 bil
Other
1.75
8.41
13.55
Oceania
75.08
249.36
Asia
385.67
83.63
99.19
America
168.43
Europe
Africa
80.46
0
50
100
251.01
132.48
150
200
250
R Billion
Exports 2012
300
350
400
450
Imports 2012
SOURCE: SARS, 2013
Figure 16: Foreign Direct Investment in South Africa, 2001-2010
R 1,200
R 1,016
R 1,000
R 867
R 752
Billions
R 800
R 633
R 612
R 600
R 400
R 500
R 371
R 264
R 311
R 363
R 200
R0
2001
2002
2003
2004
2005
2006
Year
2007
2008
2009
2010
SOURCE: SOUTH AFRICAN RESERVE BANK, 2013
STATISTICS I www.ggda.co.za I 109
Figure 17: South Africa’s Top Trading Partners, 2011
R 90
R 103
China
R 43
R 77
Germany
R 61
R 57
US
R 56
R 34
Japan
UK
R 29
India
R 29
R 29
R 24
Korea R 16 R 16
Switzerland R10 R 23
Italy
R 20 R13
Netherlands R10 R 22
R0
R 50
R 100
R 150
R 200
R 250
R billions
Imports
Exports
SOURCE: SARS, 2013
Figure 18: GDP per Capita in South Africa, 2003-2012
R40,000
R35,000
Rands
R30,000
R25,000
R20,000
R15,000
R10,000
R5,000
R0
2003
2004
2005
2006
2007
2008
Year
2009
2010
2011
2012
SOURCE: SOUTH AFRICAN RESERVE BANK, 2013
110 I STATISTICS I www.ggda.co.za
Figure 19: Real GDP Growth Rate in South Africa, 2003-2012
7.0%
6.2%
6.0%
5.4%
5.3%
4.6%
5.0%
Percentage Growth
4.2%
4.0%
4.2%
3.7%
3.6%
3.0%
2.1%
2.0%
1.0%
0.0%
-0.2%
-1.0%
2003
2004
2005
2006
2007
2008
Year
2009
2010
2011
2012
SOURCE: SOUTH AFRICAN RESERVE BANK, 2013
% change
Figure 20: CPI and PPI Inflation in South Africa, 2003-2012
16
14
12
10
8
6
4
2
0
-2
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Year
CPI
PPI
SOURCE: STATISTICS SOUTH AFRICA, 2013
STATISTICS I www.ggda.co.za I 111
Figure 21: Inflation compared between Gauteng and South Africa, 2009-2013
8
7
Percentage
6
5
4
3
2
1
0
2009
2010
SA
2011
Year
Johannesburg
Gauteng
2012
2013
City of Tshwane
SOURCE: STATISTICS SOUTH AFRICA, 2013
Figure 22: Contribution to GDP by province in South Africa, 2011
Limpopo
6%
Mpumalanga
6%
Gauteng
35%
North West
6%
KwaZulu-Natal
16%
Free State
5%
2%
Northern Cape
8%
Eastern Cape
15%
Western Cape
0%
5%
10%
15%
20%
25%
30%
35%
40%
Percentage Contribution (GDP at constant prices)
SOURCE: STATISTICS SOUTH AFRICA, 2013
112 I STATISTICS I www.ggda.co.za
Figure 23: GDP per capita by province in South Africa, 2011
Western Cape
R 48,543
Northern Cape
R 33,131
North West
R 32,858
Mpumalanga
R 29,872
Limpopo
R 22,310
Kwazulu-Natal
R 30,489
R 54,785
Gauteng
R 34,228
Free State
R 22,736
Eastern Cape
R0
R 10,000
R 20,000
R 30,000
R 40,000
R 50,000
R 60,000
Rand
SOURCE: STATISTICS SOUTH AFRICA, 2013
Figure 24: Average annual household income by province in South Africa, 2011
Limpopo
Eastern Cape
North West
Free State
Mpumalanga
KwaZulu-Natal
Northern Cape
R 56,844
R 64,539
R 69,955
R 75,312
R 77,609
R 83,053
R 86,175
Western Cape
R 143,460
Gauteng
R 156,243
Average Annual Income (Rand)
SOURCE: STATISTICS SOUTH AFRICA, 2013
STATISTICS I www.ggda.co.za I 113
Figure 25: Unemployment by province in South Africa, 2012
Free State
33
Mpumalanga
30
Eastern Cape
29
Northern Cape
28
North West
25
Gauteng
25
24
Western Cape
Kwazulu-Natal
21
Limpopo
21
0
5
10
15
20
25
30
35
% of total official unemployment in SA
Total official unemployment: 4.5 Million (24.9%)
SOURCE: STATISTICS SOUTH AFRICA, 2013
Figure 26: Formal versus informal employment distribution
Informal
Employment
24%
Formal
Employment
76%
SOURCE: STATISTICS SOUTH AFRICA, 2013
114 I STATISTICS I www.ggda.co.za
Figure 27: Working days lost by strikes in South Africa, 2002-2011
Number of working days lost (millions)
25
20
15
10
5
0
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Year
SOURCE: STATISTICS SOUTH AFRICA, 2013
Figure 28: Employment in the mining sector by province in South Africa, 2012
115.2
North West
70.4
Limpopo
63.8
Mpumalanga
28.6
Gauteng
27
Free State
19.6
KwaZulu-Natal
16.4
Northern Cape
3.2
Western Cape
2
Eastern Cape
0
20
40
60
80
100
120
140
Thousands employed
SOURCE: STATISTICS SOUTH AFRICA, 2013
STATISTICS I www.ggda.co.za I 115
Figure 29: Employment by Economic Sector in South Africa, 2012
Community services
Financial services
Transport
Trade
Construction
Electricity
Manufacturing
Mining
Agriculture
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
Millions Employed
SOURCE: STATISTICS SOUTH AFRICA, 2013
Figure 30: Population by province in South Africa, 2013
12
Gauteng
10
KwaZulu-Natal
7
Eastern Cape
6
Western Cape
5
Limpopo
4
Mpumalanga
4
North West
3
Free State
1
Northern Cape
0
2
4
6
8
10
12
14
Millions
SA total population: 51 769 972
SOURCE: STATISTICS SOUTH AFRICA, 2013
116 I STATISTICS I www.ggda.co.za
Figure 31: Distribution of households by province in South Africa, 2011
27.1%
Gauteng
17.6%
KwaZulu-Natal
11.7%
Eastern Cape
11.3%
Western Cape
9.8%
Limpopo
7.4%
Mpumalanga
7.3%
North West
5.7%
Free State
2.1%
Northern Cape
0%
5%
10%
15%
20%
25%
30%
Percentage
SOURCE: STATISTICS SOUTH AFRICA, 2013
Figure 32: Number of residential houses completed by province in South Africa,
2003-2012
149
Western Cape
5
Northern Cape
34
North West
23
Mpumalanga
10
Limpopo
61
KwaZulu-Natal
160
Gauteng
26
Free State
42
Eastern Cape
0
20
40
60
80
100
120
140
160
180
Thousands
SOURCE: STATISTICS SOUTH AFRICA, 2013
STATISTICS I www.ggda.co.za I 117
Figure 33: Number of Matric students and pass rates in South Africa,
2003-2012
90
600,000
80
500,000
60
50
300,000
40
200,000
Percentage
Number of students
70
400,000
30
20
100,000
10
0
0
2003
2004
2005
2006
2007
2008
Number of students who wrote
2009
2010
2011
2012
% pass rate
SOURCE: STATISTICS SOUTH AFRICA, 2013
Figure 34: Adult literacy rate by province in South Africa, 2011
97
Gauteng
91.5
KwaZulu-Natal
89.6
Eastern Cape
97.4
Western Cape
86.2
Limpopo
87.7
Mpumalanga
85.7
North West
90.5
Free State
84.3
Northern Cape
0
20
40
60
80
100
120
% of persons 15 and above who can read and/or write in a least one language
SOURCE: STATISTICS SOUTH AFRICA, 2013
118 I STATISTICS I www.ggda.co.za
8.3 Gauteng Statistics
Figure 35: GDP by sector in Gauteng, 2011
Government services
105
Personal services
25
Finance
160
Transport
56
Trade
86
Construction
25
Electricity
12
Manufacturing
117
Mining
11
Agriculture
2
0
20
40
60
80
100
120
140
160
180
R billion at constant 2005 prices
Total GDP: R 600,2 billion
SOURCE: STATISTICS SOUTH AFRICA, 2013
Figure 36: Percentage economic growth rate for Gauteng compared to
South Africa, 2002-2011
GDP growth rate at current prices
7
6
5
4
3
2
1
0
-1
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
-2
Year
SA
Gauteng
SOURCE: STATISTICS SOUTH AFRICA, 2013
STATISTICS I www.ggda.co.za I 119
Figure 37: Percentage economic growth for Gauteng compared to Sub-Saharan
Africa, 2002-2011
GDP growth rate at current prices
7
6
5
4
3
2
1
0
-1
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
-2
SSA
Year
Gauteng
SOURCE: STATISTICS SOUTH AFRICA, 2013, WORLD BANK, 2013
Figure 38: Composition of sectors in Gauteng, 2011
Primary Industries
2%
Tertiary
Industries
72%
Secondary
Industries
26%
SOURCE: STATISTICS SOUTH AFRICA, 2013
120 I STATISTICS I www.ggda.co.za
Figure 39: Contribution to GDP by sector in Gauteng, 2011
Personal services
4.2%
Government services
17.6%
Finance
26.7%
Agriculture
0.4%
Mining
1.9%
Manufacturing
19.5%
Transport
9.3%
Electricity
2.0%
Trade
14.3%
Construction
4.1%
SOURCE: STATISTICS SOUTH AFRICA, 2013
Figure 40: Population by race in Gauteng, 2011
(Gauteng total: 12.3 million)
Whites
16%
Black African
78%
Coloureds
3%
Asians/Indians
3%
SOURCE: STATISTICS SOUTH AFRICA, 2013
STATISTICS I www.ggda.co.za I 121
Figure 41: Population by home language in Gauteng, 2011
Population in Gauteng 12.3 Million
19%
IsiZulu
13%
English
12%
Afrikaans
11%
Sesotho
10%
Sepedi
9%
Setswana
6%
IsiXhosa
6%
Xitsonga
3%
IsiNdebele
3%
Other
2%
Tshivenda
2%
Not applicable
1%
Siswati
0%
Sign language
0%
5%
10%
15%
20%
25%
SOURCE: STATISTICS SOUTH AFRICA, 2013
Figure 42: Population by age group in Gauteng, 2011
Total population in Gauteng: 12.3 million
3.5
3
2.30
2.5
Millions
3.06
2.91
2
1.48
1.68
1.5
1
0.65
0.5
0.09
0.10
75-79
80+
0
0-14
15-24
25-29
30-44
45-59
Age Group
60-74
SOURCE: STATISTICS SOUTH AFRICA, 2013
122 I STATISTICS I www.ggda.co.za
GGDA Binder Divider 9-D1 6/22/13 9:49 PM Page 1
C
M
Y
CM
MY
CY CMY
K
Key Contact Numbers
9
Composite
9. KEY CONTACT NUMBERS
Key Gauteng Contacts
Gauteng Growth and Development Agency
011 085 2400
Gauteng Office of the Premier
011 355 6000
Gauteng Provincial Government
Contact Centre
0860 GAUTENG (0860 428 8364)
Gauteng Department of Economic Development
011 355 8000
Gauteng Municipalities
Johannesburg Metropolitan Municipality
Ekurhuleni Metropolitan Municipality
Tshwane Metropolitan Municipality
Sedibeng
West Rand
Emfuleni
Lesedi
Midvaal
Mogale City
Randfontein
Westonaria
Merafong City
011 407 6111
011 999 0003
012 358 9999
016 450 3000
011 411 5000
016 950 5000
016 340 4300
016 360 7400
011 951 2000
011 411 0000
011 278 3000
018 788 9500
Gauteng Government Departments
Department of Education
Department of Roads and Transport
Department of Infrastructure Development
Department of Housing and Local Government
Department of Health
Department of Sports, Arts, Culture and Recreation
Department of Agriculture and Social Development
Department of Community Safety
Department of Finance
011 355 0000
011 355 7000
011 355 5000
0800 046 873
011 355 3000
011 355 2598
011 821 7700
011 689 3600
0860 428 8364
Emergencies
AA/Automobile Association
Ambulance
Emergency services
Emergency services from a mobile phone
0861 000 234
10177
10111/1022
112
National Agencies and Institutions
Development Bank of Southern Africa
SA Reserve Bank
Industrial Development Corporation
011 313 3911
011 240 0700
011 269 3000
KEY CONTACT NUMBERS I www.ggda.co.za I 123
SA Revenue Services
Registrar of Companies
Department of Trade & Industry
Department of International Relations and Cooperation
0800 00 7277
012 310 8789
012 394 9500
012 351 1000
Other Useful Numbers
OR Tambo International Airport
OR Tambo International Airport — Arrivals and Departures
Lanseria Airport
Computicket
Telephone Enquiries
American Express
Diners Club
MasterCard
Visa
National Tourism Information Centre (24 hours)
International numbers
011 921 6262
086 727 7888
011 659 2750
0861 915 8000
1023
011 294 4444
011 358 8406
0800 990 418
011 547 8300
083 123 2345
10903
Car Hire
Avis
Budget
Imperial
Hertz
Tempest
Sixt
Thrifty
First Car Hire
Capital
Europa Car
0861 021 111
011 398 0123
011 314 2353
011 390 9700
011 552 3700
011 390 2342
011 390 3454
0861 178 227
011 022 5340
011 479 4000
Conference venues & Hotels
Sandton Convention Centre
Park Hyatt
Sandton Sun & Towers International
The Westcliff
Gallagher Estate
Montecasino
Emperor’s Palace
Michelangelo
Hilton International
Airport Grand Hotel
Airport Sun Intercontinental
Sheraton, Pretoria
Gold Reef City Casino
011 779 0000
011 280 1234
011 780 5555
011 481 6000
011 266 3000
011 510 7995
011 928 1000
011 245 4000
011 322 1888
011 823 1843
011 961 5400
012 429 9999
011 248 5000
124 I KEY CONTACT NUMBERS I www.ggda.co.za
GGDA Binder Divider 10-D1 6/22/13 10:03 PM Page 1
C
M
Y
CM
MY
CY CMY
K
Maps
10
Composite
10. MAPS
The World Physical Map
MAPS I www.ggda.co.za I 125
Map of Africa
126 I MAPS I www.ggda.co.za
Map of South Africa
Map of Gauteng
MAPS I www.ggda.co.za I 127
SOURCES AND ACKNOWLEDGEMENTS
Automobile Association of South Africa
Bloomberg
Blue IQ Investment Holdings
Brand South Africa
Broll
Brookings Institute
City of Johannesburg
City of Tshwane
Companies and Intellectual Property Commission
Communicaid Group Ltd.
Constitution Hill
Deloitte
Department of Labour
Department of Trade and Industry
Department of Transport
Economy Watch
Edward Nathan Sonnebergs
Engineering News
European Central Bank
Eyewitness News
Finweek
Gauteng Companies
Gauteng Economic Development Agency
Gauteng Growth and Development Agency
Gauteng Province: Department of Health
Gauteng Province: Department of Economic Development
Gauteng Provincial Government
Gauteng Tourism Authority
Gautrain
Global Africa Network (Pty) Ltd.
Government Communication and Information Services
Government Gazette
Green Building Council of South Africa
GWI/ OECD Global Water Tariff Survey
Info Taxi
Intergate Immigration
International Trade Administration, U.S. Department of Commerce
Investec Specialist Bank
128 I www.ggda.co.za
IOL News
Just Landed
Mail and Guardian Business: Africa
Midvaal Local Municipality
Money Web
Municipal IQ
Nationmaster
Nedbank
New York Taxi and Limousine Commission
NUS Consulting Group
Politics Web
Property24
Randfontein Local Municipality
Rea Vaya
SA Cab
SAICA
Solidarity Research Institute
South African Breweries
South African Governement News Agency
South African Iron and Steel Institute
South Africa Migration International
South African National Road Agency Ltd
South African Revenue Services
Sowetan Live
Statistics South Africa
Trade Invest SA
Tshwane Bus Routes
United National Breweries
UBS
Westonaria Local Municipality
World Bank Group
World Business Culture
World Economic Outlook Database
© Gauteng Growth and Development Agency, June 2013
Produced by Mthente Research and Consulting Services (Pty) Ltd
Design & layout by Kult Creative
Photographs by Mthente Research and Consulting Services (Pty) Ltd
Additional photographs courtesy of the Gauteng Film Commission
www.ggda.co.za I 129
Contact us or visit our website for additional copies of the handbook or to
download the electronic version:
Gauteng Growth and Development Agency
Tel: +27 (0) 11 085 2400
Physical address: 124 Main Street, Marshalltown
Johannesburg, Gauteng
South Africa, 2000
Website: www.ggda.co.za
2013/2014
Disclaimer:
GGDA accepts no responsibility for any errors or omissions, or for any loss caused by reliance on information in this book.
130 I www.ggda.co.za
NOTES
www.ggda.co.za I 131
NOTES
132 I www.ggda.co.za
NOTES
www.ggda.co.za I 133
NOTES
134 I www.ggda.co.za
NOTES
www.ggda.co.za I 135
NOTES
136 I www.ggda.co.za