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South Africa as a Market

Trade relations between Denmark and South Africa are growing. Danish competencies match many of the South African needs. In 2012, the Danish government launched a Growth Market Strategy for the South African market targeting the large unexploited market potential for Danish companies and set an objective to increase export to South Africa by 50% in 2016. With exports in 2015 being 46% higher than in 2012, the objective is within reach.

Danish exports to South Africa have consistently increased more than EU-15 exports in the same period, with the latter only increasing by 9.3%. Taking these numbers into account, it can reasonably be argued that there is even further scope for export growth to South Africa, and the Trade Council is happy to assist any Danish company interested in the market.

The South African Market Potential

In spite of the current economic slowdown, South Africa remains one of the most attractive markets in Sub-Saharan Africa due to its limited security risks, well-regulated open market and developed business environment. Additionally, it offers superior logistics and abundant natural resources. South Africa has a diverse population of approx. 54 million and 11 official languages, with English being the most common business language.

Ranked by the World Bank as an “upper middle-income country”, South Africa is one of the largest economies in Africa and a member of the BRICS (Brazil, Russia, India, China and South Africa). Being ranked no. 49 in the World Economic Forum's Global Competitiveness Report for 2015/16 and no. 73 in the World Bank Ease of Doing Business 2016, South Africa remains one of the easiest African countries to do business in. Laws on competition policy, copyright, patents, trademarks and disputes conform to international norms and standards.

Due to the ease of doing business as well as the lowered risks of doing business compared to other Sub-Saharan African countries, South Africa is often called the gateway to Sub-Saharan Africa, as it is a natural starting point for many businesses wanting to enter the African continent.  

Trade between South Africa and Denmark

South Africa is the largest market in Africa for Danish exports with exports of goods to South Africa amounting to DKK 2.6bn in 2015. The Danish private sector is represented in South Africa both through some of the biggest Danish players as well as a range of small and medium sized companies. As evident in the table below, Danish exports to South Africa have increased steadily over the past few years, with the exception of 2014. The high export number for 2015 indicates an expectation in further export growth within the coming years.

Table 1: Export numbers 2012-2015

Indicators

2012

2013

2014

2015

Export to SA

(DKK Millions)

1,800

2,348

1,787

2,635

Change in %

10.6%

30.4%

-23,9%

47,4%

 (Source: Statistics Denmark)

The main categories of export goods are currently mechanical machinery, pharmaceutical products, electrical motors and generators, chemical products and machines for industrial use. Combined, these 5 product categories amount to about DKK1.5bn or roughly 58% of the total exports to South Africa in 2015. All trade between Denmark and South Africa is facilitated by a Free Trade Agreement established by the EU, covering 90% of goods.

Figure 1: Export numbers by category

 

 Export in million DKK

(Source: Statistics Denmark)

South Africa has experienced rapid change over the past decades and is today one of the most interesting emerging economies for Danish companies. The challenges and development trends evident in South Africa offer business opportunities for Danish firms in a number of sectors, where Denmark has know-how, innovative solutions and years of experience.

 

Feel free to contact us with any enquires in regards to entering the South African market.

Embassy of Denmark

iParioli Office Park, Block B2
1166 Park Street
Hatfield 0083
Pretoria 

Phone +27 (0) 12 430 9340

pryamb@um.dk