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