Gauteng Business 2016 edition

SPECIAL FEATURE
tablished corporate footprints, a
culture of innovation, easy access
to finance for business, a stable
macro- and micro-financial climate,
an advanced banking system
and functioning regulatory
frameworks, of which most either
reside in the province, or are governed
from there.
Opening more doors of opportunity
is the fact that Gauteng
is the leading economy in the
country and SADC region, and
a key player in Africa’s business
landscape, contributing 11% to
Africa’s economy.
Yet, no matter how one looks
at it, the facts underscore the
strategic significance of Gauteng,
the fourth biggest economy in
the continent, in strengthening
economic trade and partnerships
with African and BRIC countries.
In the BRICS context, Gauteng
is viewed as the ‘Gateway to
Africa’ – an attractive place for
investments on the continent
– for a number of reasons. The
province offers:
• Easy 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;
high-quality road, rail and
air networks.
• An investor-friendly environ
ment.
• A large pool of young, highly
skilled labourers, whose
skill sets match the needs
of modern manufacturing,
finance, and engineering
industries.
• A large pool of skilled labour for the manufacturing, trade and
transport sectors.
• Low land and commercial building costs.
• Believe it or not, Gauteng’s electricity is among the cheapest in
the world.
The recent global economic crisis, which started in the United States,
had a huge impact on the world economy. It especially impacted
the economic recovery expectations of developed countries. As the
countries with the most active economic growth in the world, BRICS
countries face a great challenge. They need to adjust their development
strategies when facing the new challenge in order to achieve
rapid and sustainable economic development.
Economy
Gauteng outflanks other provinces in a number of key economic
metrics. It 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 2015, Gauteng contributed 36% to national
GDP (up from 34.5% in 2011)—well above the second and third largest
contributions from KwaZulu-Natal (16%) and the Western Cape (17%)
respectively.
The contributions of the remaining six provinces to national GDP
were all below 10%. 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%, above the national average of 4%.
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.
All of the above contributes to the fact that Gauteng is South
Africa’s strongest economic performer, and a very favourable partner
to both contribute to the BRICS relationship, and benefit form it as well.
However, one cannot lose sight of the fact that the global financial crisis
had a major impact on the world economy and the economic recovery
prospects of the BRICS countries as well. Neither South Africa, nor the
Gauteng province was immune to this blow. Leading economists have
warned that BRICS, as a group of developing countries (with the most
active economic growth in the world), will have to adjust their development
strategies in order to achieve rapid and sustainable economic
development in this new climate.
In this regard, developing its economic hubs with the introduction
of five new business corridors was a brilliant strategy by the Gauteng
75 GAUTENG BUSINESS 2016