The Experience of South African Firms Doing Business in Africa

This 2004 report by the South African Institute of International Affairs (SAIIA) examines the experiences of South African firms expanding into other African markets. It identifies systemic structural challenges—such as political risk, corruption, and poor infrastructure—while highlighting the growth of South African investment in sectors like banking, telecommunications, retail, and mining. The document provides specific case studies on Uganda, Morocco, Mozambique, and Ghana to illustrate the diverse operating environments across the continent.

• South African companies have diversified their investments across Africa, moving beyond traditional sectors like construction and mining into skills training, education, IT, telecommunications, healthcare, franchising, advertising, property development, and waste management.
• The report identifies several overarching structural problems facing business in Africa, including low levels of development, political and fiscal risk, a weak private sector, high dependency on donors, poor infrastructure (specifically air and road links), corruption at all levels of government, and currency fluctuations.
• South African banks possess a competitive advantage in African markets due to their technological capabilities and capital strength, as well as an existing client base of South African firms operating in those countries. Banking in Africa can offer a return on equity above 30%, significantly higher than the 20–23% average in South Africa.
• The mobile telephony sector has seen rapid growth, with South African operators MTN and Vodacom achieving market shares that exceeded expectations. By the end of 2000, 17 African countries had more mobile than fixed-line subscribers.
• South African retailers have influenced local markets by increasing the quality of goods and pushing down prices, though they face challenges such as a lack of suitable real estate, high rentals, and long supply chains. Some retailers, like Shoprite, have entered the property development business because of a lack of interested local developers.
• Mining in Africa is characterized by high risk and high reward, with political instability and the potential for nationalization acting as major deterrents. Companies often rely on expensive risk insurance from providers like MIGA to mitigate these threats.
• In Uganda, South Africa is among the top 10 investors. While the economy has grown at approximately 6% per annum over 10 years, businesses face significant corruption; a 2000 World Bank report found over 80% of Ugandan businesses reported paying bribes during a typical business year.
• Trade between South Africa and Morocco grew significantly between 2001 and 2002, with exports increasing by more than 43% and imports by 250%. However, business is hindered by language barriers (French and Arabic), cultural differences, and a lack of direct air links.
• Mozambique has become a primary destination for South African investment, driven by 'mega projects' such as the $1.3 billion Mozal aluminium smelter and the $1.1 billion Sasol gas pipeline. These projects have contributed to double-digit economic growth in the country for five years.
• Ghana is viewed as a stable entry point for West African markets due to its peace and similar legal norms to Southern Africa. However, South African firms have faced challenges including a volatile currency and the impact of a large second-hand clothing market, which led Pepkor to withdraw from the country.
• The report concludes that the private sector is the essential engine for growth under the Nepad initiative. It recommends strengthening public-private partnerships, improving the rule of law, reducing aid dependency, and investing in human capital to create a sustainable business environment.

APA

Games, D. (2004). The Experience of South African Firms Doing Business in Africa. South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2013/06/biap_rep_01_games_report_2004_en.pdf

Chicago

Games, Dianna. The Experience of South African Firms Doing Business in Africa. South African Institute of International Affairs, 2004. https://saiia.org.za/wp-content/uploads/2013/06/biap_rep_01_games_report_2004_en.pdf.

Wikipedia

{{cite report |last1=Games |first1=Dianna |title=The Experience of South African Firms Doing Business in Africa |publisher=South African Institute of International Affairs |date=2004 |url=https://saiia.org.za/wp-content/uploads/2013/06/biap_rep_01_games_report_2004_en.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{games2004experience, author = {Games, Dianna}, title = {{The Experience of South African Firms Doing Business in Africa}}, institution = {South African Institute of International Affairs}, year = {2004}, url = {https://saiia.org.za/wp-content/uploads/2013/06/biap_rep_01_games_report_2004_en.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }