“SA the gateway to Africa”


I have often pondered whether South Africa is indeed the “gateway to Africa” we like to imagine we are.

My conclusion is that we are not. As they say “that ship has sailed”, if it ever was in port.

It appears I’m not the only one. Dr Jacqueline Chimhanzi, Africa Lead for Deloitte Consulting, writes: “Sometimes in life, a phrase is bandied around so much until it becomes ‘truth’. One such ‘truth’ is the commonly used phrase: ‘South Africa is the gateway to Africa’ and interchangeably: ‘South Africa is a springboard into the rest of the continent.’
“These phrases somewhat imply that foreign companies would set up in South Africa while surveying the landscape in the rest of the continent, before deciding which markets to enter from South Africa. On closer examination of the facts, this ‘truth’ does not hold water and quickly unravels. So what then are the facts, and secondly, what are the dangers associated with this ‘South Africa is the gateway to Africa’ mindset?
“Indeed, many companies have a strategy of investing into Africa, which sometimes … includes an investment in SA given the size and sophistication of the South African economy, and Massmart is a prime example of this. As part of an overall market entry strategy, investors of course also consider other large markets such as East Africa and West Africa to complete their portfolio of investment.
“However, the mistake that most South Africans make is to assume that these investors will choose SA as an entry point for all African investments. The reality is that significant investments are flowing directly into respective African economies, as these markets currently boast higher GDP growth rates than South Africa – off a low base, admittedly,” Chimhanzi says.
“A cursory look at UNCTAD statistics is revealing: Nigeria attracted US$11 billion in 2010 compared to South Africa’s US$1.6 billion. Indeed, this trend is set to continue into the foreseeable future. A recent forecast by the Economist of the 10 fastest growing economies in the world (2011-2015) features seven African countries: Nigeria, Ethiopia, Mozambique, Zambia, Tanzania, Congo and Ghana, with the latter growing at 11% conservatively and up to 14.2% depending on the source.”

She warns that there is “the risk of South African businesses becoming complacent about proactively and aggressively seizing the opportunities being presented by the rest of the continent, because there is a belief that as the ‘gateway’ they will be approached as a channel into the rest of the continent.” Food for thought indeed…