Africa’s richest province Gauteng is working hard to attract businesses

PUBLISHED: Tue, 13 Dec 2016 09:11:19 GMT

Gauteng is the economic and industrial hub of South Africa and the African continent. As in most places in the world, the province is not invulnerable to the opposing effects of the slowing global economy. It is however, counteracting this by making clear to investors it is open for business with initiatives such as the Gauteng Investment Centre (GIC), which brings key services to those wanting to start businesses in Africa’s richest province.

CNBC Africa’s Nozipho Mbanjwa recently sat down with a panel comprised of government and business to examine cost of doing business, incentives for doing business and the province’s commitment to cut red tape with different role players, who gave insight into what can be done to encourage business growth in Gauteng, and overall the country.

“South Africa’s geographic location and the billion potential customers that are in the continent are a great opportunity. The infrastructure that South Africa has gives it an advantage over some of the other countries even within the continent.

“I also see a vibrant economy, our workers [at Ford] are highly productive, we can meet the market better from here with our South African staff then in any other area,” says Jeff Nemeth, President and CEO of Ford Motor Company South Africa in response to what opportunities are currently available in the province today.

Nemeth adds that globally, there is still a lot of white water, giving examples of Brexit, The Referendum in Italy and the future of the United States following the recent election.

“There is a lot in the horizon that is unknown. What we do see in South Africa is a very stable economy, the growth isn’t spectacular but it is stable and the rand is stabilised,” he says.

The Executive Director for the South African Portugal Chamber of Commerce, Rui Marto added that legislation and policies, crime and corruption remain a big challenge in doing business.

However globally, there is a huge interest from Europeans wanting to do business in South Africa.

“For this to happen effectively, is a question of trying to work out a better climate. Business globally is about cutting the red tape and facilitating business as much as possible,” he says.

The government also plays a significant role in the growth of the economy. Spokesperson for the Gauteng Office of the Department of Cooperative Governance and Traditional Affairs (COGTA) and Human Settlements, Keith Khoza affirms that government is a big economic player, which spends R1 trillion ($73.6 billion) in excess every year in the economy.

“However what concerns us [government] the most is the cost of doing business and the time it takes to facilitate business. That is why in Gauteng, the issue of cutting red tape is so important. To facilitate quick turn-around… we attach value to time and the more we can reduce the cost of waiting, it [will] all work well for the economy,” explains Khoza.

The CEO of the Gauteng Growth and Development Agency Saki Zamxaka was also part of the panel and said that the agency has set up the Gauteng Investment Centre (GIC), which is meant to bring in key services to those wanting to start a business.

“The motor industry is one of the best examples of what South Africa – not just in Gauteng – has done. In supporting the motor industry, we have Ford doing the Ranger in South Africa and part of it was doing the collaboration with government and it now runs into billions of rands.

“We’ve done outside missions to the rest of the continent and the rest of the world where we took businesses that want to export certain commodities from South Africa. Financial services” are interested in investing in infrastructure on the continent, Zamxaka says.

Marto adds the work done by the GIC is fantastic, but unfortunately not enough is done outside the centre.

“I think the biggest issue is implementation. I think the person that sits on the other side of the counter, assisting the business, the message does not get to them.

“There is an indifference regarding investors coming in. There seems to be more focus on South Africa, and not enough importance given to their [investors] task and how it fits into the bigger picture, business stops coming in because of a permit,” he says.

The panel also discussed public–private partnerships as a way of doing business in Gauteng, with reluctance coming from private sector and the main issue being the bottom-line

“One of the biggest wins in the province is labour. One of the things South Africa can still tap into, given its location is logistics. We export 60-65% of what we make mostly to Europe and about 30% of raw material and parts come from countries that are far away. Government needs to help find a space between state-owned enterprises and private business, that recognize the needs of both,” explains Nemeth.

The hour long discussion also spanned over topics around basic business needs, how to unlock risk capital and the growing conversation around township economies.

Marto says township economies have their strengths. “We need to show investors where there is a market within the townships and beyond,” he says.

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