Johannesburg Business
| Business Profile Despite the continuing negative influences of the apartheid economic policies of the past, a high (but declining) crime rate, a low rand gold price and erratic oil prices, South Africa still has the strongest economy on the African continent. Indeed, the 40% appreciation of the rand against the US dollar over the past year attests to this. Gauteng Province, of which Johannesburg is the capital city, contributes over 40% of South Africa’s GDP (Gross Domestic Product), while covering only 7% of its surface area. A sophisticated ‘first-world’ economy is epitomised by the JSE (Johannesburg Stock Exchange – recently renamed Johannesburg Securities Exchange), which is the tenth richest in the world. A struggling third-world economy, however, coexists alongside, as exemplified by large squatter-settlements in the city. Unemployment in Johannesburg is 30% up from 27% three years ago. Some 116,827 families live in shack settlements, while some 108,000 families live in illegal backyard shacks. There are 4,500 homeless people in Johannesburg. Unemployment rates, at 36.4% in 2003, were still lower than the national average, which stood at 40%. Johannesburg is South Africa’s centre for all rail and road connections – it also has the main container terminal at Kaserne and the busiest international airport. Greater Johannesburg and its surrounding areas attract approximately 76% of foreigners visiting South Africa from the rest of Africa and 60% of those visit Johannesburg primarily to shop and look for entrepreneurial opportunities, over and above leisure pursuits. Johannesburg is the economic epicentre of the country and the government has recognised that in order to attract domestic and foreign investment, it must necessarily be a clean, functioning city. Much of downtown Johannesburg has been victim of capital flight to the (perceived) safer, less-congested and cleaner suburbs and satellite towns, such as Sandton and Midrand. Symptomatic of this growing inner-city decay is the fact that the JSE has recently followed the path of many major corporations, by migrating from the CBD (Central Business District) to Sandton, 10km (6 miles) north. Efforts are being made to attract investment back into the city centre and national rail provider Spoornet’s relocation here already indicates a degree of success. A programme labelled ‘iGoli 2002,’ which aims to once more make the CBD secure and attractive to tourist and businesspeople alike, has been instituted. Managers are being put on performance contracts, while workers are being transferred to new, private enterprises that will run the various municipal services along business lines. This is being vehemently opposed by unions, such as SAMWU (SA Municipal Workers Union), which has rejected the restructuring due to the large number of jobs that will be lost. Black Economic Empowerment and Affirmative Action are still contentious issues, both in the political and business arenas. Business is still largely dominated by white people, however, there are a number of black-controlled groups on the JSE and several JSE stockbroker firms are black-owned. Major black empowerment acquisitions include JCI and Johnnic (from Anglo American) and Zenex Oil (from the Zenex Trust). Many companies have well designed programmes of Affirmative Action, designed to correct the inequities of the past and accelerate the development of historically disadvantaged employees. However, others make ‘politically correct’ affirmative action appointments, which are very well paid but often protected from real decision-making. Through its GEAR (growth, employment and redistribution) policy, the South African government has shown its commitment to privatisation, free trade and the fostering of a favourable investment climate. The mining (Anglo American has its African head office in Johannesburg) and heavy industry (Iscor Vanderbijlpark, AECI) sectors are fast being eclipsed by financial services (Johannesburg Stock Exchange, First National, ABSA, Barclays, Western Union and Standard banks), telecommunications (Telkom, Vodacom, MTN), retailing (Pick’n’Pay/Wooltru Holdings) and technology (IBM, PQ Holdings, Dimension Data). The tourism sector’s contribution to the GDP of South Africa (presently around 11%) continues to be undermined by crime. During August 2003, figures show that a total of 160,470 foreign travellers visited South Africa by air alone (80% via Johannesburg International), down 3.5 % on the record 2002 figures. Probably the best way for one to become familiar with business practice and opportunity in Johannesburg is to contact the Johannesburg Chamber of Commerce and Industry (JCCI, founded in 1890). Their website (www.jcci.co.za) is reliable, authoritative and informative. Detailed information and statistics regarding Johannesburg’s and the rest of South Africa’s business and economic climate can be found online (website: www.econometrix.co.za), while the City of Johannesburg also publishes its procurement needs online (website: www.joburg.org.za). |