South Africa no longer ‘gateway’ into Africa

Long considered the gateway to Africa it seems as if South Africa has lost its status as the preferred destination for multinational companies looking to invest in the continent.

It is now becoming more common for companies to start elsewhere rather than South Africa when establishing presence in the continent. This is according to Debbie Goodman-Bhyat, CEO of research company Jack Hammer.

“Companies are now looking for country managers, executive leadership teams and sales offices based elsewhere on the continent in large part because they are starting to realise the value of having a physical presence. In part, this is due to a real and growing resistance by local businesses to doing business with counterparts who display limited commitment to future growth of the local economy. Local markets want to see you there, and they want to see you making a commitment to the country, not just piggy-backing off market opportunities,” she said.

This is however more of an indication of the pulling power of other African markets rather than the South African market becoming less attractive to investors.

“Although South Africa certainly has its challenges, this move away from the country as the gateway to Africa is not purely because of push factors, but rather the pull factors of other African countries,” Goodman-Bhyat explains.

“There is an ongoing influx of businesses from Lebanon, Israel the USA and so forth. While they still see South Africa as a solid market, they don’t necessarily view it as the only option when investing infrastructure and resources.”

Furthermore it has been found that multinational companies now prefer hiring locals into leadership positions when setting shop in African markets.

 “Companies are increasingly recognising the benefit of having a truly local presence, driven by leaders who know how to navigate the unique challenges there,” she says.

Also read: SA is no longer Africa’s top country for investment, replaced by Egypt