South African companies provide the biggest investment in Africa . According to a 2002 United Nations Conference on Trade and Development (Unctad) report, South Africa has surpassed the United States (US) and Britain as a source of foreign direct investment in Africa . Over the last decade, the continent has also become the fourth largest destination for South African exports.
A visit to any major city in sub-Saharan Africa north of the Limpopo reveals this economic dominance. Having been carried to your destination by a foreign airline operated by South African Airways (SAA), you have an option to pick a car from Imperial Car Hire at an ACSA-managed airport and drive to your reserved Protea or Southern Sun hotel.
If you prefer a self-catering apartment, you can stop at Shoprite and do your groceries. In the comfort of your accommodation, you can quench your thirst with a South African beer in a can produced at Bevcan’s Rosslyn plant and brewed in a SABMiller-acquired brewery. If you are still anxious about being away from home, you can relax and watch South African soapie, Isidingo, that Multichoice and SABC beam to 32 African countries.
While South African investments span sectors such as construction, mining, retail and tourism, it is the country’s parastatals that are aggressively moving into the rest of the continent. In this section of Numsa Bulletin , we carry a review of a Department of Public Enterprises’ handbook on activities of eight parastatals in Africa . As the review of the handbook states, beyond the eight utilities there is a range of other state-owned enterprises that are active in the continent.
Bodies such as the Council for Scientific and Industrial Research (CSIR), Industrial Development Corporation (IDC) and Development Bank of Southern Africa (DBSA) are involved in various projects in the continent.
Tailing South African industrial and commercial enterprises into the rest of the continent is the country’s financial sector. South African financial institutions underwrite the contracts that local companies are involved in. A recent report entitled A Survey of the SADC Region: South African Financial Institutions, Regional Policies and Issues of Access, shows how “the South African financial sector now dominates the SADC financial market”. (see table)
From the articles in the pages that follow, it is clear that there are different reasons why South African countries are moving into the rest of the continent.
With all these developments, it is therefore not surprising that most of Numsa’s regions have submitted resolutions that deal with South African companies’ operations in neighbouring countries and the rest of the continent. Regions are calling for closer monitoring of these companies in terms of their contribution to development in countries to which they move. There is also the concern about local companies gobbling up privatised companies in the rest of the continent. A report of a meeting of Eskom unions in Africa on page 65 raises such an issue as well as labour practices of South African companies in host countries.
Unfortunately, none of the resolutions submitted raise the question of instruments that could be used to control and monitor the great trek across the Limpopo river. It is for this reason that Numsa Bulletin has an article on page 64 on International Framework Agreements (IFAs).
In the article Hlokoza Motau argues that IFAs are weapons that we can use to deal with South Africa ‘s footloose capital. How effective IFAs can be in dealing with capital mobility that we are experiencing, is something that we need to debate.
In a context of weak trade unions and low levels of industrialisation, a union-to-union and workplace strategy can be very limited. But more importantly, the move by South African companies cannot be seen outside of the country’s domestic economic policies and regional integration strategies like New Economic Programme for Africa ‘s Development (Nepad). On a continental level, Nepad whets the appetite of South African companies. For them, Nepad equals business opportunities. The G:enesis report argues that SADC’s Finance and Investment Protocol will intensify liberalisation in the region.
Domestic policy measures such as the October 2002 decision to relax controls of investments into other African states by increasing the ceiling from R750-million to R2-billion are facilitating the movement of South African capital outside the country. South Africa is also positioning itself as the financial centre of Africa . In this regard the South African government has taken the following steps:
the announcement in this year’s budget speech of the opening of South Africa ‘s capital markets to foreign and African issuers
the tabling in this session of parliament of the Security Services Bill that aims to introduce greater competition in capital market services and trading fees, thus making South Africa the country with the lowest trading costs.
Avoiding the dangers of narrow nationalism and protectionism that argue that South African companies should remain at home, South Africa ‘s labour movement requires a strategy that puts different and people-centred regional and continental integration strategies into place. This demands clarity on the nature of Nepad and the role of South African capital within the programme. IFAs and investments codes can only complement this broad strategy.
Country
No. of Banks1994
No of SA Banks1994
No of SABanks2003
No of SA Banks2003
SA Assetsas %of totalassets1994
SAAssetsas %of totalassets2003
SAdeposits as a %of totaldeposits 1994
SAdeposits as a % of total deposits 2003
Namibia
6
2
8
2
82%
72%
81%
72%
Botswana
9
2
7
2
9%
22%
7%
30%
Swaziland
5
1
4
3
18%
72%
14%
54%
Lesotho
4
2
2
0%
87%
88%
Mozambique
3
12
2
0%
30%
0%
29%
Zimbabwe
12
1
11
1
9%
3%
9%
4%
Angola
3
1
4
–
–
0%
0%
Malawi
5
9
2
0%
17%
0%
16%
Mauritius
9
12
2
0%
40%
0%
26%
Zambia
19
1
17
1
7%
12%
5%
12%
DRC
10
1
8
1
9%
7%
8%
7%
Tanzania
7
25
2
0%
21%
0%
23%
Seychelles
3
4
%
0%
0%
0%
Source : G:enesis (June 2004) A Survey of the SADC Region: South African Financial Institutions, Regional Policies and Issues of Access.