east3route Economic Report 2015 by Marc Russell Abbott

ECONOMIC REPORT 2015

east3ROUTE ECONOMIC REPORT 2015

OUR JOURNEY TOGETHER

Table of Contents List of Acronyms

1. Foreword by the MEC

2. BACKGROUND AND HISTORY OF THE east3ROUTE INITIATIVE

3. INTRODUCTION 4.

AN OVERVIEW OF THE east3ROUTE ECONOMIES: SOUTH AFRICA, MOZAMBIQUE, SEYCHELLES, SWAZILAND AND KWAZULU-NATAL

4.1.

QUICK STATISTICAL OVERVIEW

4.2. ECONOMIC OVERVIEW

4.3.

4.2.1. South Africa

4.2.2. Mozambique

4.2.3. Swaziland

4.2.4. Seychelles

4.2.5. KwaZulu-Natal

east3ROUTE TRADE IN SERVICES

4.4. OTHER COMPARABLE ECONOMIC INDICATORS

4.4.1. GDP GROWTH AND PROJECTIONS

4.4.2. GDP Sectoral Contribution

4.4.3. Unemployment and Poverty 40

5. TRADE AND INVESTMENT ANALYSIS OF THE east3ROUTE ECONOMIES

5.1. FOREIGN DIRECT INVESTMENT

5.2. INTRA-REGIONAL TRADE FLOWS

5.2.1. Exports

5.2.2. Imports

5.2.3. Top Trading Partners

6. TRADE AND OTHER BILATERAL AGREEMENTS AMONGST THE east3ROUTE ECONOMIES

6.1. TRADE AGREEMENTS

6.2. OTHER BILATERAL AGREEMENTS

6.2.1. Mozambique

6.2.2. Swaziland

6.2.3. Seychelles

east3ROUTE ECONOMIC REPORT 2015

7. THE BUSINESS ENVIRONMENT IN THE east3ROUTE ECONOMIES

7.1. DOING BUSINESS IN THE east3ROUTE REGION

7.2. GLOBAL COMPETITIVENESS OF THE east3ROUTE ECONOMIES

8. RECENT FDI ANNOUNCEMENTS IN THE east3ROUTE ECONOMIES 8.1.

KwaZulu-Natal

84 84

8.2. Mozambique

8.3. Swaziland

8.4. Seychelles

9. EMERGING OPPORTUNITIES 9.1.

KEY SECTORS AND PRODUCTS

9.1.1. Key KZN Exports

9.1.2. Key Mozambican Exports

9.1.3. Key Swaziland Exports

9.2. BUSINESSES, INVESTORS AND INVESTMENT OPPORTUNITIES 9.2.1. KwaZulu-Natal

97 99

9.2.2. Mozambique

100

9.2.3. Seychelles

100

9.2.4. Swaziland

100

10. CONCLUSIONS AND RECOMMENDATIONS

102

11.

105

List of references

OUR JOURNEY TOGETHER

List of Acronyms AGOA

African Growth and Opportunity Act

IPA

Investment Promotion Agencies

BBSDP

Black Business Supplier Development Programme

IRPC

Corporate Income Tax

BOP

Balance of Payment

JSE

Johannesburg Stock Exchange

BPO/O

Business Process Outsourcing/Offshoring

KZN

KwaZulu-Natal

CGT

Capital Gains Tax

KZNGF

KwaZulu-Natal Growth Fund

CIPC

Companies and Intellectual Property Commission

LDA

Limited Liability Company (Mozambique)

CIS

Co-Operative Incentive Scheme

MIGA

Multilateral Investment Guarantee Agency

CIT

Corporate Income Tax

Metica (Mozambique)

Centro de Promoção de Investimentos

MZM

Mozambican Metica

OPIC

Overseas Private Investment Corporation

PBO

Public Benefit Organisations

CPI

(Mozambique Investment Promotion Centre)

CPI

Consumer Price Index

CTO

Collection Terminal Order (Swaziland)

DBSA

Development Bank of Southern Africa

DFI

Development Finance Institutions Nacional de Energia Electrica (Ministry of Energy,

Rand (South Africa)

SACU

Southern African Customs Union

SAD 500

Customs Export Declaration (Mozambique)

DNEE

Mozambique)

SADC

Southern African Development Community

Dividend Tax

SARL

Joint Limited Liability Company

DTA

Differed Tax Assets

SEC

Swaziland Electricity Company

Dti

Department of Trade and Industry (South Africa)

SIPA

Swaziland Investment Promotion Agency

Lilangeni

SISA

Transfer Tax (Mozambique)

EIP

Enterprise Investment Programme

SSAS

Sector Specific Assistance Scheme

FDI

Foreign Direct Investment

STC

Secondary Tax on Companies

FNB

First National Bank (South Africa)

SZL

Swaziland Lilangeni

GDP

Gross Domestic Product

TIKZN

Trade and Investment KwaZulu-Natal

International Centre fo Settlement of Investment

USD

United States Dollar

ICSID

Disputes

WHT

Withholding Tax

IDC

Industrial Development Corporation

ZAR

South African Rand

east3ROUTE ECONOMIC REPORT 2015

ssa

fro

he M

OUR JOURNEY TOGETHER

In partnership with

1. east3ROUTE, Foreword by the MEC for Economic Affairs and Tourism, the honourable Michael Mabuyakhulu In its fifth successive year, the tripartite economic and tourism development initiative known as the east3ROUTE that was established by the founding governments has proven to be a great success. This initiative has yielded strong regional bonds, to unlock cross border investment opportunities and synergies. The first east3ROUTE was inaugurated on 26 September 2011, by the governments of South Africa (KwaZulu-Natal), Swaziland and Mozambique with Seychelles joining the bloc in 2013. It gives us, the governments responsible for this initiative a great pleasure to announce, that in this fifth edition we witness Seychelles hosting the east3ROUTE Investment Seminar. The east3ROUTE initiative is important for addressing the following objectives: •

Showcase and opportunities;

promote

investment

and

trade

•

Promote and accelerate cross-border activity in each of the partner countries;

•

Provide a platform for engagement on tourism and the need to see its increase amongst the member countries;

•

Create a dialogue between economic role players in the public and private sector on investment opportunities and the climate of doing business from each country thus enabling debate on the key issues facing development in the cross-border regions; and

•

Realise new trade and investments which will leave a legacy of reducing unemployment through the creation of sustainable jobs.

economic

In order to understand the opportunities available to us, we need to have access to contemporary research and data, profiling and analyzing linkages that can be leveraged to yield tangible outcomes. This publication is aimed to provide such data, which can be leveraged to yield sustainable results for potential investors and exporters who are looking to do business in the bloc. Such research is aimed to provide a blueprint for the investment community outlining in detail, the trade and investment regulatory environment, incentives, existing bilateral agreements, barriers to entry and details on the respective regulatory environments. Given our close economic bonds it is imperative we strengthen trade and investment within the east3ROUTE community. Harnessing synergies and leveraging each other’s strategic strengths and experiences makes us more efficient and competitive within the global context. We are fortunate though that each of the east3ROUTE member nations are uniquely positioned to offer the regional and international investor community attractive investment possibilities. Sub-Saharan Africa’s GDP grew by 4.7% in 2013 which was led by robust domestic demand, and is set to continue to rise. Despite emerging challenges, the medium-term outlook remains positive. Supported by investment in the resource sector, public infrastructure, and agriculture, GDP growth is projected to remain stable at 4.7%in 2014 and to rise to 5.1 % in 2015 and 2016. The outlook is sensitive to downside risks from lower commodity prices, tightening global financial conditions, and political instability.

Mr Silva Dunduro Mozambique Minister of Culture and Tourism

Mr Gideon CM Dlamini Minister for Commerce, Industry and Trade Swaziland

Mr Alain St. Ange Seychelles Minister for Tourism and Culture

The Mozambique economy remains driven by megaprojects, predominantly funded by foreign capital, focused on aluminium, extractive industries, and the energy sector. The extractive sector was the fastest growing in 2013 at 22%, driven mainly by coal exports. The construction, services, and transport and communications sectors have mainly been driven by the increase in public expenditure. The financial sector follows behind the extractive industry as the most dynamic sector. The agriculture sector, which employs 70% of the population, remained at a lower growth of 4.6% in 2013. The tourism sector continues to grow at an alarming rate. The Seychelles economy is predominantly dependant on the services economic sectors (83.1%), followed by industry (14.0%) and agriculture (2.9%). The main economic driver for Seychelles is the tourism industry (mainly supporting the wholesale and retail trade sector and the transport and communication sector). One of the main reasons for the increased international arrivals, was the extensive marketing that the government embarked in non-traditional markets leading to a growth spurt in tourists from Eastern Europe, Asia, Arab states and Africa. The Seychelles government plans to expand the ICT sector in the short to medium term. Seychelles is one of the most successful African stories with a burgeon tourism sector. We congratulate Seychelles’ economic progress, which saw it graduated to the status of ‘High-Income’ country recognised through the World Bank’s classification. Swaziland’s economy is mainly dependant on primary and resources sector which are responsible for approximately 70% of employment. The country also has a strong textile and apparel as well as a food and beverage sectors. The main exportable commodities are soft drink concentrates, sugar, wood pulp, cotton yarn, refrigerators, citrus and canned fruit. Swaziland imports motor vehicles, machinery, transport equipment, foodstuffs, petroleum products and chemicals. While in other parts of the world where investment promotion is focused on inward investment, South African companies focus on outward investments on the African continent. KwaZulu-Natal is a major role player in both manufacturing, transport and logistics sectors in South Africa with world class infrastructure that supports export led companies. The province enjoys strategic competitive advantage of being a global gateway for trade into Southern Africa and the world. Its’ strategic location and highly developed industrial sector ensures a competitive advantage for investors and exporters. Key subsectors include aluminium, mineral processing, motor vehicle manufacturing, pulp and paper products, chemical and petro-chemicals and food and beverages. For the 2015 edition of the east3ROUTE Investment Seminar, we have gathered once again, an ensemble of high powered speakers, experts in doing business in Africa and helping the region unlock investment opportunities. One seminar. Four countries. A wealth of possibilities! Thank you ............................. Mr Michael Mabuyakhulu (MPP) MEC for Economic Development, Tourism and Environmental Affairs

02 ND

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6 east3ROUTE ECONOMIC REPORT 2015

OUR JOURNEY TOGETHER

2. BACKGROUND AND HISTORY OF THE east3ROUTE INITIATIVE On the 26th September 2011 the east3ROUTE (e3R) was launched. This initiative began as a tripartite economic and tourism development initiative featuring KwaZulu-Natal (South Africa), Mozambique and Swaziland. A major part of this initiative is a tourism excursion (by road) which involves the three countries. The route was conceptualised taking into account the needs of each region and the opportunities for product development that would have a positive impact and leave a lasting legacy for the communities through which the expedition passed. The east3ROUTE initiative falls within the Lubombo Spatial Development initiative which was collectively conceived by the governments of South Africa, Mozambique and Swaziland in 1998; this initiative’s goal was mainly to promote ecotourism development capitalising on the region’s exciting topographic landmarks with a common cultural and historical heritage. In February 2013, the Republic of Seychelles was accepted as the fourth partner in the tripartite alliance. This ground-breaking initiative directly translated to the promotion of public-private partnerships for economic growth and vibrancy in the tourism investment sector and contributed to the overall economic and tourism industry development in this north-eastern region of SADC. The e3R Initiative therefore symbolises the beginning of a much more strategically targeted approach to economic and tourism development in the tripartite alliance countries and in the SADC region as a whole. The KwaZulu-Natal MEC for Economic Development, Tourism and Environmental Affairs, Mr Michael Mabuyakhulu; Mozambique Minister for Tourism, Mr Silva Dunduro; Swaziland Minister for Tourism & Environmental Affairs, Mr Jabulani Mabuza and Seychelles Minister for Tourism and Culture, Mr Alain St. Ange will be leading the fourth edition of the 2015 east3ROUTE Expedition. After the first two expeditions, it was agreed that the business engagement platform should be strengthened. This was achieved through a one-day investment seminar which took place in Mbabane, Swaziland in October 2013 with a focus on the following: •

An investment seminar

•

An exhibition

•

A community project platform.

The Investment Seminar has, over the years, become the highlight for an e3R Expedition with the quality of industry players it has been able to attract and the level of engagement and investment opportunity profiling that has been tabled. The investment component of the east3ROUTE initiative was integral to the whole expedition. In 2012, the east3ROUTE investment seminar was held for the first time as a stand-alone subevent in Mozambique. The seminar has thus been rotating annually amongst the four countries and is held as a one-day event allowing each host country an investment and trade showcase opportunity. The east3ROUTE Investment Seminar staged as a standalone event in the city of Victoria in the Mahé Island, Seychelles on the 31st July 2015, is a dedicated investment and trade promotion platform. The theme for the 2015 Investment Seminar is “Exploring Economic Growth through Cross Border Trade”. The Investment Seminar will provide a platform for discussion and debate, thus showcasing investment project opportunities in each of the four partner regions. The primary objective has been to create dialogue between economic role players in the public and private sectors on investment opportunities and the climate of doing business across borders.

east3ROUTE ECONOMIC REPORT 2015

The Investment Seminar provides a platform for discussion and debate, thus showcasing opportunities in each of the four partner regions. The focus of the seminar will be to create dialogue between economic role players in the public and private sectors on investment opportunities and the climate related to doing business across borders. The objectives of the investment seminar and exhibition are to: •

Showcase investment and trade opportunities in each of the four partner regions

•

Promote and accelerate cross-border economic activity in each of the four partner regions

•

Provide a platform for engagement on tourism and related economic activities in this region

•

Create a dialogue between economic role players from each country, in the public and private sector, on investment opportunities and the climate of doing business thus enabling debate on the key issues facing development in the cross-border regions

This year the programme will be improved to include national government participation and extend speaker invitations to Pan African prominent business people. Separate to the investment seminar, the expedition will feature at least 50 4x4/SUV vehicles with approximately 200 guests on board with representation from trade, media and other stakeholders. Due to geographic constraints, Seychelles would not be included at this stage. This epic safari will allow for the inspection of potential tourism attractions, products and investment opportunities within these three countries.

Int

ducti

OUR JOURNEY TOGETHER

east3ROUTE ECONOMIC REPORT 2015

3. INTRODUCTION Hundreds of economic indicators are published every day. As such, it is impossible to claim the full ability to measure the economic pulse accurately or report the most up-to-date reflection of the economic activity. This section attempts to give a picture of the economic makeup of the four plus one (4+1)1 economies of the East3Route group as accurately as possible. The East3Route Economic Report uses data from a range of sources, which include the World Bank (WB), the World Trade Organisation (WTO), the Central Intelligence Agency (CIA), Trading Economics, World Economic Forum, and the International Monetary Forum (IMF). It is the aim of this report to put the 4+1 E3Route economies in front of the same mirror that the rest of the world views them, so that they are able to address some of the challenges that confront them as a pragmatically as possible. The data employed herein are mainly cross-sectional; they are for a year or two (very occasionally more than four yearsâ&#x20AC;&#x2122; trend) across a wide range of indicators. While such data do not usually offer comprehensive trends or patterns in the different indictors, we believe the number of indicators captured is broad enough to give a sufficient picture of the E3Route economies at one given point in time. Moreover, some indictors have different reference periods, making it even more difficult to make a direct comparison across the economies. However, we believe they are still very useful and relevant. The report is structured such that the list of acronyms used in the document is profiled first. A forward by the Member of the KwaZulu-Natal Provincial Economic Council (MEC) for Economic Development, Tourism and Environmental Affairs is captured in Chapter 1. Chapter 2 gives the background and history of the east3Route initiative, and the current Chapter introduces this document. Chapter 4 gives an economic overview of the east3Route countries, while Chapter 5 profiles trade and investment trends in the economies. Chapter 6 gives a profile of trade and other bilateral and/or multilateral agreements that have been signed between and/ or among these economies. Chapter 7 gives a snapshot of the business environment on the east3Route economies, and Chapter 8 tracks some of the recent international investments into the region. Chapter 9 gives a summary of identified business opportunities in the region, and Chapter 10 concludes on lessons learned from the analysis in the document, and makes proposals for further development of the region. We capture sources of information used herein in Chapter 11.

1 South Africa is discussed as a national economy, and KwaZulu-Natal is also analysed although it is a province, by virtue of it being the initiating province of the east3Route concept.

04 AN O VERV IE W OF TH MO E ea ZA MB IQU st3RO E, S U EYC TE EC Kwa O H Zulu ELLES NOM I -natal, SWA ES: SO ZIL UT HA AN DA FRI CA ND ,

OUR JOURNEY TOGETHER

east3ROUTE ECONOMIC REPORT 2015

4. AN OVERVIEW OF THE east3ROUTE ECONOMIES: SOUTH AFRICA, MOZAMBIQUE, SEYCHELLES, SWAZILAND AND KWAZULU-NATAL 4.1. QUICK STATISTICAL OVERVIEW South Africa Official Name

Head of State

KwaZulu-Natal

Swaziland

Republic of South

Province of

Kingdom of

Africa

KwaZulu-Natal

Mozambique Republic of

Seychelles Republic of

Swaziland

Mozambique

Seychelles

President Jacob

His King Mswati III

President Filipe Nyusi

President

Zuma

Prime Minister

Prime Minister Carlos

James Alix

Sibusiso Dlamini

Argostinho do

Michel

Rosario Premier Mr Senzo

Provincial Premier

Minister for Economic Development

Mchunu Dr Rob Davies (Trade

MEC Micheal

Minister

Minister Adriano

Minister

& Industry)

Mabuyakhulu

Gideon Dlamini

Maleane

Benstrong

Minister Derek

MEC Micheal

Minister Jabulani

Minster Silva

Minister St

Hanekom

Mabuyakhulu

Mabuza

Dunduro

Ange

Cape Town

Pietermaritzburg

Mbabane

Maputo

Victoria

Mr Ebrahim Patel (Economic Development)

Minister of Tourism

(Legislative) Pretoria Capital Cities

(Administrative) Bloemfontein (Judicial)

Area (km2)

1 220 813

94 361

17 364

799 380

455

Population (mn)

54.0

10.7

1.1

24.4

0.09

Nationality

South African(s)

Swazi(s)

Mozambican(s)

Seychellois

Employment (‘000)

15 320

2 520

Unemp rate (%)

24.3

20.8

28.5

17a

3.6

Total GDP ($bn) *

$351.0

$58.6

$3.8

$15.3

$1.3

GDP growth (%) **

1.5

2.1

8.3%

3.8%

GDP per capita*

$6 504

$5 476

$3 454

$613

$14 111

Total GDP ($bn, PPP)

$683.1

$8.7

$29.8

$2.3

GDP per capita (PPP)

$12 650

$7 909

$1 221

$25 556

Inflation (%)

5.3

5.7

3.1

2.3

Exports Value ($mn)

$99 893.7

$9 533.5

$2 111.5

$4 725.3

$610.6

Imports Value ($mn)

$90 612.1

$15 394.5

$1 712.7

$8 743.1

$799.3

China, USA, Japan,

USA, China, Japan,

South Africa,

France, UK,

Germany, Saudi

UK, Netherlands,

Italy, Namibia,

Bahrain, China,

Japan, Italy,

Arabia, Botswana,

Germany, Saudi

Mozambique,

Spain, Netherlands,

Spain, India

Nigeria

Arabia, India

USA, China, India

Singapore, Indian

Exchange rate (US$1)

10.84

10.6

31.2

12.44

Time zone

UTC+02:00

UTC+04:00

Main Trading Partners

Sources: various; * nominal in US$ at official exchange rate; *real y-o-y; nominal at official exchange rate; statistics are for different years, but mostly 2013 and 2014; a2007

OUR JOURNEY TOGETHER

South Africa • • • • •

Republic Constitutional, multiparty democracy. Free and fair elections, since 1994. Emerging but stable political landscape. In terms of good governance, from 2013 statistics: • SA ranks 72 out of 177 countries (Transparency International’s Corruption Perceptions Index).

Mozambique • • • • • •

Republic. Mixed legal system with influences from customary law, Portuguese civil law and Islamic law. Relatively stable political environment. Multiple peaceful elections (since 1992 peace treaty). Constitution and electoral laws under development and review to ensure political inclusiveness and transparency. In terms of good governance, from 2013 statistics: • Mozambique ranks 119 out of 177 countries (Transparency International’s Corruption Perceptions Index).

Seychelles • • • • • •

Republic Multiparty political system Emerging but stable political environment Multiple peacful elections since 1992 Mixed legal system of English common law, French civil law, and customary law In terms of good governance, from 2013 statistics: • Seychelles ranks 47 out of 177 countries (Transparency International’s Corruption Perceptions Index).

Swaziland • • •

•

Absolute monarchy Focus on executive authority, the king as head of state. Dual system of governance based on: • Western models of governance, and • Traditional governance systems. Decentralised government with three tiers: • National/central government • Local government • Regional structures (‘tinkhundla’) In terms of good governance, from 2013 statistics: • Swaziland ranks 82 out of 177 countries (Transparency International’s Corruption Perceptions Index).

east3ROUTE ECONOMIC REPORT 2015

4.2. ECONOMIC OVERVIEW 4.2.1. South Africa

South Africa is the second largest economy in Africa. The country is rich in natural resources and is a leading producer of platinum, chromium, gold (5th) and iron (7th). From 2002 to 2008, the South African economy grew at an average of 4.5 percent year-on-year, its fastest expansion since the establishment of democracy in 1994. However, in recent years, successive governments have not been successful in addressing structural problems such as the widening gap in wealth distribution, low-skilled labour force, high unemployment rate, deteriorating infrastructure, high corruption and crime rates. As a result, since the recession in 2008, South African economic growth has been sluggish and below the African average. The economy has been growing at rates around 2% pa, narrowly escaping another recession in the third quarter of 2014, mainly owing to hampered economic activity in the mining sector, which filtered to other down-stream economic activities such as manufacturing. GDP growth rates have been 1.5% (2014), 1.9% (2013), and 2.5% (2012), rendering its growth the 167th fastest in the world (or 55th slowest). With per capita GDP of US$12,650 in 2014 – in PPP terms – South Africa is the 115th most affluent country on the planet, or 107th poorest, the country is classified as middle-income, emerging market with an abundant supply of natural resources; well-developed financial, legal, communications, energy, and transport sectors, and a stock exchange that is Africa’s largest, among the top 20 in the world, and the best regulated. Even though the country’s modern infrastructure supports a relatively efficient distribution of goods to major urban centres throughout the region, unstable electricity supplies retard growth. Unemployment, poverty, and inequality - among the highest in the world - remain a challenge. Official unemployment is sticky around 25% of the work force, and runs significantly higher among black youth. South Africa’s economic policy has focused on controlling inflation, however, the country faces structural constraints that also limit economic growth, such as skills shortages, declining global competitiveness and frequent work stoppages. With the GDP size estimated at US$351.0 billion in 2014 (official exchange rate), the country is the second largest on the continent. Using PPP, the US$683.1 billion economic activities in South Africa still rendered it the largest country in Africa in 2014, and 31st in the world. South Africa’s gross national saving 2 was 13.6% of GDP (2014 est.) (13.5% of GDP (2013 est.); 14.2% of GDP (2012 est.), making the country the 124th saver in the world. The GDP composition (by end use) was 61.9% made up of household consumption, 22.8% government consumption, 21.7% fixed capital investment, -0.3% investment in inventories and -6.1% net exports of goods and services (exports: 34% and imports: -40.1%) (2014 est.). GDP structure, by sector of origin was made up 2.4% in agriculture, 28.5% in industry and 69.1% services (2014 est.). South Africa’s agriculture products are mainly corn, wheat, sugarcane, fruits, vegetables, beef, poultry, mutton, wool, dairy products, and industrial products (which comprise mining, that sets South Africa apart as the world’s largest producer of platinum and chromium) include automobile assembly, metalworking, machinery, textiles, iron and steel, chemicals, fertilizer, foodstuffs, commercial ship repair. South Africa’s industrial production is under serious threat, mainly from competitiveness in the east, continuing restructuring of the mining sector, and the constrained electricity supply. In 2014, industrial production growth rate is around 0.1%, with the construction sector mainly pulling in the positive. This is one of the main reasons that the country is has embarked on industrial revitalisation, with turnaround strategies such as the Industrial Policy Action Plan (IPAP) and the automotive production development plan (APDP) working to aggressively improve the industry. 2

Gross national saving is derived by deducting final consumption expenditure (household plus government) from Gross national disposable income, and consists of personal saving, plus business saving (the sum of the capital consumption allowance and retained business profits), plus government saving (the excess of tax revenues over expenditures), but excludes foreign saving (the excess of imports of goods and services over exports). The figures are presented as a percent of GDP. A negative number indicates that the economy as a whole is spending more income than it produces, thus drawing down national wealth (dissaving).

OUR JOURNEY TOGETHER

South Africa’s population is estimated at around 54 million people (2014 mid-year), and of these, the labour force is approximately 20.23 million (Q4:2014), making it the 31st largest labour force in the world. With the employment structured 5% agriculture, 24% industry and 72% services, South Africa has become a tertiary economy with challenges of a primary economy, such as the highest unemployment rate of all the four east3Route countries. An estimated 26.2% of the South African population is said to be below the poverty line3. With income or consumption distributed such that the lowest 10% of the households are entitled to only 1.1%, and the highest 10% earn 53.8%, South Africa is regarded one of the most unequal societies in the world, recording a Gini index of 65.0 in 2011 up from 63.1 in 2009. However, the country has made some significant strides in reducing extreme levels of poverty, and an estimated 9.4% of the population lived on $1 per day in 2011, from 13.7% two years earlier. With government revenue estimated at $93.0 billion in 2013 – or 25.5% of GDP – South Africa’s revenue collection is 115th in the world. The country’s fiscal deficit is around –4% of GDP, and the public debt is around 46% of GDP. Inflation rate in South Africa subsided to 6% in 2014, and 4% in March 2015. As a result, the South African Reserve Bank has restrained the lending rate to 5.75% from January 2014; the resulting commercial prime lending rate is a minimum of 9.25%. Due to subdued growth in China and other major developing countries the trade deficit widened to -$9.3 billion in 2014 from -$8.2 billion in 2013, while the current account balance improved to -$18.3 billion or -5.4% of GDP from -5.8% in 2013. This is probably due to the delayed interest rate hike in the United States, as international investors continued to use the developing economies as a safe haven for their investments, since the country’s trade balance itself deteriorated in that year. Table 4.2.1: South Africa’s imports and exports by leading trade partners, 2014 (US$ millions) SA's imports, 2014 Source country Total imports

SA's exports, 2014

Value

99 892.7

Destination country Total exports

Value

90 612.1

China

15 449.4

15.5

China

8 680.0

9.6

Germany

10 003.2

10.0

United States

6 420.0

7.1

Saudi Arabia

7 129.4

7.1

Japan

4 869.3

5.4

United States

6 595.5

6.6

Botswana

4 775.0

5.3 5.0

Nigeria

5 135.8

5.1

Namibia

4 529.2

India

4 551.5

4.6

Germany

4 236.2

4.7

Japan

3 777.4

3.8

India

3 769.8

4.2

United Kingdom

3 271.7

3.3

United Kingdom

3 458.9

3.8

Italy

2 642.9

2.6

Mozambique

3 001.6

3.3

Thailand

2 376.3

2.4

Netherlands

2 995.9

61.0

Share of top 10 to total

3.3 51.6

Source: ITC - TradeMap (2015)

The country’s main exports commodities include gold, diamonds, platinum, other metals and minerals, machinery and equipment; and imports comprise mainly machinery and equipment, chemicals, petroleum products, scientific instruments, and foodstuffs. The country’s external debt was estimated at $145 billion at the end of 2014 (or 41% of GDP), a slight uptick from $142.2 billion in 2013. The stock of foreign direct investment (FDI) in South Africa was some $140 billion at the end of 2014, from $171.6 billion in 2013. At this level, the country was the 31st most invested in economy in the world, and number one in Africa.

$2 per day (PPP) % of population

east3ROUTE ECONOMIC REPORT 2015

South African companies are also very active in investing in other countries, particularly other states on the continent. At the end of 2014, the stock of South Africa’s direct investment abroad was estimated at $122.9 billion, from $97.1 billion in 2013, making the country one of the most important cross-border investors in the world. The exchange rate of the rand against the US dollar was 10.84 in 2014, and this is the lowest level in many decades. The currency has broken its long-term low, and has been trading below R12.00 per dollar since the first quarter of 2015.

4.2.2. Mozambique

At independence in 1975, Mozambique was one of the world’s poorest countries. Socialist mismanagement and a brutal civil war from 1977-92 exacerbated the situation. In 1987, the government embarked on a series of macroeconomic reforms designed to stabilize the economy. These steps, combined with donor assistance and with political stability since the multi-party elections in 1994, propelled the country’s GDP from $4 billion in 1993, following the war, to about $30.9 billion in 2014 (PPP terms), catapulting the economy to the 10th fastest growing economy on the planet. Mozambique is experiencing a period of political and economic transition, with a newly elected president and the expected launch of natural gas projects that promise to alter the country’s economic and social landscape dramatically. The October 2014 legislative and presidential elections provided the ruling party Frelimo with a renewed mandate and President Nyusi took over the reins of power from the outgoing president Armando Guebusa in January 2015. Within this context of change, the government recently approved a longterm National Strategy for Development (ENDE) for the 2015-35 period. The ENDE places particular emphasis on industrialization and the key priority areas of agriculture, fisheries, industrial diversification, infrastructure, the extractive industries and tourism. The Mozambican economy’s strong momentum continued in 2014 with a real GDP growth of 7.6%, compared to 7.4% in 2013. This growth rate was 0.4% below initial projections mostly due to lower-than-expected coal production, and the military tensions in the country’s central region that negatively impacted economic activity. FDI, one of the main drivers of growth, suffered a 28% reduction from the record levels of 2013, reaching nonetheless USD 4.2 billion (22% of GDP). Public expenditure, another major driver of economic growth, increased from 31.6% of GDP in 2012 to a record 41.4% in 2014, with capital expenditure programmed at 14.5% of GDP. The main sectors benefiting are construction, services to enterprises, transport and communications, and the extractive industries, all highly correlated with mega-projects and infrastructure development The resulting increased income per capita, coupled with strong credit expansion (25% year-on-year in 2014) has fuelled financial sector growth, particularly in urban areas. Despite its progressive decline in importance, official development aid flows still represent 9.5% of GDP at around USD 1.7 billion, and are a substantial driver of development in the education and health sectors, as well as general infrastructure. The Mozambican economy grew at an average annual rate of 6%-8% in the decade up to 2014, one of Africa’s strongest performances. The country’s ability to attract large investment projects in natural resources is expected to extend high growth rates in coming years. Revenues from these vast resources, including natural gas, coal, titanium and hydroelectric capacity, could overtake donor assistance within a short space of time. With GDP of $15.32 billion in 2014 (in official exchange rate), Mozambique is one of the smallest economies on the continent, but has managed to propel itself to unprecedented rates. The economy has been growing steadily, recording $14.38 billion in 2013, and $12.55 billion in 2012.

OUR JOURNEY TOGETHER

Mozambique’s growth rate was another ground-breaking 8.3% in 2014, from 7.1% in 2013, and 7.2% 2012 (see Figure 4.2.1 below). At this rate, the country was the world’s 10th fastest growing economy in 2014. These rates may be from a low base, but with sustainability, unwavering fiscal reforms, and good governance, the country is set to reach new heights, like many others on the continent. Africa’s time is now, and there is no room for mediocrity and complacency. However, the country’s high economic growth rates have largely been driven by capital-intensive projects, particularly in extractive industries such as mining, and there is a need to diversify economic structure speedily in order to avoid being trapped in a resource curse and become just another African story. Fiscal reforms, including the introduction of a value-added tax and reform of the customs service, have improved the government’s revenue collection abilities. In spite of these gains, more than half of the population remains below the poverty line. Subsistence agriculture continues to employ the vast majority of the country’s work force (80% of total employment). Although aluminium production from the Mozal smelter has significantly boosted export earnings in recent years, a substantial trade imbalance persists. In 2012, The Mozambican government took over Portugal’s last remaining share in the Cahora Bassa Hydroelectricity Company (HCB), a significant contributor to the Southern African Power Pool. The government has plans to expand the Cahora Bassa Dam and build additional dams to increase its electricity exports and fulfill the needs of its growing domestic industries.

Figure 4.2.1: Mozambique’s real GDP growth rates vis-à-vis other E3Route economies, 2010—2016 9.0

7.1

7.4

7.1

7.4

7.0 6.0

8.1

7.9

8.0

5.9

6.5 6.0

6.6

5.0 4.0 3.0

3.2

3.0 2.0

3.5 2.8

2.2

1.9

2.2

1.9

0.0

2010

2011

2012

2.9 1.7 1.5

1.0 2013

2014

2.0

2.1

1.9

1.8

2015**

2016**

-0.6

-1.0 Mozambique

Source: IMF (April 2015); ** projected growth rates

Seychelles

3.8

South Africa

Swaziland

east3ROUTE ECONOMIC REPORT 2015

The country’s per capita GDP (PPP) is around $1,200, making it one of the lower income countries 4 . With the gross national saving rate of around 9% of the GDP, Mozambique is a typical African country and seems to depend much on foreign investment for their economic progress. Domestic savings rates have to be increased if the country were to escape a resource curse, which has plagued a number of other developing economies in the past. GDP composition, by end use is made up of 74.2% household consumption, 17.9% government consumption, 50.3% investment in fixed capital, 0% investment in inventories, and -45.5% net exports of goods and services (exports 31.8% and imports -74.3% of GDP). By sector of origin, the country’s GDP composition is 28.9% agriculture, 24% industry and 47.1% services (2014 est.). While the country runs a large trade deficit, the industrial production growth rate is an impressive 9% (2014 est.), making it the 17th fastest in the world.

Figure 4.2.2: Value of Mozambique’s imports of goods (US$m), 2010—2014 12 000 10 099 10 000

8 743

8 000 6 306

6 177

2011

2012

6 000

4 000

3 564

2 000

2010

2013

2014

Source: ITC - TradeMap (2015)

Tertiary activities contribute 55.8% to GDP, the secondary sector 14.9%, and the primary sector represents 34.1%. The agriculture sector, which employs 80% of the population and contributes more than a quarter of GDP, continues its relative underperformance, recording 4.6% growth in 2014. The sector is marked by low productivity, and is in need of technology transfer and investment. In addition rural areas are the most vulnerable to drought, floods and cyclones. Products of the agricultural sector are mainly cotton, cashew nuts, sugarcane, tea, cassava (manioc, tapioca), corn, coconuts, sisal, citrus and tropical fruits, potatoes, sunflowers; beef, and poultry, while industrial products are primarily aluminium, petroleum products, chemicals (fertilizer, soap, paints), textiles, cement, glass, asbestos, tobacco, food, and beverages.

4 The World Bank classifies countries according to the following income groups: Low Income: Y≤$1 045; Middle income: $1 046<Y≤$12 745 {within which lower middle income: $1 046<Y≤$4125, and higher middle income: $ 4 126<Y≤12 745}; High Income: Y>$12 745

OUR JOURNEY TOGETHER

With a populating size of around 25 million people (51st largest), 12.25 million of these were in the labour force in 2014, making it the 44th largest in the world. This shows that the country has a relatively young population, and is ripe for more economic growth going forward. However, the economy is largely urban in nature and accounts for only 32% of all employment. As a result, many of the new entrants into the labour market – 300 000 every year – are forced into marginal jobs in the informal economy, both in rural and urban areas, with little prospect of reliable employment. This has resulted in unemployment rates of around a fifth of these job hopefuls. Efforts need to be made to unlock potential even on the peripheral areas of the economy; this will help deal with the high rates of unemployment and imminent rural-urban migration as job seekers will tend to follow perceptible opportunities. Government revenues in 2014 amounted to some $5.3 billion (or 32.1% of GDP), and expenditures amounted to an estimated $7.0 billion (or 42.0% of GDP), resulting in a fiscal deficit of -9.9% of GDP (2014 est.). The public debt of was 47.2% of GDP (from 41.1% in 2013). The inflation rate (measured in consumer prices) is quite manageable, at 3.1% in March of 2015, (from 3% in 2014 and 4.2% in 2013), and the Central Bank discount rate was 7.5% in the same month. At 15.3% in December 2014, the country’s commercial bank prime lending rate was lower than in 35 other countries of the world. The current account balance of -$6.3 billion (or -38.1% of GDP) in 2014 was a slight improvement from -$5.9 billion (or -38.5%) in 2013. Mozambique’s main export commodities include aluminium, prawns, cashews, cotton, sugar, citrus, timber; bulk electricity, while imports comprise machinery and equipment, vehicles, fuel, chemicals, metal products, foodstuffs, textiles. The country’s trade partners are as shown in Table 4.2.2 below. Singapore ($109.9bn in 2014 vs $630.2b in 2013), Kuwait ($16.7bn vs $313.0bn), and the UK (118.4bn vs $245.5bn) are some of the countries that were relegated from the top 10 league in 2014. Table 4.2.2: Mozambique’s imports and exports by leading trade partners, 2014 (US$ millions) Mozambique's imports, 2014 Source country

Value

Total imports

8 743.1

South Africa

2 891.9

Mozambique's exports, 2014 %

Destination country

Value

Total exports

4 725.3

33.1

Netherlands

1 111.4

% 23.5

Bahrain

810.2

9.3

South Africa

948.2

20.1

China

700.0

8.0

Singapore

474.7

10.0

Netherlands

599.3

6.9

India

387.6

8.2

United Arab Emirates

478.6

5.5

United Kingdom

209.9

4.4

Portugal

456.0

5.2

China

204.2

4.3

India

328.1

3.8

United Arab Emirates

Japan

274.5

3.1

Zimbabwe

119.1

2.5

106.5

2.3

USA

158.6

1.8

Switzerland

87.9

1.9

Thailand

140.6

1.6

Italy

77.9

1.6

Share of top 10 to total

78.2

Share of top 10 to total

78.9

Source: ITC - TradeMap (2015)

Mozambique’s reserves of foreign exchange and gold were estimated at $3.3 billion in 2014, from $3.1 billion in 2013 (20.1% of GDP and 20.5%), while the external debt swelled to an estimated $7.5 billion (45.3% of GDP) in 2014, from $6.4 billion (41.9% of GDP) in 2013. The exchange rate of the Mozambican Meticais (MZM) to one US dollar (US$) weakened slightly to 31.2 in 2014 from 30.125 in 2013. Recent historical rates were 28.38, 29.08 and 33.96 in 2012, 2011 and 2010 respectively.

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4.2.3. Swaziland Surrounded by the Republic of South Africa, except for a short border with Mozambique, the Kingdom of Swaziland depends heavily on South Africa from which it receives almost 90% of its imports and to which it sends nearly 60% of its exports. Swaziland’s currency is pegged to the South African rand, effectively attaching Swaziland’s monetary policy to South Africa. The government is heavily dependent on customs duties from the Southern African Customs Union (SACU), and worker remittances from South Africa supplement domestically earned income. Swaziland’s GDP per capita makes it a lower middle income country but its income distribution is highly skewed, with an estimated 20% of the population controlling 80% of the nation’s wealth. Subsistence agriculture employs approximately 70% of the population. The manufacturing sector has diversified since the mid-1980s. Sugar and wood pulp were major foreign exchange earners; however, the wood pulp producer closed in January 2010, and sugar is now the main export earner. Mining has declined in importance in recent years with only coal and quarry stone mines remaining active. With an estimated 29% unemployment rate, the need for Swaziland to increase the number and size of small and medium enterprises and attract foreign direct investment is acute. Overgrazing, soil depletion, drought, and floods persist as problems for the future. In January 2015, Swaziland lost its eligibility for benefits under the African Growth and Opportunity Act (AGOA), threatening the remaining 12,000 jobs in the textile and apparel sector; approximately 2,000 jobs were lost in 2014 in anticipation of the impending loss of AGOA benefits. However, the country has recently signed an agreement to receive €885,390 grant funding from the Common Market for the Eastern and Southern Africa (COMESA), which it will use to develop a strategy for trade in services, upgrade the International Trade Department’s website, develop sector specific standards and capacity building for SMMEs to enable them to comply with international standards. The funding is also aimed to increase Swaziland’s exports to COMESA and beyond, which will make up for the lost AGOA opportunity. The country’s GDP was $3.8 billion (official exchange rates) in 2014, recording the growth rate of 2.1% (from 2.8% in 2013 and 1.9% in 2012). With the GDP estimate of $8.7 billion (PPP terms) in 2014, the country ranks 161st out of 222 countries tracked by the CIA. This grew from $8.5 billion in 2013 and $8.3 billion in 2012. The per capita GDP (PPP) was $3 455, scoring the country a position among the middle-income economies. Swaziland’s gross national saving is estimated at 13.4% of GDP in 2014, the 127th highest in 2014. In 2013 it was 15.7% of GDP, and 11.8% in 2012. The country’s GDP composition (by end use) was 80.5% household consumption, 25.3% government consumption; 13.5 % fixed capital investment, -0.1% investment in inventories, and -19.2% net exports of goods and services (exports: 51% and imports: -70.2%) (2014 est.). Due mainly to its small population size, the economy is impressively open to international trade, but will need to work on the trade deficit in order to address domestic unemployment issues. GDP composition, by sector of origin was 7.2% agriculture, 47.4% industry, and 45.4% services in 2014. Swaziland’s agricultural products are mainly sugarcane, cotton, corn, tobacco, rice, citrus, pineapples, sorghum, peanuts; cattle, goats, sheep, while industrial output is made up of coal, wood pulp, sugar, soft drink concentrates, textiles and apparel. The country’s industrial production growth rate is 2.1% (2014 est.), and is ranked 124th in the world. Swaziland’s Labour force is about 435,500 people (2012 est.), out of a total population of 1.0 million. 29% of the labour force is unemployed, and 70% of the employed are absorbed in agriculture; however there are no formal statistics on employment in the two main sectors of the economy. In 2009, 59.1% of the population was estimated to be living below the poverty line. The lowest 10% of the population/households earn 1.7% of the national income, while the highest 10% bring home 40.1% (2010 est.). The Gini coefficient (on a scale of 0-100) was estimated at 50.4 in 2009.

OUR JOURNEY TOGETHER

Public revenue was $1.35 billion in 2014 (35.1% of GDP), while expenditures amounted to some $1.41 billion (or 36.6%), rendering the fiscal deficit of -1.5% of GDP. The country’s rate of inflation was 5.7% in 2014, from 5.6% in 2013, while the Central bank discount rate was 6.5% in December 2010. The Commercial bank prime lending rate was 8.8% at the end of 2014, from 8.5% in 2013. Stock of domestic credit was estimated at $657 million at the end of 2014, from $643.9 million the previous year, and the Current account balance was a significantly narrower $47.5 million in 2014 (1.2% of GDP) from $140.8 million in 2013 (3.7% of GDP). At this rate still, Swaziland was one of the few African countries with a current account surplus; however this might also indicate adverse domestic economic activity, particularly in the midst of the high unemployment rate – a higher current account surplus is desired as it reflects more international receipts for the economy, from both goods and services made available to foreign customers. The country’s trade partners are as shown in Table 4.2.3 below with South Africa being the main trading partner in regard to both imports and exports.

Table 4.2.3: Swaziland’s imports and export by main trading partners, 2014 (US$ ‘000) Imports Source country

Exports Value

Total imports

1 765.1

South Africa

1 505.9

85.3

Destination country

Value

Total exports

2 2029.5

South Africa

1 147.3

India

56.5

Qatar

53.8

121.7

China

26.5

1.5

United States of America

85.5

4.2

India

26.2

1.5

Bahrain

53.3

2.6

United States of America

25.7

1.5

United Kingdom

49.7

2.4

Zambia

18.0

China

46.7

2.3

Germany

13.6

0.7

Mozambique

45.6

2.2

Thailand

12.0

0.7

Spain

36.2

1.8

Taipei, Chinese

9.5

0.5

Netherlands

29.9

1.5

Hong Kong, China

8.2

0.5

Italy

28.7

1.4

96.3

Total share of top 10

80.9

Source: ITC - TradeMap (2015)

Swaziland’s main export commodities include soft drink concentrates, sugar, wood pulp, cotton yarn, refrigerators, citrus and canned fruit, while import products comprise motor vehicles, machinery, transport equipment, foodstuffs, petroleum products, and chemicals.The country’s import products comprised motor vehicles, machinery, transport equipment, foodstuffs, petroleum products, chemicals. The stock of foreign direct investment from abroad was some $838 million in 2013, while Swaziland had invested about $76 million in other countries as at 2013. Swaziland’s emalangeni is pegged to the South African rand; thus the exchange rate of the emalangeni for a US dollar was almost similar as 10.6 in 2014, and 9.6442, 8.2, 7.2597 and 7.3212 in 2013, 2012, 2011 and 2010 respectively.

east3ROUTE ECONOMIC REPORT 2015

4.2.4. Seychelles Since independence in 1976, per capita output in this Indian Ocean archipelago has expanded to roughly seven times the pre-independence, near-subsistence level, moving the island into the upper-middle-income group of countries. Growth has been led by the tourist sector, which employs about 30% of the labour force and provides more than 70% of hard currency earnings, and by tuna fishing. In recent years, the government has encouraged foreign investment to upgrade hotels and other services. At the same time, the government has moved to reduce the dependence on tourism by promoting the development of farming, fishing, and small-scale manufacturing. In 2008, having depleted its foreign exchange reserves, Seychelles defaulted on interest payments due on a $230 million Eurobond, requested assistance from the International Monetary Fund (IMF), and immediately enacted a number of significant structural reforms, including liberalization of the exchange rate, reform of the public sector to include layoffs, and the selling of some state assets. In December 2013, the IMF declared that Seychelles had successfully transitioned to a market-based economy with full employment and a fiscal surplus. Seychelles nominal GDP in official exchange rate $1.27 billion in 2013. The country’s GDP growth rate has been around 3% per annum (3.7% in 2014, 3.5% in 2013 and 2.8% in 2012), and it is in the top 80 fastest growing economies of the world. This growth rate is quite subdued compared to the 10.4% the country recorded in 2007. In PPP terms, the economy was estimated at $2.304 billion in 2014, from $2.222 billion in 2013 and $2.147 billion in 2012. With a population of around 90,000 people, per capita GDP was some $14,100 in 2014, making the Seychellois the most affluent group of people in the east3Route. The country’s gross national saving was 15% of GDP in 2014, a decrease from 21.4% in 2013. GDP composition (by end use) was 101% household consumption, 10.2% government consumption, 31.4% investment in fixed capital, -5.1% inventories, and -37.5% net exports of goods and services (exports 42.1% and imports -79.6%). Structured by sector of origin, the GDP was 3% agriculture, 14% industry and a whopping services sector of 83.1% (2014 est.). Agricultural products include coconuts, cinnamon, vanilla, sweet potatoes, cassava (manioc, tapioca), copra, bananas; poultry; and tuna, while industrial products include fishing, tourism, processing of coconuts and vanilla, coir (coconut fiber) rope, boat building, printing, furniture; and beverages. The industrial production growth rate is around 3%. The labour force is some 39,560 people, out of a total of 90,000 people. At 3.6%, unemployment rate is one of the lowest in the world, and the economy’s highly services-oriented employment by sector is estimated 3% agriculture, 23% industry and 74% services. Income inequality in Seychelles is not much of an issue, with household income distributed such that the lowest 10% of the households bring home 4.7% of the national income, and the highest 10% earn 15.4%.5 Public revenues were estimated at $498.4 million (or 39.2% of GDP) in 2014, and expenditures at $474.3 million (or 37.3%), leaving a fiscal surplus 1.9% of GDP. The public debt was 64.5% of GDP in 2014 (and 65.5% in 2013), and the country was one of the top 50 most indebted (49th), and inflation rate (measured in consumer prices) was manageable at 2.3% (2014 est. from 4.3% in 2013). The Central bank discount rate is currently the highest among the E3Route economies at 10.53% (Jan 2015), while the Commercial bank prime lending rate was 13% (as at end of 2014). Stock of domestic credit was $485.1 million (or 38.2% of GDP) in 2014, from $500.8 million in 2013 (or 48.6%). The current account balance was a wider -$338.5 million (-26.7% of GDP) in 2014 compared to -$209.9 million in 2013 (or 20.4% of GDP). Seychelles exports of goods and services were estimated at $701.0 in 2014, from $799.3 million in 2013. The value of the country’s imports was some $514 million, also a decline from $610.6 million in 2013, making it one of the few countries that run a positive trade balance. 5

2007 estimates

OUR JOURNEY TOGETHER

The country’s exports commodities are mainly canned tuna, frozen fish, cinnamon bark, copra, petroleum products (re-exports), and imports comprise machinery and equipment, foodstuffs, petroleum products, chemicals, other manufactured goods, while imports commodities included machinery and equipment, foodstuffs, petroleum products, chemicals, other manufactured goods. Exports partners include France, UK, Italy, Japan, Mauritius, Israel and Spain, while imports partners include Spain, France, India and Italy (see Table 4.3.4).

Table 4.3.4: Seychelles imports and export by leading trading partners, 2013 vs 2014 (US$ ‘000) Imports Source Total

Value

Source country

799.3

Exports Value

701.0

Value

Total

imports Spain

Destination country

610.6

514.2

exports 148.8

18.6

Spain

116.2

16.6

France

160.0

26.2

France

138.0

26.8

France

90.8

11.4

France

60.3

8.6

114.8

18.8

106.3

20.7

India

59.5

7.4

South

54.6

7.8

Italy

65.1

10.7

Italy

66.4

12.9

Africa Italy

47.3

5.9

China

45.6

6.5

Japan

53.8

8.8

Japan

51.2

South

45.7

5.7

39.5

5.6

Mauritius

48.0

7.9

Mauritius

37.0

7.2

38.7

4.8

India

37.4

5.3

Israel

37.3

6.1

Spain

22.5

4.4

Germany

32.1

4.0

Mauritius

28.3

Spain

23.9

3.9

Thailand

13.5

2.6

30.7

3.8

Singapore

27.8

Austria

15.5

2.5

Denmark

6.8

1.3

Mauritius

30.6

3.8

Italy

26.4

3.8

Denmark

8.3

1.4

6.0

1.2

Singapore

30.1

3.8

Korea

24.0

3.4

Madagascar

7.4

1.2

Switzerland

5.9

1.1

65.6

Total share of top 10

87.5

Total share of top 10

Africa China

Republic Total share of top 10

69.3

Total share of top 10

88.2

Source: ITC - TradeMap (2015)

Seychelles’ reserves of foreign exchange and gold at the end of 2014 were estimated at $496.6 million, having increased from $425.9 million in 2013 (36% of GDP), while the country’s external debt was estimated at $2.099 billion from $2.049 billion respectively. The exchange rate of Seychelles rupees (SCR) per US dollar was 12.44 in 2014, depreciation from 12.058 in 2013, which was an appreciation from 13.7 in 2012. Seychelles: the tourism island In 2014, an estimated 232,667 international tourists visited Seychelles. A large majority of these came from Europe (66%), Asia (18%) and other parts of Africa (12%). Only 3% of the visitors had come from the Americas, with the Oceania accounting for the fewest visitors at 1% of the total (Figure 4.2.3). Seychellois tourism has been growing steadily, with the country receiving an increasing number of tourists even during the years of global economic weakness, when most countries felt the tremors of the economic meltdown, safe for 2009 when a thousand fewer tourists were recorded, compared to the year earlier. The 2014 figure was the highest since 2000 (Figure 4.2.4).

east3ROUTE ECONOMIC REPORT 2015

Figure 4.2.3: Seychelles international visitors, 2014 by region of origin America, 6 677 (3%)

Africa, 28 210 (12%)

Oceania, 1 772 (1%)

Europe, 153 569 (66%)

Asia, 42 439 (18%)

Source: Seychelles National Bureau of Statistics [NBS] (2015)

158 952

157 541

2004

161 273

2003

140 627

2002

128 654

2001

120 765

132 246

2000

122 038

129 762

105 000

130 046

2007

2008

2009

208 034

194 476

200 000

174 529

232 667

250 000

230 272

Figure 4.2.4: Seychelles total annual tourist arrivals, 2000â&#x20AC;&#x201D;2014

100 000

50 000

Source: Seychelles National Bureau of Statistics [NBS] (2015)

2005

2006

2010

2011

2012

2013

2014

OUR JOURNEY TOGETHER

South Africa is one of the important sources of tourism receipts for Seychelles, steadily in the top ten tourism demand markets for the country (and contributing 5% of the total tourism arrivals in 2014). Table 4.2.4 below shows the E3Route economies ranking on demand for tourism services in Seychelles between 2000 and 2014, and the annual number of South African, Mozambican and Swazi tourists visiting Seychelles. Table 4.2.4: E3Route economiesâ&#x20AC;&#x2122; ranks as sources of tourists for Seychelles, & visitor numbers, 2000â&#x20AC;&#x201D; 2014 Year 2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Indicator Rank No of visitors Rank No of visitors Rank No of visitors Rank No of visitors Rank No of visitors Rank No of visitors Rank No of visitors Rank No of visitors Rank No of visitors Rank No of visitors Rank No of visitors Rank No of visitors Rank No of visitors Rank No of visitors Rank No of visitors

Economy South Africa

Mozambique

Swaziland

4 260

4 396

100

103

4 173

106

5 003

11 107

5 130

115

5 395

6 107

6 277

102

8 106

8 219

29 108

8 208

10 425

64 92

10 559

131

110

12 351

141

127

13 294

143

102

12 480

189

Source: Seychelles National Bureau of Statistics [NBS] (2015)

Compared to Seychelles, all the other east3Route economies do not depend as much on international tourism receipts. Seychelles collects these receipts as high as 37% of its total exports, while the other economies collect <10% (Figure 4.2.5). While the latter three economies may not rely heavily on international tourism, this reflects a lost opportunity for them, given the potential of this industry to create employment on a wide scale and address their domestic unemployment challenges.

east3ROUTE ECONOMIC REPORT 2015

Figure 4.2.5: International tourism receipts in E3Route economies (% of exports), 2006—2013 50.0

46.4

45.2

45.0 41.1

41.9

40.3

40.0 35.0

38.7

37.1

38.0

30.0 25.0 20.0 11.8

11.3

10.0 5.2

6.3

5.0 -0.0

4.1 2006

11.1

9.9

7.9

7.6

1.5

6.8 1.5

2.3

2.5

2007

2008

2009

2010

Seychelles Source: World Banks (2015) – WDI

9.3

South Africa

9.8

9.6

5.9

5.2

1.0

1.4

0.6

2011

2012

2013

8.7

6.9

Mozambique

Swaziland

OUR JOURNEY TOGETHER

4.2.5. KwaZulu-Natal

KwaZulu-Natal is one of the nine provinces of the Republic of South Africa. It has the country’s second largest population (10.7 million people in July 2014), and is the country’s second largest provincial economy (16% in 2013) (see Figure 4.2.6 below). Figure 4.2.6: RSA GDP by province, 2013 (% share) Northen Cape, 2.0 Free State, 5.1

North West, 6.8

Gauteng, 33.8

Limpopo, 7.3

Mpumalanga, 7.6

Eastern Cape, 7.7

Western Cape, 13.7

KwaZulu-Natal, 16.0

Source: Stats SA (2014)

The province of KwaZulu-Natal is South Africa’s second largest provincial economy, contributing almost a fifth to the country’s gross domestic product (GDP) (Figure 4.2.6). The provincial economic growth has also consistently recorded above national average rates, signalling its continuous relevance and remarkable resilience. KZN is home to two of South Africa’s, and Africa’s, largest and busiest seaports: the Port of Durban, and the Port of Richards’ Bay. The Port of Durban handles between 60% and 65% of all South Africa’s container traffic, and nearly 60% of all vehicle exports, while about 45% to 50% of the country’s bulk cargo goes through the Port of Richards’ Bay. This is also the world’s largest standalone coal export facility6. Estimated at some R470.3 billion (or $48.7bn, in real terms), or R565.2 billion (or $58.6 billion in nominal terms) the provincial economy of KwaZulu-Natal, is the second largest in South Africa. Similar to South Africa’s economic structure, KZN has gradually moved to being a tertiary-sector economy, with the services sector accounting for over 60% of the provincial economy (Figure 4.2.7). However, there is a strong move to re-industrialise the economy and create much needed employment that will help curb the triple challenge on poverty, unemployment and inequality. The provincial government is establishing industrial economic hubs across the province, in order to harness the unique industrial capacities of the different districts.

6 While the Chinese port of Qinhuangdao maintains the largest coal exporting terminal in the world, at 209 Million tons compared to Richards Bay with 91 Million tons, the latter is the world’s largest standalone coal export facility, and the former is made up of a group terminals.

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Figure 4.2.7: KwaZulu-Natal economy by broad economic sectors, 2013 Primary Industries, 5.1

Net Taxes on products, 9.9 Secondary Industries, 23.6

Tertiary Industries, 61.4 Source: Stats SA, 2014

Strong sectors of the provincial economic makeup (excluding general government services) include Finance, Real Estate and Business Services (FREBS), Trade, Manufacturing and Logistics. Not only are these sectors largely the industrial backbone of the KZN economy, but they are also still going strong, recording phenomenal growth rates of up to 3.2% (Figure 4.2.8). Great potential lies in the agricultural sector, and the transportation sector, which includes maritime transport that remains largely untapped. Potential for economic growth in the province lies everywhere, with the provincial governmentâ&#x20AC;&#x2122;s plans to (i) attract strategic investment activities into the Dube Trade Port, home of the newly commissioned world-class King Shaka International Airport, (ii) establish industrial economic hubs across the province to unleash each districtâ&#x20AC;&#x2122;s unique economic potential, and (iii) increase international tourism though establishment of worldclass tourism offerings.

OUR JOURNEY TOGETHER

Growth (%)

Figure 4.2.8: KwaZulu-Natal real GDPR by sector (% share and growth), 2013 6.0

5.0

Mining and quarrying, 1.7, 4.3 Finance, real estate; business services, 15.6, 3.2

4.0

Construction, 4.1, 3.1

General government services, 14.0, 3.1

3.0

2.0

Transport, storage and communications, 12.3, 2.3 Wholesale, retail and motor trade; catering and accommodation 18.9, 1.5

Agriculture, forestry and fishing, 3.4, 1.8

Personal services, 5.6, 2.0

1.0 Electricity, gas and water, 3.6, -0.1

Net taxes on products, 9.9, 1.5

Manufacturing, 15.9, 0.9

0.0 2.0 -1.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

contribution

Source: Stats SA (2014)

The provincial economy is spread between five major economic hubs across the province. The eThekwini municipal area contributes more than Â˝ of the provincial output, followed by uMgungundlovu and uThungulu, while all the other districts contribute <5% to the provincial gross value added (Figure 4.2.9). The eThekwini municipal area is home to the Port of Durban, the second busiest port in Africa, and the city of Durban, one of the most progressive cities of the world by virtue financial management and largest domestic tourism demand. UMgungundlovu is the administrative seat of the province, while uThungulu is home to the Port of Richardâ&#x20AC;&#x2122;s Bay, which houses the Richards Bay Coal Terminal.

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Figure 4.2.9: KZN Gross Value Added by municipality (%), average 2009â&#x20AC;&#x201D;2013 Umzinyathi, 2.2%

Harry Gwala, 2.4% Umkhanyakuce, 2.7% Amajuba, 3.4% iLembe, 3.8% Ugu, 4.5%

eThekwini, 52.0% Zululand, 4.5%

Uthukela, 4.9%

Uthungulu, 7.8%

UMgungundlovu, 11.7%

Source: TIKZN using Quantec, 2014

The provinceâ&#x20AC;&#x2122;s export markets are also traditional first world markets in the west and the east. There is a continuing emergence of the African markets in the radar (Table 4.2.5). Table 4.2.5: KwaZulu-Natal imports and export by leading trading partners, 2009 and 2013 (% share) Destination markets 2009

Source markets 2013

United States

9.5

United States

Japan

7.8

China

2009

2013

10.4

China

16.7

China

13.5

6.4

Japan

13.5

Japan

11.1

China

6.1

Japan

4.9

Germany

8.1

Saudi Arabia *

7.9

United Kingdom

4.7

United Kingdom

4.7

United States

6.4

India

5.8

Netherlands

4.6

Netherlands

4.6

Australia

6.2

Thailand

5.2

Republic of Korea

3.6

Algeria *

3.5

Argentina

5.8

Angola *

5.1

Indonesia

3.3

Zambia

3.4

Thailand

4.8

Australia

4.3

Nigeria

3.2

India *

3.3

United Kingdom

3.4

Germany

3.8

Mozambique

2.9

Mozambique

3.2

India

3.0

Singapore *

3.2

Zambia

2.8

Zimbabwe *

3.1

Malaysia

3.0

United States

3.2

Top ten share of total 48.5%

47.5%

Total export value R56.7 bn ($6.7 bn)

70.9%

62.9%

Total import value R92.0 bn ($9.3 bn)

R60.0 bn ($7.1 bn)

R148.6 bn ($15.4 bn)

Source: Quantec (2014); * New markets

KZN still imports most of its goods from the traditional markets, while Angola is also an important market, ahead of the likes of Germany and United States.

OUR JOURNEY TOGETHER

However, the province is slowly diversifying its source and destination markets, with the share of the leading markets to the province’s inward and outward trade decreasing. In 2013, nearly 48% of the province’s total export value landed in the top 10 destination markets, which include the traditional ones such as the US, China, Japan, the UK, and the Netherlands. This was a percentage point lower than the share of the leading markets half a decade earlier. In addition, more African markets such as Algeria and Zimbabwe featured in the leading destination markets. In respect of import markets, concentration was also reduced from 71% in 2009 to 63% in 2013 (almost 10% off), signalling market diversification and the province’s increased integration into the international market. The province sourced goods from new markets including Saudi Arabia, Angola and Singapore.

4.3. east3ROUTE TRADE IN SERVICES Trade in goods is generally easier to document and record than trade in services, and most international trade statistics are more on merchandise than services. However, the World Trade Organisation (WTO) does attempt to document countries trade in services, especially such countries with sophisticated technological systems that attempt to record their service transactions almost accurately enough to indicate services to both local and international consumers. The following summary table (Table 4.3.1) gives a snap-shot of the E3Route economies international trade in services, gross value added of such services, general infrastructure endowments/investment and usage and access to such services. The usage also ties with the technological readiness of these economies, as discussed in chapter 7. As these data are national in nature, only the national economies are included herein. Table 4.3.1: Infrastructure and service sector indicators in E3Route economies Indicator GDP (current US$ m)

Country Mozambique

Seychelles

South Africa

Swaziland

15 319

1 268

350 630

3 791

Services (value added % of GDP)

44.5

74.2

52.5

30.6

of which infrastructural services

13.9

12.7

18.8

9.9

2 964

221

15 962

715

1 579

13 760

243

-1 385

281

-2 202

-473

All commercial services Imports Exports Net exports

(i)

Exports % of GDP

10.3

39.6

3.9

6.4

Exports % of goods & comm. Services exports

27.3

45.7

12.7

11.3

Transportation services International airports Rail lines (total network; km) Road lines (total network; km)

3 116

20 500

300

30 331

508

Containers (TEU’s, 000)

280

4 424

Value added

815

31 387

% of total value added Imports Exports Net exports

7.2

9.1

2.5

844

118

7 686

362

1 721

-482

-25

-5 965

-5

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Indicator (ii)

Seychelles

South Africa

Swaziland

Telecommunications Total telephone subscriptions (per 100 persons)

171

157

Mobile phone subscriptions (% tot. tel. subscr.)

99.4

86.3

94.2

95.1

Internet users (per 100 persons)

24.7

50.4

48.9

24.7

Value added ($m)

322

146

% of total value added

2.8

4.5

280

214

-7

-9

-66

Domestic credit by banking sector (% of GDP)

28.9

38.8

188.1

19.5

Value added ($m)

441

34 916

% of total value added

3.9

5.5

9.7

2.9

Imports

115

Exports

868

-5

753

-9

611

Imports Exports Net exports (iii)

Country Mozambique

Finance and insurance services

Financial services

Net exports Insurance services Imports Exports Net exports

266

-5

-345

-9

Source: WTO (2015) Trade Profiles databases

4.4. OTHER COMPARABLE ECONOMIC INDICATORS As labour costs in Asia start to increase and pressure remains to keep prices competitive, CEOs are increasingly recognising the untapped potential of the Sub-Saharan African (SSA) countries. SSA is expected to see faster economic growth than any other region by 2040 and have the largest labour force in the world7. Countries within the African continent have shown to be more resilient to the financial crisis, especially the low-income countries. This resilience is mainly due to the discovery and development of natural resources within Africa 8. SSA recent sustained growth has been made possible largely by improved political and macroeconomic stability, a strengthened political commitment to private-sector growth, and increased investment in infrastructure and education 9. Although growth in South Africa has been slower than some of the other SSA regions, and Mozambique in particular, it still remains the economic power house of the region and of the entire African continent. This is evident in the countriesâ&#x20AC;&#x2122; foreign exchange reserves presented in the figure below (Figure 4.4.1). South Africaâ&#x20AC;&#x2122;s foreign exchange reserves have increased over the last five years and Swaziland and Mozambique have remained stable and constant.

7 PwC, Which Cities hold the key to unleashing growth in Sub-Saharan Africa? (2014) 8 https://www.imf.org/external/np/speeches/2013/050613.htm 9 http://www.mckinsey.com/insights/economic_studies/fulfilling_the_promise_of_sub-saharan_africa

OUR JOURNEY TOGETHER

Figure 4.4.1: Foreign Exchange (USD) - South Africa, Swaziland, Mozambique and Seychelles10 45 000 USD Millions

40 000 35 000 30 000 25 000 20 000 15 000 10 000 5000 0

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Year Seychelles

South Africa

Mozambique

Swaziland

Figure 4.4.2 below depicts the four countriesâ&#x20AC;&#x2122; total reserves (minus gold). South Africaâ&#x20AC;&#x2122;s total reserves have grown steadily from 2008, with a tapering out occurring from 2012. Growth has also been experienced in Mozambique, Seychelles and Swaziland indicating that these are growing economies within the SSA region.

Figure 4.4.2: Total Reserves-minus Gold (USD) - South Africa, Swaziland, Mozambique and Seychelles11 USD Millions

50 000 40 000 30 000 20 000 10 000 0

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Year Seychelles

South Africa

Mozambique

Swaziland

The Consumer Price Index (CPI) measures the changes in the price level of goods and services purchased by households and are used as a measure of inflation. The figure below (Figure 4.4.3) presents the CPI for South Africa, Mozambique, Seychelles and Swaziland. It is evident that CPI within the four countries has grown steadily over the last ten years. It is also important to note that CPI has remained below the 10% for all four countries.

10 11

Quantec, 2014 Quantec, 2014

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Figure 4.4.3: Consumer Price Index (CPI) South Africa, Swaziland, Mozambique and Seychelles12

CPI

150 100 50 0

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Year Seychelles

South Africa

Mozambique

Swaziland

The figure below (Figure 4.4.4) presents the Primary Lending Interest Rates for South Africa, Mozambique, Seychelles and Swaziland. In terms of lending rates, South Africa and Swaziland are almost equal, having followed the same growth and declination pattern over the past five years, this indicates a strong linkage between the two economies. Mozambique and Seychelles has higher lending rates compared to South Africa and Swaziland.

Figure 4.4.4: Lending Interest Rates (%) - South Africa, Swaziland, Mozambique and Seychelles13

Percentages

30 25 20 15 10 5 0

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Year Seychelles

South Africa

Mozambique

Swaziland

4.4.1. GDP GROWTH AND PROJECTIONS SSAs GDP grew by 4.7% in 2013 which was led by robust domestic demand, and is set to continue to rise. Despite emerging challenges, the medium-term outlook remains positive. Supported by investment in the resource sector, public infrastructure, and agriculture, GDP growth is projected to remain stable at 4.7%in 2014 and to rise to 5.1 % in 2015 and 2016. The outlook is sensitive to downside risks from lower commodity prices, tightening global financial conditions, and political instability14 .

12 13 14

World Bank, World Development Indicators, 2013 Quantec, 2014 World Bank, Global Economic Prospects (2014)

OUR JOURNEY TOGETHER

The table below (Table 4.4.1) presents the GDP in US Dollars for the four countries. Table 4.4.1: GDP Per Region (2013)15 Region

GDP (2013) USD Billions

South Africa

351.2

Mozambique

15.3

Swaziland

3.8

Seychelles

1.2

GDP (2013) ZAR Millions (Current Prices) KZN

1 665 540

Real GDP growth in South Africa declined from 2.5% in 2012 to 1.9% in 2013 and is projected to increase to 2.7% in 2014 and 3% in 2015. However these growth projections are dependent on the European market gaining momentum as well as the effective implementation of electricity and transport infrastructure projects to reduce backlogs. KZN shows steady economic with an average annual GDP growth rate of 3.5% (2003 â&#x20AC;&#x201C; 2013). Mozambique also experienced a decline in real GDP growth from 7.2% in 2012 to 7% in 2013. It is expected that the real GDP growth will increase to 8.5% in 2014 and 8.2% in 2015. The growth in GDP is mainly attributed to the implementation of mega-projects within Mozambique, which is stimulating investment into a various economic sectors. The real GDP growth for Seychelles has seen a steady growth from 2012, with an increase from 2.8% in 2012 to 3.5% in 2013. The growth is projected to further increase to 3.6% in 2014 and 4.3% in 2015. The increase in mainly due to the steady growth in tourist numbers to the Seychelles. Swaziland also shows an increase in real GDP growth between 2012 (1.7%) and 2013 (3.5%), however it is estimated that the real GDP growth will decline to 2.4% in 2014 and 2.5% in 2015. The projected decline in real GDP growth is mainly linked to the slow recovery of the South African and European markets. Figure 4.4.5 below illustrates the real GDP growth for South Africa, Mozambique, Seychelles and Swaziland. Figure 4.4.6 illustrates the Annual Real GDP growth for KZN.

Annual GDP Growth (%)

Figure 4.4.5: Annual Real GDP Growth for South Africa, Mozambique, Seychelles and Swaziland16 10 8 6 4 2 0 -2 -4 2009

2010

2011

2012

2013

2014 (Projected) 2015 (Projected)

Year Seychelles

15 16

South Africa

Mozambique

Quantec, 2014 African Economic Outlook Reports, South Africa, Mozambique, Seychelles and Swaziland (2014)

Swaziland

east3ROUTE ECONOMIC REPORT 2015

Figure 4.4.6: Annual Real GDP Growth for KZN GDP ZAR Millions (constant 2005 prices)

80 000 70 000 60 000 50 000 30 000 20 000 20 000 10 000 0

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Year

4.4.2. GDP Sectoral Contribution The four charts below present the sector contribution to GDP for KZN17, Mozambique18, Seychelles19 and Swaziland 20. Figure 4.4.8: Mozambique GDP by Broad Economic Sector (percentage contribution) (2012)

Servies, 47.1%

Agriculture, 28.9%

Industry, 24.0%

17 18 19 20

Quantec, 2014 African Economic Outlook, Mozambique (2014) African Economic Outlook, Seychelles (2014) African Economic Outlook, Swaziland (2014)

OUR JOURNEY TOGETHER

Figure 4.4.9: Seychelles GDP by Broad Economic Sector (percentage contribution) (2012) Industry, 24.0%

Servies, 47.1%

Agriculture, 28.9%

Figure 4.4.7: KwaZulu-Natal GDP by Broad Economic Sector (percentage contribution) (2013) Industry, 14.0%

Agriculture, 2.9%

Servies, 83.1%

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Figure 4.4.10: Swaziland GDP by Broad Economic Sector (percentage contribution) (2012)

Servies, 45.4% Industry, 47.4%

Agriculture, 7.2%

KwaZulu-Natal (South Africa)21 KwaZulu-Natalâ&#x20AC;&#x2122;s economy illustrates high contribution from the services (43.8%) and industry (51.7%) sectors with very limited contribution from the agricultural sector (3.4%). The economy remains driven by the manufacturing, tourism, finance and business services, and the transport and communications sectors. The sectors showing the highest growth rates over the past 10 years include construction (7.4%), finance and business services sector (5.1%), wholesale and retail trade (4%) and transport and communications sector (3.8%). Mozambique22 The Mozambique economy shows a relatively even split between the contribution of services sectors (47.1%), industry (24.0%) and agriculture (28.9%). The economy remains driven by mega-projects, predominantly funded by foreign capital, focused on aluminium, extractive industries, and the energy sector. The extractive sector was the fastest growing in 2013 at 22%, driven mainly by coal exports. The construction, services, and transport and communications sectors have mainly are driven by the increase in public expenditure. The financial sector follows behind the extractive industry as the most dynamic. The agriculture sector, which employs 70% of the population, remains at a lower growth of 4.6% in 2013.

21 African Economic Outlook, KwaZulu-Natal (2014) 22 African Economic Outlook, Mozambique (2014)

OUR JOURNEY TOGETHER

Seychelles23 The Seychelles economy is predominantly dependant on the services economic sectors (83.1%), followed by industry (14.0%) and agriculture (2.9%). The main economic driver for Seychelles is Tourism industry (mainly supporting the wholesale and retail trade sector and the transport and communication sector). One of the main reasons for the increased arrivals was the extensive marketing that the government embarked on in non-traditional export markets leading to a growth in tourists from Eastern Europe, Asia, Arab states and Africa. Further growth was seen in other tertiary sub sectors such as financial and insurance services, Information and communication technology (ICT) and residential housing. Continued growth in these sectors is expected as financial reforms continue and new investments are made. Furthermore, the government plans to expand the ICT sector in the short to medium term. The growth of the fishing sector, one of the main foreign exchange earners for the country, has been slow. Over the last 5 years, the sector suffered from the effects of piracy. Despite piracy being combated, the sector’s growth has decreased even further due to the reduction in fish stock and the need to go further off-shore than previously. The government is currently investing in the development of additional fishing quays to support the industry’s growth (particularly at the artisanal level) and is designing an Aqua-Mari-culture plan, in order to increase the exports of non-traditional fish.

Swaziland24 Swaziland’s economy is mainly dependant on the services (45.4%) and industry economic sectors (47.4%), with a very small contribution from the agriculture sector (7.2%). The tertiary sector decline of 1.2% in 2011 was reversed to a positive growth of 2.5% in 2012. The transport, storage and communications sector experienced the largest growth at 19.3% in 2012 compared to 2.7% the previous year. Growth in the primary and secondary sectors was subdued due mainly to a combination of a poor agricultural season, especially the maize and citrus sub-sectors, and a slow recovery in South Africa and the European Union. These two markets account for about 70% of the country’s exports. Higher receipts from the SACU in 2012/13 helped reduce domestic payments arrears to the private sector, especially the construction sector where suspended activities were revived. Growth in 2013 therefore improved, largely driven by a recovery in manufacturing and service sectors. Construction benefited from public sector investments, especially given the 25% increase in the capital budget. By the third quarter of 2013, building plans approvals had jumped by more than 7% compared with that of 2012. As the construction sector recovered, the demand for quarried stone increased. This, together with the higher coal output, led to positive growth in the mining and quarrying sector. Weaknesses in the global economy, however, continue to pose some risks to Swaziland’s growth prospects. Growth in the South African economy, in particular, has slowed down.

23 African Economic Outlook, Seychelles (2014) 24 African Economic Outlook, Swaziland (2014)

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4.4.3. Unemployment and Poverty Figure 4.4.11 below presents the unemployment rates for KwaZulu-Natal (South Africa), Mozambique, Seychelles and Swaziland.

Unemployment Rate

Figure 4.4.11: Unemployment (%) by region (KZN, Swaziland, Mozambique and Seychelles)25 30.0% 25.0%

28.5% 22.0% 21.0%

20.0% 15.0% 10.0%

4.0%

5.0% 0.0% Mozambique

Seychelles

Swaziland

KwaZulu-Natal

Country

The figure below (Figure 4.4.12) indicates the level of poverty in each of the regions. This is measured as a percentage of the total population. The years of the data, although not the same, are the latest values for each region.

Percentage (%)

Figure 4.4.12: Percentage of Population living below $2 per day26 100 81.8%

81%

60 40

35.7%

1.84%

0 South Africa (2006)

Mozambique (2008)

Seychelles (2007)

Swaziland (2009)

Country

From the above it is evident that although the regions have experienced economic growth (and areprojected to grow in the future), this growth is mainly job-less growth. This means that the growth has not resulted in creating job-opportunities for the labour force and therefore there are still high unemployment percentages as well as large percentages of the population living below $2 a day.

25 Quantec (2014) & African Economic Outlook (2014) 26 World Bank, African Development Indicators, 2014

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OUR JOURNEY TOGETHER

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5. TRADE AND INVESTMENT ANALYSIS OF THE east3ROUTE ECONOMIES 5.1. FOREIGN DIRECT INVESTMENT The global economic downturn that began in 2008 has greatly affected foreign direct investment in SADC. Between 2009 and 2010, total foreign direct investment in the region fell by almost 50%. However, not all Member States are equal in terms of market size, political stability, infrastructure quality, or availability of natural resources â&#x20AC;&#x201C; all factors that affect international investment. Consequently, some Member States have maintained levels of foreign direct investment more strongly than others. South Africa and Angola have historically higher levels of foreign direct investment, and 2010 saw the Democratic Republic of Congo increase its net foreign direct investment inflow to almost US $3 billion. Similarly, Seychelles increased its foreign direct investment as a percentage of gross domestic product significantly, approaching 40%. Even Member States who are below average in terms of these key decisive indicators are often able to attract steady Foreign Direct Investment into extractive industries, as the potential international demand for the natural resources outweigh any risks involved 27. Foreign direct investment are the net inflows of investment to acquire a lasting management interest (10 percent or more of voting stock) in an enterprise operating in an economy other than that of the investor. It is the sum of equity capital, reinvestment of earnings, other long-term capital, and short-term capital as shown in the balance of payments. This series shows net inflows (new investment inflows less disinvestment) in the reporting economy from foreign investors. The figure below illustrates the FDI net inflows in US Dollars for South Africa, Mozambique, Seychelles and Swaziland.

Figure 5.1.1: Foreign Direct Investment Net Inflows for South Africa, Mozambique, Seychelles and Swaziland28 12 000 000 000

FDI Net Inflow (US Dollars $)

10 000 000 000 8 000 000 000 6 000 000 000 4 000 000 000 2 000 000 000 -

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

(2 000 000 000) Year Seychelles

South Africa

27 http://www.sadc.int/themes/economic-development/investment/foreign-direct-investment 28 World Bank, World Development Indicators (2014)

Mozambique

Swaziland

2013

OUR JOURNEY TOGETHER

South Africa29 FDI net inflow to South Africa increased from $4.6 billion in 2012 to $8.2 billion in 2013. The key recipient sectors included mining, pharmaceuticals, automotive equipment, financial services and, most recently, renewable energy. Investments originated from BRICS (China and India in particular), as well as Europe and the United States. Table 5.1.1: FDI projects into South Africa, 2003â&#x20AC;&#x201D;2015* Year

Projects

Capex

Jobs

Average capex

Jobs per project

2015

3 144

4 881

50.7

78.7

2014

120

3 830

8 408

31.9

70.1

2013

153

5 770

15 572

37.7

101.8

2012

161

4 604

15 141

28.6

94.0

2011

169

10 859

21 475

64.3

127.1

2010

109

5 950

18 412

54.6

168.9

2009

117

5 847

20 588

50.0

176.0

2008

125

12 199

23 712

97.6

189.7

2007

3 750

6 958

67.0

124.3

2006

4 588

14 041

51.0

156.0

2005

3 017

17 069

49.5

279.8

2004

3 770

6 558

73.9

128.6

2003

3 658

16 736

62.0

283.7

Total

1 262

67 118

183 537

53.2

145.4

Source: FDI Intelligence (2015); * as at June

As at the end of June 2015, the FDI Intelligence estimates that 62 FDI projects had been announced to be implemented in South Africa, at $50.7 million per projects and creating 79 jobs. The average capital expenditure (capex) thus far was higher than the average in 2014, and the pace of investment itself is promising to be higher than 2014 performance if the trend is at least maintained. The current performance is nonetheless still below the trend average of $53.2 million and 145 jobs per project, and indication of a long road to recovery after the global economic slowdown. Overall, South Africa has continued to attract the highest number of FDI projects into its shores, in excess of 100 projects annually since 2008. Mozambique30

FDI net inflow to Mozambique increased from $5.6 billion in 2012 to $5.9 billion in 2013. FDI remain one of the main drivers for economic growth within Mozambique and therefore it is important to ensure political stability within Mozambique in order to sustain the current increase in FDI. The main FDI investments are made in the extractive sectors and public expenditure. According to a recent United Nations Conference on Trade and Development (UNCTAD) report, from 1992 to 2010 30% of foreign direct investment (FDI) was directed towards small and medium enterprises (SMEs), creating 19 times more employment than investments in megaprojects. Some of the major investors include India (mining, agricultural processing and energy), China (infrastructure â&#x20AC;&#x201C; ports, roads and energy) and Brazil (agriculture, mineral resources, infrastructure and health) 29 30

African Economic Outlook, South Africa (2014) African Economic Outlook, Mozambique (2014)

east3ROUTE ECONOMIC REPORT 2015

Table 5.1.2: FDI projects into Mozambique, 2003â&#x20AC;&#x201D;2015* Year

Projects

Capex

Jobs

Average capex

Jobs per project

2015

3 013

1 625

215.2

116.1

2014

8 800

10 856

176.0

217.1

2013

6 280

8 910

179.4

254.6

2012

3 206

4 942

106.9

164.7

2011

8 927

4 912

330.6

181.9

2010

3 200

4 715

213.3

314.3

2009

785

1 682

78.5

168.2

2008

6 589

7 244

286.5

315.0

2007

2 073

2 484

345.5

414.0

2006

564

1 857

112.8

371.4

2004

1 602

924

400.5

231.0

2003

560

3 334

93.3

555.7

Total

225

45 605

53 485

202.7

237.7

Source: FDI Intelligence (2015); * as at June

While the 2015 performance shows that Mozambique is likely to attract fewer projects than it did in 2014, creating fewer jobs. However, FDI into this country is the most remarkable of all the east3Route economies, creating the highest number of jobs per project and receiving the highest capex per project (Table 5.1.2). Except for the years 2003 and 2009, Mozambican FDI has recorded average capital expenditure (capex) in the hundreds of US dollars, while jobs per project have also been constantly above 100. This is typical of resource-based investments, as economic activity in the primary sector tends not to be too mechanised and still depends on large labour inputs. However, as the economy continues to grow, the Mozambican economic structure will also evolve to the higher sectors. In order to avoid possible structural unemployment associated with such shifts in the economic build-up, the country will do well to invest in skills for the future. Strong emphasis should be placed on investment in good education systems. Seychelles31

FDI net inflows increased from $166 million in 2012 to $178 million in 2013, largely in the construction sector, which also had a positive impact on growth. In addition to tourism, the other major growth driver has been Foreign Direct Investment (FDI). The latter increased due mainly to the completion of several high-end hotels, largely financed by foreign investors, and the construction of a residential project in Ile Perseverance.

African Economic Outlook, Seychelles (2014)

OUR JOURNEY TOGETHER

Table 5.1.3: FDI projects into Seychelles, 2003—2014 Year

Projects

2014

Capex

Jobs

Average capex

119

Jobs per project

12.3

39.7

2013

155

105

77.5

52.5

2012

179

36.0

179.0

2011

11.0

18.0

2010

129

219

129.0

219.0

2009

0.0

4.0

2008

140

237

70.0

118.5

2007

124

296

62.0

148.0

2005

137

23.3

45.7

2004

129

621

43.0

207.0

Total

836

1935

44.0

101.8

Source: FDI Intelligence (2015); * as at June

Being a small economy, FDI projects into Seychelles are not very frequent as there is not much room for expansion. Nonetheless, the government of Seychelles is actively looking to diversify the country’s economic activity, and investors should not lose sight of opportunities presented by such a policy shift. Swaziland32

FDI net inflows declined from $90 million in 2012 to $67 million in 2013. Swaziland’s inflows of foreign direct investment (FDI) targeting the export market were larger than those for Botswana and Namibia in the early 1990s. Its attraction for such investments has declined since the demise of the apartheid regime in South Africa and the end of civil war in Mozambique. Despite the decline in FDI inflows, $136 million in 2010 to $89 million in 2012, the stock of foreign direct investment has remained significant at almost a billion dollars. In 2011 and 2012, the share of FDI in gross fixed capital formation was more than 24%. Table 5.1.4: FDI projects into Swaziland, 2003—2015* Year

Projects

Capex

Jobs

Average capex

Jobs per project

2014

240

33.5

120.0

2013

150

150.0

89.0

2012

6.0

15.0

2011

438

1890

48.7

210.0

2009

10.0

91.0

2008

130

6.7

43.3

2005

444

32.5

222.0

2004

378

5700

189.0

2850.0

Total

1138

8599

54.2

409.5

Source: FDI Intelligence (2015); * as at June

32 African Economic Outlook, Swaziland (2014)

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The number of FDI projects into Swaziland in 2014 was the highest in three years, and the average number of jobs created per project was also the highest in the same length of time. As 120 jobs per project, Swaziland’s performance was also quite impressive since the economy needs to create jobs. KwaZulu-Natal33

The total foreign investment into the province of KwaZulu-Natal since 2003 until June 2015 is estimated at $6.1 billion. The highest number of projects recorded was in 2013, when 15 projects were confirmed for implementation in the province. However, the heydays of 2007—2009 seem to be long over, in terms of the value of capital invested, jobs created and average jobs and capex per project. Table 5.1.5: FDI projects into KwaZulu-Natal, 2003—2015* Year

Projects

Capex

Jobs

Average capex

Jobs per project

2015

123

178

12.3

17.8

2014

377

548

75.4

109.6

2013

489

1 311

32.6

87.4

2012

256

612

32.0

76.5

2011

406

1 261

33.8

105.1

2010

172

834

57.3

278.0

2009

4 543

16.3

757.2

2008

2044

1 809

204.4

180.9

2007

572

271

286.0

135.5

2006

186

401

31.0

66.8

2005

419

3 336

38.1

303.3

2004

256

670

36.6

95.7

2003

704

3 364

70.4

336.4

Total

105

6107

19138

58.2

182.3

Source: FDI Intelligence (2015); * as at June

The year 2015 has also proven to be promising, since 10 projects have been announced to be implemented in the province so far.If this trend is anything to go by, at least 20 projects should be implemented in KwaZuluNatal in 2015, which could be a commendable quadrupling of the province’s performance in 2014. While the average job creation and capex are not that high, the number of projects alone is a vote of confidence in the province as an investment destination, a position TIKZN strives to showcase.

5.2. INTRA-REGIONAL TRADE FLOWS The following sub-section focuses on providing an understanding of the imports and exports (trade flows) within KwaZulu-Natal (South Africa), Mozambique, Seychelles and Swaziland. The trade information provides insight into the potential for future inter-regional trade between these regions. Table 5.2.1 gives some information on the size of outward trade between South Africa and the other east3Route counterparts.

33 Financial Times: FDI Intelligence (2015)

OUR JOURNEY TOGETHER

Table 5.2.1: South Africa’s exports to E3Route economies, 2014 Market

Seychelles

Value (US$ m) % SA exports % of market imports

Swaziland 1 505.9

3 001.6

0.1

1.7

3.3

7.8

85.3 Mineral fuels, oils, distillation

Mineral fuels, oils, distillation

boilers, etc

products, etc

Vehicles other than railway,

Machinery, nuclear reactors,

tramway

boilers, etc

Vehicles other than railway,

Machinery, nuclear reactors,

tramway

boilers, etc

Wood and articles of wood, wood charcoal Plastics and articles thereof

Plastics and articles thereof Electrical, electronic equipment

Furniture, lighting, signs,

Essential oils, perfumes,

prefabricated buildings

cosmetics, toiletries

Articles of iron or steel

Cereals articles of pulp, paper and board

Toys, games, sports requisites Edible fruit, nuts, peel of citrus fruit, melons

Iron and steel Vehicles other than railway, tramway Electrical, electronic equipment Articles of iron or steel Ores, slag and ash

Paper and paperboard, Beverages, spirits and vinegar

Market imports (US$m)

34.3

Machinery, nuclear reactors,

Electrical, electronic equipment

Products

Mozambique

54.6

Miscellaneous edible preparations

Articles of iron or steel

Plastics and articles thereof

Beverages, spirits and vinegar

Sugars and sugar confectionery

701.0

SA’s exports (US$ M)

1 765.1

8 743.1

90 612.1

Source: TradeMap (2015)

In 2014, South Africa exported goods to Seychelles valued at some $54.6 million. This was 0.1% of South Africa’s total exports in that year, and 7.8% of Seychelles total imports. The most popular products traded between these countries were machinery, electrical and electronic products, vehicles, woods and related articles and plastic products – mainly for the construction industry. To Swaziland, South Africa exported $1.5 billion worth of goods; 1.7% of SA’s total exports and over 85% of Swaziland’s import demand. Swaziland mostly imported fuels, vehicles, machinery, plastics, essential oils, and food and beverages from South Africa. Mozambique purchased goods worth an estimated $3 billion from South Africa, sealing its position as the largest destination market of the two other east3Route markets. The import mix was quite similar to the other markets’, except for imports of iron and steel, and ores, ash and slag, which products were most likely used in the manufacturing of rail infrastructure in the country, as Mozambique continues to expand its railway network and reinforce its seaport operations. This trade performance is captured in Table 5.2.1 above. In terms of imports from the east3Route partners, South Africa sourced significant amounts of goods from Swaziland and Mozambique; 56% and 22% of these countries respective total export bills landed in South Africa. However, their contributions to South Africa’s total import bill were just as negligible as that of Seychelles. This is a clear indication of room for increased trade between South Africa and these countries, as the call for increased intra-Africa trade increases. The leading products exported from these economies to South Africa are shown in Table 5.2.2 below.

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Table 5.2.2: South Africa’s imports from E3Route economies, 2014 Market

Seychelles

Value (US$ m)

Swaziland 1.2

Mozambique 1 147.3

1 045.3

% SA imports

0.0

1.1

1.0

% of market exports

0.2

56.3

22.1

Essential oils, perfumes,

Mineral fuels, oils, distillation

cosmetics, toiletries

products, etc

Aircraft, spacecraft, and parts

Sugars and sugar

Edible fruit, nuts, peel of citrus

thereof

confectionery

fruit, melons

Machinery, nuclear reactors,

Miscellaneous chemical

Bird skin, feathers, artificial

boilers, etc

products

flowers, human hair

Optical, photo, technical,

Articles of apparel,

medical, etc apparatus

accessories, not knit or crochet

Footwear, gaiters and the like,

Wood and articles of wood,

Residues, wastes of food

parts thereof

wood charcoal

industry, animal fodder

Articles of apparel,

Sugars and sugar

Toys, games, sports requisites

Products

Manmade filaments Special woven or tufted fabric, lace, tapestry etc

SA’s imports (US$ m)

Organic chemicals

confectionery Machinery, nuclear reactors, boilers, etc

Commodities not elsewhere

Other made textile articles,

specified

sets, worn clothing etc

Ships, boats and other floating

Mineral fuels, oils, distillation

Oil seed, oleagic fruits, grain,

structures

products, etc

seed, fruit, etc,

Printed books, newspapers,

Fish, crustaceans, molluscs,

pictures etc

aquatic invertebrates

Electrical, electronic equipment Market exports (US$ m)

accessories, knit or crochet

Articles of iron or steel

514.2

2 029.5

Copper and articles thereof

4 725.3

99 892.7

Source: TradeMap (2015)

KwaZulu-Natal’s trade with Seychelles was quite impressive, given that the latter is not very active in intraAfrican trade. 0.2% of the province’s exports in 2013 (or R176.7 million) landed in Seychelles, and these included mainly machinery such as washing machines, fridges and refrigerators. The wood and plastic products that feature highly on the South African list of exports to Seychelles also appear to have KZN as an important the origin.

OUR JOURNEY TOGETHER

Table 5.2.3: KwaZulu-Natal’s exports to E3Route economies, 2013 Market

Seychelles

Value

Swaziland

176,705,888

Mozambique 17,216,144

2,908,830,476

% KZN exports Nuclear reactors, boilers,

Vehicles other than railway,

machinery, etc

tramway

Wood and articles of wood,

Nuclear reactors, boilers,

wood charcoal

machinery, etc Electrical, electronic

Plastics and articles thereof

equipment Inorganic chemicals, precious

Beverages, spirits and vinegar

metal compound, isotopes

Electrical, electronic equipment Products

Iron and steel

Soaps, lubricants, waxes,

Articles of iron or steel

candles, modelling pastes Vehicles other than railway,

Cereals

tramway

Soaps, lubricants, waxes,

Articles of iron or steel

candles, modelling pastes Paper & paperboard, articles of

Meat and edible meat offal

pulp, paper and board

Miscellaneous edible

Sugars and sugar

preparations KZN’s exports

confectionery 91,999,812,564

Source: Quantec (2015)

The largest of the three markets at a whopping R2.9 billion, Mozambique purchased mostly vehicles, machinery, electrical and electronic equipment and chemicals. Of course iron and steel would not come from South Africa without the province’s contribution. Trade between the province and Swaziland is not well documented; in 2012, only R17.2 million worth of goods is reported to have been exported from KZN to Swaziland – this is almost a tenth of the trade between KZN and Seychelles. The products that made up the tiny trade figure were also not known (Table 5.2.3).

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Table 5.2.3: KwaZulu-Natal’s imports from E3Route economies, 2013 Market

Seychelles

Value (R ‘000)

Swaziland* 1,588.2

% KZN imports

Mozambique 20.6

0.0

2,028,719.6

0.0

1.4

Aircraft, spacecraft, and parts

Nuclear reactors, boilers,

Mineral fuels, oils, distillation

thereof

machinery, etc

products, etc

Electrical, electronic

Sugars and sugar

equipment

confectionery

Salt, sulphur, earth, stone, plaster,

Vehicles other than railway,

Residues, wastes of food

lime and cement

tramway

industry, animal fodder

Nuclear reactors, boilers,

Clocks and watches and parts

machinery, etc

thereof

Iron and steel

Electrical, electronic equipment Products Ceramic products Wood and articles of wood, wood charcoal Furniture, lighting, signs, prefabricated buildings

Cotton

Sugars and sugar

Edible fruit, nuts, peel of citrus

confectionery

fruit, melons

Articles of apparel,

Fish, crustaceans, molluscs,

accessories, knit or crochet

aquatic invertebrates nes

Articles of iron or steel Rubber and articles thereof

Electrical, electronic equipment Oil seed, oleagic fruits, grain, seed, fruit, etc, nes

Tools, implements, cutlery, etc of

Paper & paperboard, articles

Articles of apparel, accessories,

base metal

of pulp, paper and board

not knit or crochet

Miscellaneous articles of base

Articles of apparel,

Nuclear reactors, boilers,

metal

accessories, not knit or crochet

machinery, etc

KZN’s imports (R ‘000)

148 559 906.3

Source: Quantec (2015); * data are for 2012

On the import side, details of KZN’s imports from Swaziland are relatively well documented, while the value of was an eye-popping negligible R21 000, and was limited to parts of machines such as cocks for taps and pipes. This trade figure is an indication of leaky activity between the regions, or simply lack of control and management. The proximity of the markets does not warrant this kind of a figure. Mozambique was KZN’s key source market of the three again, and a good source of fuels, animal feeds and a number of other foodstuff products, including products of the agricultural, forestry and fishing industry. Although at a very low level, Seychelles also supplied KZN with a mixture of high-tech finished products such as parts of aircraft, machine products and electric and electronic products.

OUR JOURNEY TOGETHER

Trade between these countries can be summarised as follows: Imports

Exports 3% of total exports to Mozambique 4.61% of total South African Exports (2013)

22.5% of total Mozambique Exports (2013)

0.3% of total Seychelles Exports (2008)

81.6% of total Swaziland Exports

1.2% of total imports are from Mozambique

1.6% of total exports to Seychelles

0% of total imports are from Seychelles

0.05% of total exports to Swaziland

1.1% of total imports are from Swaziland

22.4% of total exports to South Africa

32.7% of total imports are from South Africa

0% of total exports to Seychelles

0% of total imports are from Seychelles

0.1% of total exports to Swaziland

0.4% of total imports are from Swaziland

0.2% of total exports to South Africa

6.2% of total imports are from South Africa

0% of total exports to Mozambique

0% of total imports are from Mozambique

0.1% of total exports to Swaziland

0.1% of total imports are from Swaziland

79.8% of total exports to South Africa

81.4% of total imports are from South Africa

1.8% of total exports to Mozambique

1.3% of total imports are from Mozambique

0% of total exports to Seychelles

2.36% of total South African Imports (2013)

33.1% of total Mozambique Imports (2013)

6.3% of total Seychelles Imports (2008)

82.7% of total Swaziland Imports (2007)

0% of total imports are from Seychelles

The analysis of the trade data indicates that the majority of the trade is occurring between South Africa (KwaZulu-Natal) and the other countries. There is very little trade occurring between Mozambique, Seychelles and Swaziland. It is also important to note that although the main trade is occurring between South Africa and the other countries, the trade is a small percentage of South Africaâ&#x20AC;&#x2122;s total trade with the world. The above trend is mainly due to benefits of various trade agreements. Countries will prioritise trade through channels that provide the greatest benefit. For this reason South Africa is used as a base to discuss the imports and exports within the region as a whole.

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5.2.1. Exports

The following table presents the total export value from each of the regions. From the table it is evident that South Africa has the highest export value, followed by Mozambique, Swaziland and Seychelles. Table 5.2.5: Total Export Value (2013) Country

Total US Dollars ($)

South Africa

$95,224,783,000

Mozambique

$4,023,719,000

Swaziland

$551,493,000

Seychelles

$2,012,428,000

Province

South African Rand Value (ZAR)

KwaZulu-Natal

ZAR 91,999,812,564z

The following table presents the commodity exports to South Africa from Mozambique, Seychelles and Swaziland for 201334 . Table 5.2.6: Exports to South Africa from Mozambique, Seychelles and Swaziland (2013) HS CODE 6

Mozambique % of Export to SA

Seychelles % of Export to SA

Swaziland % of Export to SA

Live Animals, Animal Products

0.7%

Vegetable products

3.5%

36%

Animal and Vegetable Fats and Oils

0.0%

Prepared Food Stuffs, Beverages

2.1%

Mineral Products

88.0%

Products of Chemical or Allied Industries

0.2%

Plastics, Rubber

0.0%

Raw hides & Skins, leather and articles thereof

0.0%

Wood, cork, straw and articles thereof

0.1%

Pulp of wood, paper and products

0.0%

Textiles and Textile Articles

0.5%

34%

Footwear, headgear, umbrellas, walking sticks

1.3%

Articles of stone, plaster, cement, asbestos, glass

0.0%

Pearls, precious or semi-precious stones

0.0%

Base metals and articles of base metals

2.4%

Machinery and equipment

0.9%

23%

17%

Vehicles, aircrafts and transport equipment

0.0%

16%

10%

Optical and Photographic equipment

0.2%

Arms and Ammunition

0.0%

Miscellaneous manufactured Articles

0.0%

26%

Works of Art and antiques

0.0%

Other unclassified Goods

0.0%

Quantec,2014

OUR JOURNEY TOGETHER

Based on further analysis it is evident that the main products being exported are as follows:

Exports from Mozambique to South Africa: 1.

Mineral products (88%).

•

Petroleum oils, oils from bituminous minerals, crude

•

Natural gas, liquefied

•

Blends of complex petroleum hydrocarbons classifiable in tariff subheading 2710.12.90, for use as plasticisers in the manufacture of pneumatic tyres classifiable in tariff heading 40.11, in such quantities, at such times and subject to such con

Vegetable Products (3.5%)

•

Bananas, including plantains, fresh or dried

•

Cashew nuts, shelled dried

•

Ground nuts

•

Oil seeds and oleaginous fruits

Exports from Seychelles to South Africa: 1.

Miscellaneous manufactured Articles (26%)

•

Equipment for gymnastics, sports, outdoor games

Machinery and equipment (23%)

•

Aircraft engines, spark-ignition

•

Personal weighing machines, baby & household scales

•

Units of auto data process

Vehicles, aircrafts and transport equipment (16%)

•

Aircraft parts

4. Optical and Photographic equipment (10%) •

Instruments, appliances for medical, etc. science

•

Equipment to measure, check gas/liquid properties

5. Live Animals, Animal Products (8%) •

Fish, frozen, whole

east3ROUTE ECONOMIC REPORT 2015

Exports from Swaziland to South Africa 1.

Vegetable products (36%)

•

Bananas, including plantains, fresh or dried

Textiles and Textile Articles (34%)

•

Women’s, girls blouses, shirts, man made fibre, not knit

Machinery and equipment (17%)

•

Parts of lifts, skip hoist or escalators

5.2.2. Imports

The following table presents the total import value form each of the regions. From the table it is evident that South Africa has the highest import value, followed by Mozambique, Swaziland and Seychelles. Table 5.2.7: Total Import Value (2013) Country South Africa

Total US Dollars ($) $103,461,277,000

Mozambique

$10,099,147,000

Swaziland

$799,325,000

Seychelles

$1,709,167,000

Province KwaZulu-Natal

South African Rand Value (ZAR) ZAR 148,559,906,274

The following table presents the commodity imports from Mozambique, Seychelles and Swaziland to South Africa for 201335.

Quantec (2014)

OUR JOURNEY TOGETHER

Table 5.2.8: Imports into Mozambique, Seychelles and Swaziland from South Africa (2013) HS CODE 6

Mozambique % of Import from SA

Seychelles % of Import from SA

Swaziland % of Import from SA

Live Animals, Animal Products Vegetable products

Animal and Vegetable Fats and Oils

Prepared Food Stuffs, Beverages

14%

Mineral Products

29%

Products of Chemical or Allied Industries

12%

23%

Plastics, Rubber

Raw hides & Skins, leather and articles thereof

Wood, cork, straw and articles thereof

Pulp of wood, paper and products

25%

Textiles and Textile Articles

Footwear, headgear, umbrellas, walking sticks

Articles of stone, plaster, cement, asbestos, glass

Pearls, precious or semi-precious stones

Base metals and articles of base metals

23%

Machinery and equipment

16%

Vehicles, aircrafts and transport equipment

10%

Optical and Photographic equipment

Arms and Ammunition

Miscellaneous manufactured Articles

Works of Art and antiques

Other unclassified Goods

Imports into Mozambique from South Africa: 1.

Mineral Products (29%)

•

Electric Energy

Machinery and equipment (16%)

•

Parts of cranes, work-trucks, shovels, construction machine

•

Parts of lifting/handling machinery

•

Parts of boring or sinking machinery

•

Earth moving/road making equipment, self-propelled

•

Front end shovel loaders

•

Graders and levellers, self-propelled

•

Parts of pumps for liquids

•

Pumps fitted, designed to have, a measuring device

•

Parts for mineral sort, screen, mix, etc machines

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Vehicles, aircrafts and transport equipment (10%)

•

Diesel powered trucks weighing < 5 tonnes

•

Diesel powered trucks weighing 5-20 tonnes

•

Dump trucks designed for off-highway use

4. Base metals and articles of base metals (9%) •

Bar/rod, i/nas, indented or twisted

•

Bar/rod, iron or non-alloy steel, forged

•

Structures and parts of structures, iron or steel

Prepared Food Stuffs, Beverages (9%)

•

Refined sugar, in solid form, pure sucrose

•

Soups and broths and preparations thereof

•

Beer made from malt

Products of Chemical or Allied Industries (8%)

•

• Organic surfactant washing, cleaning preparations

•

• Washing and cleaning preparations, retail

•

• Organic surface-active agents

•

• Soaps, for toilet use

•

• Calcium phosphates except hydrogen-orthophosphate

Imports into Seychelles from South Africa: 1.

Machinery and equipment (16%)

•

Grape wines, fortified wine or must, pack < 2l

•

Food preparations

•

Sauces, mixed condiments, mixed seasoning

Prepared Food Stuffs, Beverages (14%)

•

Grape wines, fortified wine or must, pack < 2l

•

Food preparations

•

Sauces, mixed condiments, mixed seasoning

OUR JOURNEY TOGETHER

Products of Chemical or Allied Industries (12%)

•

Personal deodorants and antiperspirants

•

Beauty, makeup and suntan preparations

•

Powders, for skin care and make-up

•

Hair preparations

•

Hair shampoos

Vehicles, aircrafts and transport equipment (10%)

•

Diesel powered trucks weighing < 5 tonnes

•

Spark ignition engine trucks weighing < 5 tonnes

5. Base metals and articles of base metals (9%) •

Structures and parts of structures, iron or steel

•

Doors, windows, frames of iron or steel

Imports into Swaziland from South Africa: 1.

Pulp of wood, paper and products (25%)

•

Paper, filter, cut to size or shape

•

Paper, sulphite wrapping, uncoated

•

Paper, tarred, bituminised or asphalted

2. Base metals and articles of base metals (23%) •

Bars, rods & profiles of copper-zinc base alloys

Products of Chemical or Allied Industries (23%)

•

Quaternary ammonium salts and hydroxides

Mineral Products (7%)

•

Petroleum bitumen

east3ROUTE ECONOMIC REPORT 2015

5.2.3. Top Trading Partners

The table below indicates the countries that imported the greatest value of goods from South Africa in 2013. What is noticeable about South Africa’s trading partners in 2013 is that of the top ten importers of South African goods, only three were African countries (Botswana, Namibia and Mozambique). Compared to 2011 data it is evident that South Africa is increasing its trade with African countries (2011 there were only two African countries in the top 10 – Zimbabwe and Zambia). Given the significant growth and the Free Trade Agreements that exist between Southern African Development Community (SADC) partners in the sub-Saharan market, there is much opportunity for South Africa to increase intra-regional trade with African partners. Table 5.2.9: South Africa’s Principal Destination Markets (2013)36 Countries

Exported value in 2013 (USD 000)

China

12,058,975

USA

6,894,762

Japan

5,570,290

Botswana

4,602,432

Namibia

4,237,707

Germany

3,828,853

United Kingdom

3,297,878

Netherlands

3,074,073

India

2,998,302

Mozambique

2,830,787

Zambia

2,711,156

Zimbabwe

2,399,408

The table below presents the top four African importers from South Africa: Botswana, Namibia, Mozambique and Zambia, respectively. Table 5.2.10: South Africa’s Principal African Destination Markets (2013)37 African Countries

Exported value in 2013 (USD 000)

Botswana

4,602,432

Namibia

4,237,707

Mozambique

2,830,787

Zambia

2,711,156

Zimbabwe

2,399,408

Mozambique’s top two trading partners are the Netherlands (first), and South Africa (second). Of the top ten importers of Mozambique goods, only three were African countries (South Africa, Zimbabwe and Tanzania). Mozambique, like South Africa, also has a strong trading relationship with China.

36 37

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OUR JOURNEY TOGETHER

Table 41: Mozambiqueâ&#x20AC;&#x2122;s Principal Destination Markets (2013)38 Countries

Exported value in 2013 (USD 000)

Netherlands

1,150,608

South Africa

901,548

India

679,568

USA

143,562

China

104,980

Portugal

104,239

Switzerland

79,347

Zimbabwe

74,510

Spain

74,104

Tanzania

68,548

United Kingdom

48,952

Belgium

48,567

The table below presents the top four African importers from Mozambique: Botswana, Namibia, Mozambique and Zambia, respectively. Table 5.2.12: Mozambiqueâ&#x20AC;&#x2122;s Principal African Destination Markets (2013)39 African Countries South Africa

Exported value in 2013(USD 000) 901,548

Zimbabwe

74,510

Tanzania

68,548

Malawi

47,883

Mauritius

17,750

The table below illustrates the top trading partners for Seychelles. From the table it is evident that the Seychelles mainly exports to European countries. This indicates that there is a significant opportunity to partner with Seychelles to increase trade between Seychelles and the other countries in the region. Table 5.2.13: Seychelles Principal Destination Markets (2008)40 Countries Saudi Arabia

Exported value in 2008 (USD 000) 91,459

France

55,176

United Kingdom

45,739

Italy

16,336

Germany

15,938

Netherlands

3,944

Switzerland

2,738

Sri Lanka

2,433

USA

1,820

China

1,614

Mauritius

1,088

Madagascar

38 39 40

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973

east3ROUTE ECONOMIC REPORT 2015

Seychelles has very limited trading with African countries. However the top 4 African countries being exported to are Mauritius, Madagascar, South Africa and Swaziland (Mozambique is 6th on the list of African country partners). Table 5.2.14: Seychelles Principal African Destination Markets (2008)41 African Countries Mauritius Madagascar

Exported value in 2008 (USD 000) 1,088 973

South Africa

716

Swaziland

251

Tanzania

107

The table below indicates the top ten importers of Swazilandâ&#x20AC;&#x2122;s goods. Swaziland exports primarily to South Africa, which is understandable given its location. The second greatest importer of Swaziland goods in 2013 was Italy, although this was much less in value than South Africa. Table 5.2.15: Swaziland Principal Destination Markets (2007)42 Countries

Exported value in 2007 (USD 000)

South Africa

1,113,278

Italy

888,546

Namibia

153,492

Mozambique

31,131

United Arab Emirates

20,214

Botswana

5,575

Australia

3,272

Zamia

2,168

Lesotho

1,455

United Kingdom

1,328

Switzerland

1,303

USA

1,138

Swaziland, unlike South Africa, exports primarily to sub-Saharan African countries. The table below indicates the top five African importers of Swazilandâ&#x20AC;&#x2122;s goods Table 5.2.16: Swaziland Principal African Destination Markets (2007)43 African Countries

Exported value in 2007 (USD 000)

South Africa

1,113,278

Namibia

153,492

Mozambique

31,131

Botswana

5,575

Zamia

2,168

41 42 43

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06 T

TH ER TH E ea BILAT ER st3 AL RO AGR UT EEM EE CO EN NO MIE TS AM S ON

TRA D E AN

OUR JOURNEY TOGETHER

east3ROUTE ECONOMIC REPORT 2015

6. TRADE AND OTHER BILATERAL AGREEMENTS AMONGST THE east3ROUTE ECONOMIES 6.1. TRADE AGREEMENTS The following trade agreements 44 are of particular importance in relation to the East3Route: •

South African Customs Union (SACU)

•

The Southern African Development Community (SADC)

•

The SADC Free Trade Area

•

The African Growth and Opportunity Act (AGOA)

The following table shows some of the bilateral agreements between South Africa (KZN), Mozambique, Seychelles and Swaziland. Table 6.1.1: Bilateral Trade Agreements between KZN, Mozambique, Seychelles and Swaziland45 Type of Agreement

Countries/Provinces Involved

Main Objective/Terms

The African Growth

•

South Africa

AGOA provides eligible sub-Saharan African countries with duty free access

and Opportunity Act

•

Mozambique

and quota free access into the United States’ market, for those products

•

Seychelles

•

Swaziland

The Common

•

Swaziland

The Common Market for Eastern and Southern Africa represents 20 countries

Market for Eastern

•

Seychelles

and aims to promote cooperation between the member states in all areas of

•

South Africa

SACU affords duty and quota - free access to the markets in member states.

•

Swaziland

Only VAT is levied. Duty free movement of goods with a common external tariff

•

South Africa

Tariff reductions on selected goods.

(AGOA)

and Southern Africa

meeting the eligibility requirements.

economic activity.

(COMESA) Southern African Customs Union (SACU)

SACU - Free Trade

on goods entering any of the countries from outside the SACU.

Agreement (FTA)

•

Swaziland

SACU-Southern

•

South Africa

Common Market

•

Swaziland

South African

•

South Africa

The Southern African Development Community is an association of 14 Southern

Development

•

Mozambique

African states whose objective is to sustain regional collaboration in order to

•

Seychelles

•

Swaziland

(Mercosur) PTA

Community (SADC)

Tariff reductions on selected goods.

promote economic growth and improve general conditions.

44 See Table 1 for explanations on all trade agreements to which South Africa, Swaziland and Mozambique align themselves. 45 http://www.dfa.gov.za/docs/2006/moza0628.htm, http://export.gov/southafrica/build/groups/public/@bg_za/documents/webcontent/bg_za_034197. pdf, http://www.traveldocs.com/index.php?page=swaziland-trvl-info, http://focusafrica.gov.in/Seychelles_Trade_Agreement.html

OUR JOURNEY TOGETHER

Type of Agreement

Countries/Provinces Involved

Main Objective/Terms

South Africa

The aim of SADC Protocol on Trade is to liberalise intra-regional trade in goods

•

Swaziland

and services within the region. A free trade area (FTA) along with economic

•

Mozambique

Agreement(FTA)

•

Seychelles

Africa Free Trade Zone

•

South Africa

(AFTZ)

•

Swaziland

•

Mozambique

Southern African Development Community (SADC) Free Trade

•

development, diversification and industrialisation of the region is the main objective. A FTA, with 85% duty-free trade was achieved in 2008. The Association was formed to promote African competitiveness by encouraging the best practices in Free Zones Scheme which will help in attracting FDI into the Continent.

•

Seychelles

Trade, Investment

•

South Africa

Makes provision for the parties to negotiate and sign agreements relating

and Development

•

Swaziland

to sanitary and phyto-sanitary measures (SPS), customs cooperation and

Cooperation

technical barriers to trade (TBT). It also establishes a forum of engagement of any matters of mutual interest, including capacity-building and trade and

Agreement (TIDCA)

investment promotion. SACU-preferential Trade

•

South Africa

Agreement

•

Swaziland

MOU on Natural Gas

•

South Africa

Tariff reductions on selected goods.

Memorandum of Understanding on Natural Gas Trade.

•

Mozambique

MOU on Goods and

•

South Africa

Bilateral Agreement on the Carriage of Goods by Road, and the Agreement for

Movements

•

Mozambique

the Promotion and Reciprocal Protection of Investments.

MOU on Taxation

•

South Africa

Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal

Swaziland

Evasion with respect to Taxes on Income.

•

Source: Department of Trade and Industry South Africa, 2014

6.2. OTHER BILATERAL AGREEMENTS In addition to regional trade agreements that exist between South Africa and the other E3Route economies, there are other general bilateral and multilateral agreements that South Africa has with these other countries. These are meant to consolidate efforts and harmonise the broader economic and social environment beyond trade only. A good number of these are not in force, and would be helpful to exploit their premise and implement their objectives. Since these documents are legal in nature, it suffices to list them for general reference. The full documents are available from the South African Department of International Relations and Cooperation. Some are not technically relevant here, but we believe it is useful to have them captured to give a fair picture of historical ties and bonds that have existed between and among the economies. 6.2.1. Mozambique

The Republic of South Africa has at least sixty (60) bilateral and multilateral agreements with the Republic of Mozambique. These are listed in Table 6.2.1 below. As recently as May 2015, the president of Mozambique, President Filipe Nyusi invited the president of South Africa, President Jacob Zuma, for a State Visit in Mozambique, where another series of relevant agreements were made and signed, an indication of ongoing friendship and interactions between the two states.

east3ROUTE ECONOMIC REPORT 2015

Table 6.2.1: Bilateral and multilateral agreements between South Africa and Mozambique46

Date signed 19860605

Country

Title

Botswana

Agreement between the Governments of the Republic of Botswana, the Peopleâ&#x20AC;&#x2122;s

Zimbabwe

Republic of Mozambique, the Republic of South Africa and the Republic of

Mozambique

Zimbabwe relative to the Establishment of the Limpopo Basin Permanent

Entry into force46: Date (yymmdd) 19860605

Technical Committee 20031127

Botswana

Agreement on the Establishment of the Limpopo Watercourse Commission

20110905

Mozambique Zimbabwe 19281110

Mozambique

Working Agreement regarding Railway Matters - Mozambique Convention

Not in force

19641013

Portugal

Labour Agreement - Mozambique Mineworkers in SA

19650101

Rail Transport: Mozambique Convention

19650101

Rivers of Mutual Interest and Cunene River Scheme

Not in force

Swaziland

Agreement between the Government of the Republic of South Africa, the

19830217

Mozambique

Government of the Kingdom of Swaziland and the Government of the Peopleâ&#x20AC;&#x2122;s

Mozambique 19641013

Portugal Mozambique

19641013

Portugal Mozambique

19830217

Republic of Mozambique relative to the Establishment of a Tripartite Permanent Technical Committee (on water) 19840316 19840502

Mozambique

Agreement on Non-Aggression and good Neighbourliness. (Accord of Nkomati)

19840316

Mozambique

Agreement Relative to the Cahora Bassa Project

19840502

Portugal 19841126

Mozambique

Agreement concerning Fishing Matters with Additional Protocol

19841126

19920824

Mozambique

Agreement with regard to the Establishment of Trade Missions

19920824

19920831

Mozambique

Agreement concerning Fishing matters

Not in force

19930927

Mozambique

Agreement on Establishment of Diplomatic Relations

Not in force

19940720

Mozambique

Agreement for the Establishment of a Joint Permanent Commission for Co-

19940720

operation 19950228

Mozambique

Agreement in respect of Co-operation and Mutual Assistance in the Field of

19950228

Crime Combating 19950228

Mozambique

Agreement in the field of Tourism

Not in force

19950228

Mozambique

Joint Statement of Intent by the Honourable Mr. Nelson R Mandela President of

19950228

the Republic of South Africa and the Honourable Mr Joachim Chissano President of the Republic of Mozambique and the Presidents of the Agricultural Unions of the Free State and Transvaal Dr Piet Gouws Mr A.A.B. Bruwer 19960116

Mozambique

Memorandum of Understanding on Natural Gas Trade

19960116

19960227

Mozambique

Joint Statements of Intent in respect of Locating, Lifting and Destruction of

19960227

19960506

Mozambique

Agreement between the Government of the Republic of South Africa and the

Landmines Not in force

Government of the Republic of Mozambique on Agricultural Development 19960506

Mozambique

Agreement regarding Merchant Shipping and related Matters

Not in force

19960726

Mozambique

Agreement on the Co-ordination of the Maputo Development Corridor

Not in force

19960726

Mozambique

Agreement on the Establishment and Functioning of the Joint Water Commission

19960726

Mozambique

Protocol on the Design, Financing, Construction, Operation and Maintenance of

Not in force

a portion of National Route 4 in the Republic of South Africa and the Road from Ressano Garcia to Maputo in the Republic of Mozambique as a Toll Highway together with Developments and Associated Facilities

46 This is the date on which each Contracting State has notified the other in writing through the diplomatic channel of its compliance with the constitutional requirements necessary for the implementation of the Agreement. The date of entry into force [is normally] the date of the last notification s = signed; r = ratified; a = acceded

OUR JOURNEY TOGETHER

Date signed

Country

Title

Entry into force46: Date (yymmdd)

19970320

Mozambique

Memorandum of Understanding concerning Mepanda Uncua

19970320

19970327

Mozambique

Agreement on Demining

Not in force

19970505

Mozambique

Bilateral Agreement on the Carriage of Goods by Road.

Not in force

19970505

Mozambique

Bilateral Agreement on the Conveyance of Passengers by Road.

Not in force

19970506

Mozambique

Agreement for the Promotion and Reciprocal Protection of Investments. Plus

Not in force

19980715

Mozambique

Protocol on the Establishment of a “One Stop Border Control Facility on the Border

Protocol Not in force

at Lebombo/Ressano Garcia 20000211

Mozambique

Diplomatic Exchange of Notes on the Employment of the South African

Not in force

National Defence Force to render Humanitarian Assistance to the Mozambican Government during the widespread Flooding 20000316

Mozambique

Cooperation Agreement in the Field of Defence.

Not in force

20000622

Mozambique

General Trans-Frontier Conservation and Resource Area Protocol

Not in force

Lubombo Ndumu-Tembe-Futi Trans Frontier Conservation and Resource Area

Not in force

Swaziland 20000622

Mozambique

Protocol 20000622

Mozambique

Lubombo Ponto Do Ouro-Kosi Bay Marine and Coastal Trans-Frontier

Not in force

Conservation and Resource Area Protocol between the Government of the Republic of Mozambique and the Government of the Republic of South Africa 20000816

Mozambique

Agreement between the Republic of South Africa, the Republic of Mozambique

Swaziland

and the Kingdom of Swaziland on Co-operation with regard to the International

Not in force

Interconnector (Motraco) 20001110

Mozambique

Agreement on the Development of the Gaza-Kruger-Gonarezhou Transfrontier

Zimbabwe

Park between the Governments of the Republic of South Africa, the Republic of

Not in force

Mozambique and the Republic of Zimbabwe 20010406

Mozambique

Agreement concerning Natural Gas Trade

Not in force

20020305

Mozambique

Memorandum of Understanding on Bilateral Cooperation in the Field of Sport

20020305

and Recreation 20020318

Mozambique

Agreement regarding Mutual Assistance between their Customs Administrations

20060112

20020510

Mozambique

Agreement regarding the Coordination of Search and Rescue Services

Not in force

20020510

Mozambique

Air Services Agreement

20020510

20020704

Mozambique

Agreement on Institutional Cooperation in the Field of Agriculture and Livestock

20020704 Not in force

20020829

Swaziland

Tripartite Interim Agreement between the RSA, Kingdom of Swaziland and

Mozambique

the Rep. of Mozambique for Co-operation on the Protection and Sustainable

Mozambique

Treaty between the Governments of the Republic of Mozambique, South Africa

Zimbabwe

and Zimbabwe on the establishment of the Great Limpopo Transfrontier Park

Mozambique

Cooperation Agreement in the fields of Migratory Labour, Job Creation, Training,

Utilisation of the Water Resources of the Inkomati and Maputo Watercourses 20021209 20030117

Not in force Not in force

Studies and Research, Employment Statistics, Social Dialogue and Social Security 20030827

Mozambique

Inter-Governmental Memorandum of Understanding on the North Mozambique

Not in force

Power Development Initiatives (“NMPD”) 20031127

Botswana

Agreement on the Establishment of the Limpopo Watercourse Commission

20110905

Agreement for Funding the Scoping Phase of the Joint Maputo River Basin Study

20031127 (s)

Agreement regarding the Waiver of Visa Requirements for Holders of Ordinary

20050429

Mozambique Zimbabwe 20031127

Mozambique Swaziland

20050415

Mozambique

Passports 20050415

Mozambique

Memorandum of Understanding on Economic Cooperation.

Not in force

20051208

Mozambique

Agreement on Health Matters

Not in force

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Date signed 20060525

Country

Mozambique

Title

Memorandum of Understanding on Cooperation in the field of Sport and

Entry into force46: Date (yymmdd) 20060525

Recreation 20060623

Mozambique

Agreement in the Fields of Arts and Culture

Not in force

20060707

Mozambique

Agreement on Scientific and Technological Cooperation

20060707

20070918

Mozambique

Agreement on Combined Border Control Posts on the Mozambique-South Africa

Not in force

Border. 20070918

Mozambique

Convention for the Avoidance of Double Taxation and the Prevention of Fiscal

20090219

Evasion with Respect to Taxes on Income 20071120

Mozambique

Agreement for the Establishment of a Joint Permanent Commission on Defence

20071120

and Security 20081204

Mozambique

Agreement on Co-operation in respect of Fisheries and Integrated Marine and

20081204

Coastal Management and Development 20090522

Mozambique

Agreement between the Republic of South Africa and the Republic of

20090522

Mozambique on Harmonisation of their Individual Submissions for their Respective Claim for an Extended Continental Shelf 20110214

Mozambique

Memorandum of Understanding between the Government of the Republic of

20110214

South Africa and the Government of the Republic of Mozambique regarding the Conceptualization, Design, Development and Implementation of the Matola Raid Memorial Project in Maputo, Mozambique 20111213

Agreement between the Government of the Republic of South Africa and Mozambique

the Government of the Republic of Mozambique on Regular Diplomatic

20120404

Consultations Agreement between the Government of the Republic of South Africa and the 20111213

Mozambique

Government of the Republic of Mozambique on the Establishment of a Bi-

20120404

national Commission Memorandum of Understanding between the Government of the Republic of 20111213

Mozambique

Mozambique Regarding Co-operation in the Forestry Based Industries

20111213

Memorandum of Understanding between the Government of the Republic 20111213

Mozambique

of Mozambique, the Government of the Republic of South Africa and

Tanzania

the Government of the United Republic of Tanzania on Maritime Security

20111213

Cooperation Memorandum of Understanding between the Government of the Republic 20111213

Mozambique

of South Africa and the Government of the Republic of Mozambique on

20111213

Cooperation in the Field of Communications Programme of Co-operation for the Implementation of the Agreement between 20111213

Mozambique

the Government of the Republic of South Africa and the Government of the

20111213

Republic of Mozambique on Co-operation in the Areas of Arts and Culture for the years 2012-2014 Annexes to the Agreement between the Government of the Republic of South 20130611

Mozambique

Africa and the Government of the Republic of Mozambique on Combined Border

Not in force

Control Posts on the Mozambique-South Africa Border Memorandum of Understanding between the Government of the Republic 20140417

Mozambique

of South Africa and the Government of the Republic of Mozambique on Cooperation in the Field of Biodiversity Conservation and Management

Source: South African Department on International Relations and Cooperation [DIRCO] (2015).

Not in force

OUR JOURNEY TOGETHER

6.2.2. Swaziland There are at least forty-three (43) known bilateral and multilateral agreements between the Republic of South Africa and the Kingdom of Swaziland, as listed below. Table 6.2.2: bilateral and multilateral agreements between South Africa and Swaziland Date signed

Country

Title

Entry into force: Date (yymmdd)

20110214

Mozambique

Memorandum of Understanding between the Government of the Republic of

20110214

19630704

Lesotho

Multilateral Monetary Agreement between the Government of the Kingdom of

19920310 (s)

Swaziland

Lesotho, the Government of the Republic of Namibia, the Government of the

19920327

Namibia

Republic of South Africa, and the Government of the Kingdom of Swaziland

Swaziland

Agreement concerning Postal services - Insured Parcels

19630401

Swaziland

Extradition Agreement

19681005

Swaziland

Convention for the Avoidance of Double Taxation and the Prevention of Fiscal

19730823

19640603 19680904 19680905 19721219

Evasion with respect to Taxes on Income 19740320

Swaziland

Issuing of Notes and Coins (Amended 1.6.85)

19740320

19741205

Lesotho

Monetary Agreement between the Governments of South Africa, Swaziland and

19741205 (s)

Swaziland

Lesotho. (Amended in 1986, 1989, and 1992)

19750822

Swaziland

Labour Agreement

19750822

19800501

Swaziland

Agreement with reference to the Understanding reached between the

19800501

Governments of the RSA and The Kingdom of Swaziland in respect of a Servitude to be granted by Swaziland to SA for the Inundation of 3800 Acres (1540 hectares) in Swaziland by the Pongolapoort Dam 19820217

Swaziland

Exchange of Notes with regard to Matters of Common Security

19820217

19830217

Swaziland

Agreement between the Government of the Republic of South Africa, the

19830217

Mozambique

Government of the Kingdom of Swaziland and the Government of the Peopleâ&#x20AC;&#x2122;s Republic of Mozambique relative to the Establishment of a Tripartite Permanent Technical Committee

19830916

Swaziland

Agreement with regard to Financial and Technical Assistance for the Construction

19830916

of a Railway link in the Kingdom of Swaziland 19841227

Swaziland

Agreement with regard to Exchange of Trade Representatives.

19841227

19850601

Swaziland

Exchange of Notes to amend Article 2 of the Agreement on the issue of Notes and

19850601

19860418

Lesotho

Trilateral Agreement amending the Monetary Agreement between the

19860418(s)

Swaziland

Government of the Republic of South Africa, Government of the Kingdom of

Not in force

Coins dated 20.3.1974

Lesotho, and the Government of the Kingdom of Swaziland dated 5th December 1974. (Amended in 1989) 19860418

Swaziland

Bilateral Monetary Agreement

19860418 (s) 19860401

19890401

Lesotho

Trilateral Agreement amending the Trilateral Monetary Agreement between

Swaziland

the Government of the Kingdom of Lesotho, the Government of the Kingdom of

19890401(s)

Swaziland and the Government of the Republic of South Africa. (Amended in 1992) 19900409

Botswana

Agreement amending the Customs Union Agreement between the Governments

Lesotho

of Botswana, Lesotho, RSA and Swaziland of 11 December 1969

Swaziland

19900409

east3ROUTE ECONOMIC REPORT 2015

Date signed

Country

Title

Entry into force: Date (yymmdd)

19900904

Botswana

Memorandum of Understanding on Road Transportation in the Common

Lesotho

Customs Area pursuant to the Customs Union Agreement between the

Swaziland

Governments of the Rep. of Botswana, the Kingdoms of Lesotho and Swaziland

Not in force

and the RSA 19920313

Swaziland

Treaty on the Development and Utilisation of the Water resources of the Komati

Not in force

River Basin 19920313

Swaziland

Treaty on the Establishment and functioning of the Joint Water Commission

Not in force

between the Governments of the RSA and the Kingdom of Swaziland 19920327

Lesotho

Multilateral Monetary Agreement between the Government of the Kingdom of

Swaziland

Lesotho, the Government of the Republic of Namibia, the Government of the

19920310 (s)

Namibia

Republic of South Africa, and the Government of the Kingdom of Swaziland

19920327

19930603

Swaziland

Agreement relating to the Basic Conditions Governing the Secondment of Judges

19930603

Swaziland

Agreement relating to the Basic Conditions governing the Secondment of

19930603

Officials 19930603

Swaziland

Agreement relating to the Training of Personnel of the Government Service of

19930603

Swaziland 19930924

Swaziland

Exchange of Notes to amend the Extradition Agreement of 4/5 9 1968

19931001

Swaziland

Exchange of Notes on the Establishment of Diplomatic Relations

19930924 19931001

19950810

Swaziland

Agreement in respect of Cooperation and Mutual Assistance in the field of Crime

19950810

20000622

Mozambique

General Trans-Frontier Conservation and Resource Area Protocol

Not in force

Lubombo Nsubane-Pongolo Trans-Frontier Conservation and Resource Area

Not in force

Combating Swaziland 20000622

Swaziland

Protocol between the Government of the Republic of South Africa and the Government of the Kingdom of Swaziland 20000816

Mozambique

Agreement between the Republic of South Africa, the Republic of Mozambique

Swaziland

and the Kingdom of Swaziland on Co-operation with regard to the International

Not in force

Interconnector (Motraco) 20020829

Swaziland

Tripartite Interim Agreement between the RSA, Kingdom of Swaziland and

Mozambique

the Rep. of Mozambique for Co-operation on the Protection and Sustainable

Not in force

Utilisation of the Water Resources of the Inkomati and Maputo Watercourses 20031127

Mozambique

Agreement for Funding the Scoping Phase of the Joint Maputo River Basin Study

20031127 (s)

Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal

20050208

Swaziland 20040123

Swaziland

Evasion with respect to Taxes on Income 20041220

Swaziland

Agreement on the Establishment of a Joint Bilateral Commission for Cooperation

20041220

20091029

Swaziland

Memorandum of Understanding on Co-operation in the Legal Field

20091029

20100510

Swaziland

Agreement between the Government of the Republic of South Africa and the

20100510

Government of the Kingdom of Swaziland on Cooperation in the Field of Health 20100723

Swaziland

Agreement between the Republic of South Africa and the Government of the

20100723

Kingdom of Swaziland on Water Supply Across the Border between South Africa and Swaziland 20110913

Swaziland

Agreement between the Government of the Republic of South Africa and

20110913

the Government of the Kingdom of Swaziland on Cooperation in the field of Agriculture 20110927

Swaziland

Memorandum of Understanding between the Government of the Republic of

20110927

South Africa and the Government of the Kingdom of Swaziland on Co-operation in the Management of Wild Fires and other Forestry Development Issues 20120608

Swaziland

Memorandum of Understanding between the Government of the Republic of South Africa and the Government of the Kingdom of Swaziland on Financial Assistance

20120608

OUR JOURNEY TOGETHER

Date signed

Country

Title

Entry into force: Date (yymmdd)

20120802

Swaziland

Memorandum of Understanding between the Government of the Republic of

20120802

South Africa and the Government of the Kingdom of Swaziland on Cooperation in the Field of Rail Transport 20131204

Swaziland

Agreement between the Government of the Republic of South Africa and the Government of the Kingdom of Swaziland on Mutual Assistance and Cooperation and the Prevention of Fiscal Evasion with respect to Value-Added Tax

Source: South African Department on International Relations and Cooperation [DIRCO] (2015).

Not in force

east3ROUTE ECONOMIC REPORT 2015

6.2.3. Seychelles

The Republic of South Africa and the Republic of Seychelles have at least seven (7) known agreements between them. Table 6.2.3: Bilateral agreements between South African and Seychelles Date signed

Country

Title

Entry into force: Date (yymmdd)

19530519

Seychelles

Parcel Post Agreement

Not in force

19931105

Seychelles

Exchange of Notes Establishing Consular Relations

19931105

19980826

Seychelles

Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal

20020729

19530817

Evasion with respect to Taxes on Income 20060831

Seychelles

Agreement on Health Matters

Not in force

20070130

Seychelles

General Co-operation Agreement

20070130

20110404

Seychelles

Protocol Amending the Agreement between the Government of the Republic

Not in force

of South Africa and the Government of the Republic of Seychelles for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income 20130805

Seychelles

Agreement between the Government of the Republic of South Africa and the Government of the Seychelles on Co-operation in the Field of Tourism

Source: South African Department on International Relations and Cooperation [DIRCO] (2015).

Not in force

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7. THE BUSINESS ENVIRONMENT IN THE east3ROUTE ECONOMIES 7.1. DOING BUSINESS IN THE east3ROUTE REGION This section provides a review of Doing Business in South Africa, Mozambique, Seychelles and Swaziland. Information has been sourced from existing documentation, specifically.

The table below, extracted from the World Bank Doing Business Report for each country, highlights the key business indicators for each region. Table 7.1: Key Business Indicators INDICATOR

SOUTH AFRICA

MOZAMBIQUE

SEYCHELLES

SWAZILAND

EASE OF DOING BUSINESS (RANK)

127

110

107

127

145

STARTING A BUSINESS (RANK) Procedures (number)

Time (days)

19.0

13.0

38.0

30.0

Cost (% of income per capita)

0.3

17.1

10.7

23.3

Min. Capital (% of income per capita)

0.0

0.4

DEALING WITH CONSTRUCTION PERMITS (RANK) Procedures (number)

48.0

144.0

119.0

96.0

Cost (% of warehouse value)

0.9

4.4

0.4

2.9

GETTING ELECTRICITY (RANK)

158

164

130

140

Time (days)

Procedures (number) Time (days) Cost (% of income per capita) REGISTERING PROPERTY (RANK) Procedures (number)

226

107

137

729.5

2,484.8

454.7

1,039.1

101

129

Time (days)

23.0

40.0

33.0

21.0

Cost (% of property value)

6.2

6.9

7.0

7.1

GETTING CREDIT (RANK)

131

171

Strength of legal rights index (0-12)

Depth of credit information index (0-8)

Credit bureau coverage (% of adults)

55.4

5.7

0.0

42.1

Credit registry coverage (% of adults)

0.0

PROTECTING MINORITY INVESTORS (RANK)

110

6.3

5.7

4.3

5.5

4.0

6.0

5.2

6.8

5.2

5.8

4.8

Extent of conflict of interests regulation index (0-10) Extent of shareholder governance index (0-10) Strength of minority investor protection index (0-10)

OUR JOURNEY TOGETHER

INDICATOR

SOUTH AFRICA

MOZAMBIQUE

SEYCHELLES

SWAZILAND

EASE OF DOING BUSINESS (RANK)

127

110

129

PAYING TAXES (RANK) Payments (number per year) Time (hours per year)

200

230

110

Total tax rate (% of profit)

28.8

36.6

31.7

35.6

TRADING ACROSS BORDERS (RANK)

100

131

127

Documents to export (number) Time to export (days)

1,830

1,100

705

1,980

Documents to import (number)

Time to import (days)

Cost to export (US$ per container)

Cost to import (US$ per container)

2,080

1,600

675

2,245

ENFORCING CONTRACTS (RANK)

145

103

173

Procedures (number)

Time (days)

600

760

915

956

Cost (% of claim)

33.2

119.0

15.4

56.1

RESOLVING INSOLVENCY (RANK)

109

Time (years)

2.0

5.0

2.0

Cost (% of estate)

Recovery rate (cents on the dollar)

35.7

17.6

38.9

38.7

Strength of insolvency framework index (0-16)

14.5

Source: World Bank Doing Business Report, 2014.

7.2. GLOBAL COMPETITIVENESS OF THE east3ROUTE ECONOMIES The World Economic Forum (WEF) publishes a number of global benchmarking reports. This section presents findings from some of these reports, the main one being the Global Competitiveness Report (GCR). In an attempt not to dilute the message and the analysis, the following excerpts on the relevance of the indicators of competitiveness are adopted directly from the WEF’s GCR 2015. The excerpts captured are in Box 1.

Box 1: The Global Competitiveness Report 2014-2015 assesses the competitiveness landscape of 144 economies, providing insight into the drivers of their productivity and prosperity... The different aspects of competitiveness are captured in 12 pillars, which compose the Global Competitiveness Index.

east3ROUTE ECONOMIC REPORT 2015

THE 12 PILLARS OF COMPETITIVENESS WEF defines competitiveness as the set of institutions, policies, and factors that determine the level of productivity of a country. Although the productivity of a country determines its ability to sustain a high level of income, it is also one of the central determinants of its return on investment, which is one of the key factors explaining an economy’s growth potential. Many determinants drive productivity and competitiveness, and understanding the factors behind this process has occupied the minds of economists for hundreds of years, engendering theories ranging from Adam Smith’s focus on specialization and the division of labour to neoclassical economists’ emphasis on investment in physical capital and infrastructure, and, more recently, to interest in other mechanisms such as education and training, technological progress, macroeconomic stability, good governance, firm sophistication, and market efficiency, among others. While all of these factors are likely to be important for competitiveness and growth, WEF acknowledges that they are not mutually exclusive— two or more of them can be significant at the same time. The GCI captures this open-endedness by including a weighted average of many different components, each measuring a different aspect of competitiveness. 1st pillar: Institutions The institutional environment is determined by the legal and administrative framework within which individuals, firms, and governments interact to generate wealth. The importance of a sound and fair institutional environment has become all the more apparent during the recent economic and financial crisis and is especially crucial for further solidifying the fragile recovery, given the increasing role played by the state at the international level and for the economies of many countries. The quality of institutions has a strong bearing on competitiveness and growth. It influences investment decisions and the organization of production and plays a key role in the ways in which societies distribute the benefits and bear the costs of development strategies and policies. For example, owners of land, corporate shares, or intellectual property are unwilling to invest in the improvement and upkeep of their property if their rights as owners are not protected. The role of institutions goes beyond the legal framework. Government attitudes toward markets and freedoms and the efficiency of its operations are also very important: excessive bureaucracy and red tape, overregulation, corruption, dishonesty in dealing with public contracts, lack of transparency and trustworthiness, inability to provide appropriate services for the business sector, and political dependence of the judicial system impose significant economic costs to businesses and slow the process of economic development. In addition, the proper management of public finances is critical for ensuring trust in the national business environment.

OUR JOURNEY TOGETHER

2nd pillar: Infrastructure Extensive and efficient infrastructure is critical for ensuring the effective functioning of the economy, as it is an important factor in determining the location of economic activity and the kinds of activities or sectors that can develop within a country. Well-developed infrastructure reduces the effect of distance between regions, integrating the national market and connecting it at low cost to markets in other countries and regions. In addition, the quality and extensiveness of infrastructure networks significantly impact economic growth and reduce income inequalities and poverty in a variety of ways. A welldeveloped transport and communications infrastructure network is a prerequisite for the access of less-developed communities to core economic activities and services. Effective modes of transport— including quality roads, railroads, ports, and air transport—enable entrepreneurs to get their goods and services to market in a secure and timely manner and facilitate the movement of workers to the most suitable jobs. Economies also depend on electricity supplies that are free from interruptions and shortages so that businesses and factories can work unimpeded. Finally, a solid and extensive telecommunications network allows for a rapid and free flow of information, which increases overall economic efficiency by helping to ensure that businesses can communicate and decisions are made by economic actors taking into account all available relevant information.

3rd pillar: Macroeconomic environment The stability of the macroeconomic environment is important for business and, therefore, is significant for the overall competitiveness of a country. Although it is certainly true that macroeconomic stability alone cannot increase the productivity of a nation, it is also recognized that macroeconomic disarray harms the economy, as we have seen in recent years, conspicuously in the European context. The government cannot provide services efficiently if it has to make high-interest payments on its past debts. Running fiscal deficits limits the government’s future ability to react to business cycles. Firms cannot operate efficiently when inflation rates are out of hand. In sum, the economy cannot grow in a sustainable manner unless the macro environment is stable. Macroeconomic stability captured the attention of the public most recently when some advanced economies, notably the United States and some European countries, needed to take urgent action to prevent macroeconomic instability when their public debt reached unsustainable levels in the wake of the global financial crisis. It is important to note that this pillar evaluates the stability of the macroeconomic environment, so it does not directly take into account the way in which public accounts are managed by the government. This qualitative dimension is captured in the institutions pillar described above. 4th pillar: Health and primary education A healthy workforce is vital to a country’s competitiveness and productivity. Workers who are ill cannot function to their potential and will be less productive. Poor health leads to significant costs to business, as sick workers are often absent or operate at lower levels of efficiency. Investment in the provision of health services is thus critical for clear economic, as well as moral, considerations. In addition to health, this pillar takes into account the quantity and quality of the basic education received by the population, which is increasingly important in today’s economy. Basic education increases the efficiency of each individual worker. Moreover, often workers who have received little formal education can carry out only simple manual tasks and find it much more difficult to adapt to more advanced production processes and techniques, and therefore they contribute less to devising or executing innovations. In other words, lack of basic education can become a constraint on business development, with firms finding it difficult to move up the value chain by producing more sophisticated or value- intensive products.

east3ROUTE ECONOMIC REPORT 2015

5th pillar: Higher education and training Quality higher education and training is crucial for economies that want to move up the value chain beyond simple production processes and products. In particular, today’s globalizing economy requires countries to nurture pools of well-educated workers who are able to perform complex tasks and adapt rapidly to their changing environment and the evolving needs of the production system. This pillar measures secondary and tertiary enrolment rates as well as the quality of education as evaluated by business leaders. The extent of staff training is also taken into consideration because of the importance of vocational and continuous on-the-job training—which is neglected in many economies— 6th pillar: Goods market efficiency Countries with efficient goods markets are well positioned to produce the right mix of products and services given their particular supply-and-demand conditions, as well as to ensure that these goods can be most effectively traded in the economy. Healthy market competition, both domestic and foreign, is important in driving market efficiency, and thus business productivity, by ensuring that the most efficient firms, producing goods demanded by the market, are those that thrive. The best possible environment for the exchange of goods requires a minimum of government intervention that impedes business activity. For example, competitiveness is hindered by distortionary or burdensome taxes and by restrictive and discriminatory rules on foreign direct investment (FDI)—which limit foreign ownership—as well as on international trade. The recent economic crisis has highlighted the high degree of interdependence of economies worldwide and the degree to which growth depends on open markets. Protectionist measures are counterproductive as they reduce aggregate economic activity. 7th pillar: Labour market efficiency The efficiency and flexibility of the labour market are critical for ensuring that workers are allocated to their most effective use in the economy and provided with incentives to give their best effort in their jobs. Labour markets must therefore have the flexibility to shift workers from one economic activity to another rapidly and at low cost, and to allow for wage fluctuations without much social disruption. 8th pillar: Financial market development An efficient financial sector allocates the resources saved by a nation’s citizens, as well as those entering the economy from abroad, to their most productive uses. It channels resources to those entrepreneurial or investment projects with the highest expected rates of return rather than to the politically connected. A thorough and proper assessment of risk is therefore a key ingredient of a sound financial market. Therefore economies require sophisticated financial markets that can make capital available for private-sector investment from such sources as loans from a sound banking sector, well-regulated securities exchanges, venture capital, and other financial products. In order to fulfill all those functions, the banking sector needs to be trustworthy and transparent, and financial markets need appropriate regulation to protect investors and other actors in the economy at large.

OUR JOURNEY TOGETHER

9th pillar: Technological readiness In today’s globalized world, technology is increasingly essential for firms to compete and prosper. The technological readiness pillar measures the agility with which an economy adopts existing technologies to enhance the productivity of its industries, with specific emphasis on its capacity to fully leverage information and communication technologies (ICTs) in daily activities and production processes for increased efficiency and enabling innovation for competitiveness. ICTs have evolved into the “general purpose technology” of our time, 15 given their critical spillovers to other economic sectors and their role as industry-wide enabling infrastructure. Therefore ICT access and usage are key enablers of countries’ overall technological readiness. WEF warns of the importance of noting that, in this context, the level of technology available to firms in a country needs to be distinguished from the country’s ability to conduct blue-sky research and develop new technologies for innovation that expand the frontiers of knowledge. That is why they separate technological readiness from innovation, captured in the 12th pillar, described below. 10th pillar: Market size The size of the market affects productivity, since large markets allow firms to exploit economies of scale. Traditionally, the markets available to firms have been constrained by national borders. In the era of globalization, international markets have become a substitute for domestic markets, especially for small countries. Vast empirical evidence shows that trade openness is positively associated with growth. Even if some recent research casts doubts on the robustness of this relationship, there is a general sense that trade has a positive effect on growth, especially for countries with small domestic markets. Thus exports can be thought of as a substitute for domestic demand in determining the size of the market for the firms of a country. By including both domestic and foreign markets in their measure of market size, WEF gives credit to export-driven economies and geographic areas (such as the European Union) that are divided into many countries but have a single common market. 11th pillar: Business sophistication There is no doubt that sophisticated business practices are conducive to higher efficiency in the production of goods and services. Business sophistication concerns two elements that are linked in a complex manner: the quality of a country’s overall business networks and the quality of individual firms’ operations and strategies. These factors are especially important for countries at an advanced stage of development when, to a large extent, the more basic sources of productivity improvements have been exhausted. The quality of a country’s business networks and supporting industries, as measured by the quantity and quality of local suppliers and the extent of their interaction, is important for a variety of reasons: (i) when companies and suppliers from a particular sector are interconnected in geographically proximate groups, efficiency is heightened, greater opportunities for innovation in processes and products are created, and barriers to entry for new firms are reduced; (ii) individual firms’ advanced operations and strategies (branding, marketing, distribution, advanced production processes, and the production of unique and sophisticated products) spill over into the economy and lead to sophisticated and modern business processes across the country’s business sectors.

east3ROUTE ECONOMIC REPORT 2015

12th pillar: Innovation Innovation can emerge from new technological and nontechnological knowledge. Nontechnological innovations are closely related to the know-how, skills, and working conditions that are embedded in organizations and are therefore largely covered by the eleventh pillar of the GCI. The final pillar of competitiveness focuses on technological innovation. Although substantial gains can be obtained by improving institutions, building infrastructure, reducing macroeconomic instability, or improving human capital, all these factors eventually run into diminishing returns. The same is true for the efficiency of the labour, financial, and goods markets. In the long run, standards of living can be largely enhanced by technological innovation. Technological breakthroughs have been at the basis of many of the productivity gains that our economies have historically experienced. These range from the industrial revolution in the 18th century and the invention of the steam engine and the generation of electricity to the more recent digital revolution. The latter is not only transforming the way things are being done, but also opening a wider range of new possibilities in terms of products and services. The interrelation of the 12 pillars Although the WEF report the results of the 12 pillars of competitiveness separately, they are mindful of the fact that these are not independent: they tend to reinforce each other, and a weakness in one area often has a negative impact in others. For example, a strong innovation capacity (pillar 12) will be difficult to achieve without a healthy, well-educated and trained workforce (pillars 4 and 5) that is adept at absorbing new technologies (pillar 9), and without sufficient financing (pillar 8) for R&D or an efficient goods market that makes it possible to take new innovations to market (pillar 6). Although the pillars are aggregated into a single index, measures are reported for the 12 pillars separately because such details provide a sense of the specific areas in which a particular country needs to improve

OUR JOURNEY TOGETHER

Table 7.2 below summarises the E3Route economies rankings in the current Global Competitiveness Report, overall and in relation to the individual pillars discussed above. Last year’s overall rankings are also captured to show the countries progress or regression. It is immediately evident that, apart from Swaziland – which improved slightly from 124 in 2014 to 123 now, all the other economies have lost their competitiveness, or have become more difficult to operate a business in. According to this table, South Africa is the most competitive of the pack, followed by Seychelles, and Swaziland, then Mozambique. Table 7.2: E3Route economies’ Global Competitiveness Rankings, 2015 Indictor

Economy and ranking Mozambique

Seychelles

South Africa

Swaziland

Overall ranking

133

123

Ranking 2013/14

137

124

Basic requirements

133

108

Institutions

127

Infrastructure

128

Macroeconomic environment

110

Health and primary education

135

132

134

Efficiency enhancers

131

105

126

Higher education and training

138

120

Goods market efficiency

116

Labour market efficiency

104

113

105

Financial market development

126

103

Technological readiness

122

125

Market size

101

143

136

Innovation and sophistication factors

120

108

Business sophistication

125

101

Innovation

118

112

Source: World Economic Forum (2014)

east3ROUTE ECONOMIC REPORT 2015

Figures 7.1 to 7.9 below summarises leaders in competitiveness in a selection of regional clusters. Figure 7.1: Global Top 10 Switzerland, 1 10

Sweden, 10

9 8

Singapore, 2

7 6 5

United Kingdom, 9

4 3

United States, 3

2 1

Netherlands, 8

Finland, 4

Hong Kong, 7

Germany, 5 Japan, 6

Source: TIKZN using WEF (2015)

Figure 7.2: Europe Top 10 Switzerland, 1 20

Luxembourg, 19

18 16

Finland, 4

14 12 10

Belgium, 18

8 6

Germany, 5

4 2

Denmark, 13

Netherlands, 8

Norway, 11

United Kingdom, 9 Sweden, 10

Source: TIKZN using WEF (2015)

OUR JOURNEY TOGETHER

Figure 7.3: Asia Pacific Top 10 Singapore, 2 35

Thailand, 31

Japan, 6

25 20 15

China, 28

Hong Kong SAR, 7

10 5

Korea, Rep., 26

Taiwan, China, 14

Australia, 22

New Zealand, 17 Malaysia, 20

Source: TIKZN using WEF (2015)

Figure 7.4: Latin America Top 10 Chile, 33 90

El Salvador, 84

80 70

Panama, 48

60 50 40

Uruguay, 80

Costa Rica, 51

20 10

Guatemala, 78

Brazil, 57

Colombia, 66

Mexico, 61 Peru, 65

Source: TIKZN using WEF (2015)

east3ROUTE ECONOMIC REPORT 2015

Figure 7.5: Middle East and North Africa Top 10 United Arab Emirates, 12 80

Algeria, 79

Qatar, 16

60 50 40

Morocco, 72

Saudi Arabia, 24

20 10

Jordan, 64

Israel, 27

Oman, 46

Kuwait, 40 Bahrain, 44

Source: TIKZN using WEF (2015)

Figure 7.6: Sub-Saharan Africa Top 10 Mauritius, 39 120

Lesotho, 107

100

South Africa, 56

80 60

Gabon, 106

Rwanda, 62

Zambia, 96

Botswana, 74

Seychelles, 92

Namibia, 88 Kenya, 90

Source: TIKZN using WEF (2015)

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8. RECENT FDI ANNOUNCEMENTS IN THE east3ROUTE ECONOMIES This section profiles some cross-border investments in the east3Route region in the past five years.

8.1. KwaZulu-Natal Project Date Apr 2015 Mar 2015 Mar 2015

Investing Company Jellyfish MMR Research Worldwide Driver Group Africa

Source Country UK UK UK

Sub-Sector Advertising, PR, &

Business

Services

Professional, scientific

Business

& technical services

Services

Professional, scientific

Business

& technical services

Services

Agriculture, Mar 2015

Liebherr Africa

Switzerland

construction, & mining machinery

Project Type

6.8

New

6.8

New

6.8

New

0.2

New

12.5

Expansion

New

Business Services

Animal food

Manufacturing

General purpose

Maintenance &

machinery

Servicing

Japan

Tyres

Manufacturing

97.63

234

Expansion

Switzerland

Coffee & tea

Manufacturing

34.7

128

Expansion

Italy

Solar electric power

Electricity

219.2

New

16.4

Expansion

Feb 2015

Cargill

United States

Africa

Servicing

Jobs Created

& technical services

YourCulture

Busch South

Maintenance &

Capital Investment

Professional, scientific

Feb 2015

Jan 2015

Industry Activity

Germany

Sumitomo Oct 2014

Rubber South Africa

Sep 2014 Jul 2014

Apr 2013

Nestle South Africa Building Energy Total South Africa

France

Petroleum bulk stations & terminals

Logistics, Distribution & Transportation

Apr 2013

Afrox

Germany

Basic chemicals

Manufacturing

56.3

101

New

Mar 2013

Incotec

Netherlands

Grains & oilseed

Manufacturing

1.4

New

17.3

New

31.9

New

1.9

New

2.8

New

130.2

370

New

Crane Mar 2013

Worldwide

USA

Logistics

Freight/Distribution Services

Sales, Marketing & Support Sales,

Sep 2012

Knight Frank

Real estate services

Marketing & Support

Aug 2012

Coracall KCI Konecranes

Finland

Business support

Customer

services

Contact Centre

General purpose machinery

Sales, Marketing & Support

Coating, engraving, Mar 2012

Safal Steel

Mauritius

heat treating, & allied activities

Manufacturing

OUR JOURNEY TOGETHER

Project Date

Investing Company

Source Country

Sub-Sector Clothing & clothing

Industry Activity

Capital Investment

Jobs Created

Retail

12.8

New

Project Type

Feb 2012

Zara

Spain

Feb 2012

Lanxess

Germany

Basic chemicals

Manufacturing

53.2

Expansion

USA

Marine electric power

Electricity

20.0

New

Hong Kong

Water transportation

17.3

New

accessories

Hydro Feb 2012

Alternative Energy

Sales, Dec 2011

Pacific Basin

Marketing & Support

Nov 2011

Slater Coal

Canada

Nov 2011

Slater Coal

Canada

Calcium Carbide

Spain

Jun 2011 Jun 2011 May 2011

Illovo Sugar Ltd Unilever State Bank of India (SBI) BASF

96.5

214

Expansion

Coal mining

Extraction

96.5

214

Expansion

Electricity

12.7

Manufacturing

32.1

114

Expansion

Manufacturing

81.3

458

New

11.0

New

28.3

103

New

2.8

New

11.0

New

6.4

Expansion

power generation (Alternative/Renewable

CoLocation

Energy)

(SACC) Jul 2011

Extraction

Other electric

South African Sep 2011

Coal mining

Sugar & confectionary

products Fruits & vegetables &

specialist foods

India Germany

Retail banking Paints, coatings, additives & adhesives

Business Services Manufacturing

Ventilation, heating, air conditioning, Mar 2011

Aggreko

and commercial

refrigeration equipment

Sales, Marketing & Support

manufacturing Mar 2011

Jan 2011

AfrAsia Bank HewlettPackard (HP)

Mauritius

USA

Retail banking Custom computer programming services

Business Services Sales, Marketing & Support

Jul 2010

Toyota Motor

Japan

Automobiles

Manufacturing

65.1

400

Expansion

Mar 2010

Apollo Tyres

India

Tyres

Manufacturing

53.0

218

Expansion

Mar 2010

Apollo Tyres

India

Tyres

Manufacturing

53.0

218

Expansion

Capital Investment

Jobs Created

Project Type

2.5

New

8.2. Mozambique Project Date Apr 2015

Investing Company Inchcape Shipping Services

Source Country

Sub-Sector

Industry Activity Sales,

Water transportation

Marketing & Support

Apr 2015

Equity Bank

Kenya

Retail banking

Apr 2015

Entreposto Group

Portugal

Automobiles

Business Services Headquarters

east3ROUTE ECONOMIC REPORT 2015

Project Date Feb 2015

Investing Company Engen

Source Country Malaysia

Sub-Sector Petroleum bulk stations & terminals

Industry Activity

Capital Investment

Jobs Created

Project Type

197.1

122

New

864.9

875

New

6.8

New

6.8

New

15.3

New

154.1

130

New

5.45

New

178.9

342

New

3.7

New

6.1

New

22.2

New

35.9

New

Logistics, Distribution & Transportation

Commercial & Feb 2015

Taaleritehdas

Finland

institutional building

Construction

construction Jan 2015

Global Continuity

South Africa

Other support services

Jan 2015

Securico

Zimbabwe

Other support services

Jan 2015

CWT-ASI Africa

Singapore

Dec 2014

British Petroleum (BP)

Freight/Distribution Services Other petroleum & coal products

Dec 2014

Moza Banco

Portugal

Retail banking

Nov 2014

Hyundai Motor

South Korea

Automobiles

Nov 2014

Bank of Africa

Morocco

Retail banking

MM Integrated Nov 2014

Steel Mills

Tanzania

Mozambique

Iron & steel mills & ferroalloy

Banco Sep 2014

Comercial e de

Portugal??

Retail banking

Angola

Retail banking

Portugal

Heavy duty trucks

Investimentos Sep 2014

Banco Sol (Sol bank)

Business Services Business Services Sales, Marketing & Support Logistics, Distribution & Transportation Business Services Manufacturing Business Services Manufacturing

Business Services Business Services Logistics,

Sep 2014

Grupo Nors

Distribution & Transportation

Sep 2014

Auto Sueco Mozambique

Portugal

PTT Exploration Aug 2014

and Production

Thailand

(PTTEP)

Seafood products

Manufacturing

53.586

307

New

United States

Tobacco

Manufacturing

157

900

Expansion

7.5

New

15.3

New

55.7

429

New

Emerging United States

Communications Jun 2014

Jun 2014

Schenker South Africa Savanna Tobacco

Support

France

Aquapesca

Markets

Marketing &

Services

Jul 2014

Jun 2014

Sales,

Business

Luxembourg

Leaf Tobacco

compressed gas

Servicing

services

Regus

Mozambique

Natural, liquefied and

Maintenance &

Rental & leasing

Jul 2014

Heavy duty trucks

Germany

Zimbabwe

Satellite telecommunications Freight/Distribution Services Tobacco

Sales, Marketing & Support Sales, Marketing & Support Manufacturing

OUR JOURNEY TOGETHER

Project Date

Investing Company

Source Country

Sub-Sector

Industry Activity

Capital Investment

Jobs Created

Construction

864.9

875

New

Project Type

Commercial & May 2014

Pylos

Belgium

institutional building construction

May 2014

Millennium BIM

Portugal

Retail banking

Headquarters

45.1

New

South Africa

Other (Real Estate)

Construction

864.9

875

New

6.8

New

10.8

New

2.3

New

6.2

New

9.1

105

New

6.8

New

197.1

122

Expansion

55.4

151

New

6.8

New

7.5

New

6.8

New

197.1

122

Expansion

15.3

New

6.8

New

150

New

Atterbury Apr 2014

Property Developments

Apr 2014

WTS Energy

Netherlands

Employment services

Mar 2014

Moza Banco

Portugal

Retail banking

Mar 2014

Gras Savoye

France

Insurance

Business Services Business Services Sales, Marketing & Support

Feb 2014

Jan 2014

Dec 2013

Bosch

Syngenta

Fugro

Germany

Switzerland

Netherlands

Motor vehicle electrical & electronic equipment

Fugro

Netherlands

Oct 2013

British Petroleum (BP)

MER Group

Israel

Oct 2013

Murray & Roberts

South Africa

Oct 2013

Flexenclosure

Sweden

Support Sales,

& other agricultural

Marketing &

chemicals

Support

Architectural,

Design,

engineering, & related

Development &

services

Testing

engineering, & related services

Oct 2013

Marketing &

Pesticide, fertilisers

Architectural, Dec 2013

Sales,

Petroleum bulk stations & terminals

Business Services Logistics, Distribution & Transportation

Wireless

Logistics,

telecommunication

Distribution &

carriers

Transportation

Heavy & civil

Business

engineering

Services

Communications equipment

Sales, Marketing & Support

Environmental Oct 2013

Resources Management

Environmental

Business

consulting services

Services

(ERM) Oct 2013

Oct 2013

Sep 2013

British Petroleum (BP) Air Logistics Group Spencer Ogden Energy Vodacom Mozambique

Petroleum bulk stations & terminals

Logistics, Distribution & Transportation Sales,

Air transportation

Marketing & Support

Employment services Data processing,

hosting, & related services

Business Services ICT & Internet Infrastructure

east3ROUTE ECONOMIC REPORT 2015

Project Date Sep 2013

Investing Company ThyssenKrupp Engineering

Source Country Germany

Sep 2013

Clover Industries

South Africa

Aug 2013

MAC Cosmetics

United States

Sub-Sector General purpose machinery Dairy products

Industry Activity

Capital Investment

Jobs Created

Project Type

2.9

New

Manufacturing

55.7

429

New

Retail

36.9

179

New

Retail

12.3

New

1.3

New

75.6

342

New

6.8

New

10.33

New

6.8

New

Retail

36.9

179

New

Manufacturing

2.5

New

Retail

3.23

New

Manufacturing

1641.2

146

Co-Locati

Extraction

484.6

214

New

197.1

122

New

244.2

116

New

2.9

New

15.3

New

200

Expansion

2364.3

6000

Sales, Marketing & Support

Cosmetics, perfume, personal care & household products Aug 2013

LG Electronics

South Korea

Drive Control Aug 2013

Corporation

South Africa

(DCC)

Electronics & appliances stores Computer & peripheral equipment

Sales, Marketing & Support

Cimentos de Jul 2013

Mocambique (Cements of

Portugal

Cement & concrete products

Manufacturing

Mozambique) Jun 2013 May 2013

Norton Rose Fulbright Olam Mozambique

Legal services

Singapore

Textiles & Textile Mills

Business Services Manufacturing Business

May 2013

Nedbank

Retail banking

May 2013

Sumol+Compal

Portugal

Soft drinks & ice

Manufacturing

May 2013

Aveng Group

South Africa

Heavy & civil

Business

engineering

Services

May 2013

May 2013 Apr 2013 Apr 2013 Apr 2013

Mar 2013

Builders Warehouse Sogitel Mozambique Massmart Beacon Hill Resources Nippon Steel & Sumitomo Metal Bollore Africa Logistics Jindal Steel & Power Siemens

Crane Worldwide Logistics

Services

Building material & United States

garden equipment & supplies dealers

Portugal United States South Africa

Cement & concrete products Wholesale Trade (Consumer Goods) Other petroleum & coal products

Japan

Coal mining

France

Warehousing & storage

Logistics, Distribution & Transportation India

Germany

United States

Fossil fuel electric power

Electricity

All other electrical

Sales,

equipment &

Marketing &

components

Support

Freight/Distribution Services Fossil fuel electric

Sales, Marketing & Support Electricity

Mar 2013

Aggreko

Jan 2013

Forestal Oriental

Finland

Forestry & logging

Manufacturing

Dec 2012

Coca-Cola

United States

Soft drinks & ice

Manufacturing

Dec 2012

Coca-Cola

United States

Soft drinks & ice

Manufacturing

29.7

120

power

New Expansion New

OUR JOURNEY TOGETHER

Project Date

Investing Company

Source Country

Dingsheng Dec 2012

International

Sub-Sector

Industry Activity

Capital Investment

Jobs Created

Project Type

500

3000

New

6.8

New

Commercial & Hong Kong

Investment

institutional building

Construction

construction Accounting, tax

Nov 2012

Baker Tilly Portugal

preparation,

Business

bookkeeping, & payroll

Services

services Nov 2012 Oct 2012 Sep 2012 Sep 2012

Sep 2012

Carbon Neutral Investments (CNI) Astral Foods Bharat Petroleum (BPCL) Multotec ABB (Asea Brown Boveri)

UK South Africa India Germany

Switzerland

Other (Financial

Business

Services)

Services

Animal production

Manufacturing

55.7

429

New

Manufacturing

1641.2

146

New

4.1

New

2.9

New

15.3

New

504

New

22.2

New

Retail

6.4

New

Natural, liquefied and compressed gas All other industrial

Maintenance &

machinery

Servicing

All other industrial machinery

Sales, Marketing & Support Sales,

Sep 2012

Sturrock Shipping

South Africa

Water transportation

Marketing & Support

Sep 2012

Ncondezi Coal

Aug 2012

Riversdale Mining

Fossil fuel electric power

Electricity Sales,

Coal mining

Marketing & Support

Jul 2012

Moza Banco

Portugal

May 2012

Movitel

Vietnam

Retail banking

Business Services

Wireless telecommunication carriers Seci API Biomasse May 2012

Mozambique

Italy

Crop production

Manufacturing

15.1

New

Italy

Biomass power

Manufacturing

187.6

109

New

Agriculture,

Sales,

construction, & mining

Marketing &

2.9

New

machinery

Support

Breweries & distilleries

Manufacturing

34.1

222

New

Agriculture,

Sales,

construction, & mining

Marketing &

2.9

New

machinery

Support 2

New

2.8

New

34.1

New

(SADM) Seci API Biomasse May 2012

Mozambique (SADM)

Apr 2012

Atlas Copco Cervejas de MoCambique Atlas Copco

Sweden

Sales, Apr 2012

Nico Holdings

Malawi

Insurance

Marketing & Support

Apr 2012

Mar 2012

Tenaris

Bluepharma

Italy

Portugal

Other fabricated metal products Pharmaceutical preparations

Sales, Marketing & Support Headquarters

east3ROUTE ECONOMIC REPORT 2015

Project Date Feb 2012

Feb 2012

Investing Company deVere & Partners (deVere Group) Weir Minerals Africa

Source Country Switzerland

South Africa

Dec 2011

Lacatoni

Portugal

Nov 2011

International The Foschini Group Beacon Hill Resources

Capital Investment

Jobs Created

New

2.8

New

2.8

New

Manufacturing

19.9

300

New

Manufacturing

1641.2

146

New

36.9

179

New

22.2

New

Extraction

484.6

214

New

Manufacturing

1641.2

146

New

Extraction

484.6

214

Expansion

154.1

130

New

2.8

New

142

New

3000

294

New

5.8

New

Manufacturing

75.6

342

Expansion

Retail

16.6

177

New

Manufacturing

55.7

429

Expansion

22.2

New

Expansion

Corporate & investment

Business

banking

Services

Project Type

Rubber hoses & belting

Marketing & Support

CNBC Africa

Sasol Petroleum

Industry Activity

Sales, UK

Jan 2012

Nov 2011

Sub-Sector

South Africa South Africa

South Africa

Nov 2011

Eni SpA (Eni)

Italy

Nov 2011

Eni SpA (Eni)

Italy

Radio & TV

Business

broadcasting

Services

Clothing & clothing accessories Natural, liquefied and compressed gas General merchandise stores Other petroleum & coal products Oil & gas extraction Natural, liquefied and compressed gas

Retail Sales, Marketing & Support

Vale Nov 2011

(Companhia Vale do Rio

Brazil

Coal mining

Doce) Vale Nov 2011

(Companhia Vale do Rio

Brazil

Other petroleum & coal products

Doce) Oct 2011

Oct 2011 Oct 2011

Sep 2011

Globe Metals & Mining Africa Great Wall Cement Jindal Steel & Power Hewlett-Packard (HP)

Logistics, Distribution & Transportation Sales,

Australia

Other metal ore mining

Marketing & Support

China India

United States

Cement & concrete products Fossil fuel electric power Custom computer programming services

Manufacturing Electricity Sales, Marketing & Support

Cimentos de Sep 2011

Mocambique (Cements of

Portugal

Cement & concrete products

Mozambique) Aug 2011

Choppies

Botswana

Jul 2011

Maragra ACucar

Jun 2011

Mitsui & Co

Japan

Food & Beverage Stores (Food & Tobacco) Sugar & confectionary products

Sales, Oil & gas extraction

Marketing & Support

Jun 2011

Ecobank Transnational

Togo

Retail banking

Business Services

OUR JOURNEY TOGETHER

Project Date

Investing Company

Source Country

Sub-Sector

Industry Activity

Capital Investment

Jobs Created

Project Type

Manufacturing

1.2

New

Manufacturing

75.6

342

New

15.6

New

154.1

130

Expansion

Extraction

270

1012

Expansion

Manufacturing

1.65

New

Retail

16.6

177

New

150

New

484.6

214

New

34.1

222

New

2.9

New

Plastics packaging Jun 2011

Plasteuropa

Portugal

materials & unlaminated film & sheets

Jun 2011

Henan Tongli Cement Essar Global

Grindrod

China

India

South Africa

Apr 2011

Noventa Limited

Mar 2011

Embrapa

Brazil

Cement & concrete products Iron & steel mills & ferroalloy Other petroleum & coal products Other metal ore mining

Logistics, Distribution & Transportation Logistics, Distribution & Transportation

Pesticide, fertilisers & other agricultural chemicals Feb 2011 Feb 2011 Jan 2011 Jan 2011 Nov 2010 Nov 2010

Nov 2010

Oct 2010 Oct 2010 Aug 2010

Shoprite First National Choice Movitel Pohang Iron & Steel (POSCO) RJ Corporation United Bank for Africa (UBA) MCC Plant Hire Central Bank of India (CBI) Bakhresa Olam Mozambique

South Africa South Africa

Group

Manufacturing

Communications

ICT & Internet

equipment

Infrastructure

South Korea

Coal mining

Extraction

India

Soft drinks & ice

Manufacturing

Nigeria

Retail banking

Vietnam

South Africa

Jul 2010

ABC Holdings (BancABC) Nestle Africa Region

Sales,

construction, & mining

Marketing &

machinery

Support

African Medical Investments (AMI)

Tanzania

Grains & oilseed

Manufacturing

30.4

174

New

Singapore

Textiles & Textile Mills

Manufacturing

200

New

22.2

New

45.3

260

New

32.4

260

New

Construction

49.4

209

New

Electricity

100

New

Expansion

Kenya

Other petroleum & coal products

Botswana

Retail banking

Switzerland

Coffee & tea

Switzerland

Coffee & tea

(Elsewedy

Vodafone Mozambique

Sales, Marketing & Support Business Services Manufacturing Distribution & Transportation

Egypt

Cables) May 2010

Services

Logistics,

Elsewedy Electric May 2010

Business

Retail banking

(EAR) May 2010

Services

Agriculture,

Nestle Equatorial Jul 2010

Business

India

(KenolKobil) Jul 2010

(Food & Tobacco) Soft drinks & ice

Kenol-Kobil Jul 2010

Food & Beverage Stores

General medical & surgical hospitals Fossil fuel electric power Wireless

telecommunication carriers

ICT & Internet Infrastructure

east3ROUTE ECONOMIC REPORT 2015

Project Date Mar 2010 Feb 2010

Investing Company Portucel Soporcel Group Riversdale Mining

Source Country Portugal Australia

Sub-Sector Pulp, paper, & paperboard Coal mining

Industry Activity

Capital Investment

Jobs Created

Manufacturing

2300

3000

Extraction

484.6

214

Project Type New Co-Locati

8.3. Swaziland Project Date

Investing Company

Source Country

Reyada Mar 2014

Construction

Egypt

Industries Reyada Mar 2014

Construction

Egypt

Industries Nov 2013

Mar 2012 Dec 2011 Oct 2011

MTN Swaziland Don't Waste Services Galp Swaziland Nedbank Swaziland University of Creative

Cement & concrete products Cement & concrete products Wireless

South Africa

telecommunication carriers

Industry Activity

Capital Investment

Jobs Created

Manufacturing

65.9

120

New

Manufacturing

1.29

120

New

150

New

6.8

New

33.3

335

New

14.6

New

Construction

49.4

209

New

Manufacturing

31.1

376

New

Retail

4.2

New

Manufacturing

134

768

Expansion

150

New

ICT & Internet Infrastructure

Waste management &

Business

remediation services

Services

Portugal

Gasoline stations

Retail

Retail banking

South Africa

Limkokwing Jul 2011

Sub-Sector

Schools, colleges, Malaysia

universities, & professional schools

Technology

Business Services Education & Training

Project Type

Sanlam Jul 2011

Investment Management

South Africa

Investment

Business

management

Services

(SIM) Jul 2011 Jul 2011 Jun 2011 May 2011

Vantage Health Vantage Health Clicks Group Ubombo Sugar

United States United States South Africa UK

General medical & surgical hospitals Pharmaceutical preparations Health & personal care stores Sugar & confectionary products Wired

Mar 2011

Seacom

Mauritius

telecommunication carriers

ICT & Internet Infrastructure

OUR JOURNEY TOGETHER

8.4. Seychelles Project Date Jun 2014 Jun 2014 Feb 2014

Investing Company Mihin Lanka Sri Lanka Insurance Bank of Ceylon

Source Country

Sub-Sector

Sri Lanka

Air transportation

Sri Lanka

Insurance

Sri Lanka

Retail banking Wireless

Feb 2013

Bharti Airtel

India

telecommunication carriers

Jan 2013

Dec 2012 Oct 2011 Jun 2010

Prism Informatics Pure Gold Jewellers UAE Exchange Centre Raffles Hotels & Resorts

Custom computer India

programming services

Industry Activity Sales, Marketing & Support Sales, Marketing & Support Business Services ICT & Internet Infrastructure Sales, Marketing & Support

UAE

Jewellery & silverware

Retail

UAE

Retail banking

Business Services

Canada

Accommodation

Construction

Capital Investment

Jobs Created

Project Type

15.3

New

10.8

New

150

New

5.8

New

36.9

179

New

129.8

219

New

east3ROUTE ECONOMIC REPORT 2015

Eme

ing

Opp

tunitie

OUR JOURNEY TOGETHER

9. EMERGING OPPORTUNITIES 9.1. KEY SECTORS AND PRODUCTS Herewith the strategic products for trade between each of the regions are presented. There is clearly potential to increase trade between these four countries, especially given the fact that 他 of them border one another, have three major ports between them (Richards Bay, Durban and Maputo) and are connected to one another through a network of good quality roads and rail infrastructure (for the most part in KZN, with greater investment into road and rail infrastructure being seen in Mozambique and Swaziland). Although not physically connected to the other three countries, Seychelles also offers unique opportunities for the other three partners in that the economy is almost entirely services-oriented, and will definitely benefit from trading more intensely with the other three. The fact that South Africa is constantly in the top 10 leading sources of tourists for Seychelles is also already a sure indication of existing connection between the countries, and potential positive spill-over with the rest of the E3Route economies. 9.1.1. Key KZN Exports In order for optimum economic growth in the KZN Province, it has been deemed essential by the KZN Department of Economic Development and Tourism that key investment areas be targeted. Based on the specific competitive advantages within each of the Districts/the Metro of KwaZulu-Natal, certain key investment sectors have been identified. These key investment areas/products should be aligned with future plans for exports in order to maximize the potential from the investment. These key investment areas, with a potential for export to Mozambique, Seychelles and Swaziland, are highlighted in the table below. Table 9.1: Key investment areas and products for KZN with potential for regional export47 District / (Metro) Amajuba

Ugu

Key Investment Sectors

Key Products Identified

Metal Manufacturing

Window frames

Coal Mining

Car parts

Textiles and Clothing

Domestic appliances

Forestry and Timber

Furniture

Agriculture

Sugar cane

Quarrying

Macadamia nuts

Furniture Production Food processing Agriculture (vegetables, chicken)

Leather products / footwear

Forestry and Logging

Dairy

Leather and Footwear

Processed crop products

Livestock farming (Nguni)

Meats

Forestry and Logging

Skins

Coal Mining

Beneficiated products from mining

Coal Mining

Meats and skins

Skins processing

Beneficiated products from mining

uMkhanyakude

Agriculture

Pineapples

iLembe

Agriculture

Packaged and processed

Agro-processing

agricultural products

Wood-processing

Biodiesel

uMgungundlovu

Zululand

uMzinyathi

Sugarcane

Plastics and packaging Green Energy 47

KZN Department of Economic Development and Tourism, Industrial Hubs and Special Economic Zones, (2013)

east3ROUTE ECONOMIC REPORT 2015

District / (Metro)

Key Investment Sectors

eThekwini

Key Products Identified

Chemical Manufacturing

Petrochemicals

Automotive manufacturing

Automotive and related products

Electronics uThungulu

Forestry and Logging

Machinery

Wood Products Manufacturing Mineral Mining Metal Manufacturing Non-metallic heavy manufacturing Sisonke

Agriculture

Dairy products

Agro-processing

Wood

Forestry uThukela

Agriculture

Canvas, towels, sheets and clothes

Clothing and textiles

Pork products

Food processing

Crops

9.1.2. Key Mozambican Exports The table below highlights some of the key products from Mozambique that have potential to be imported regionally by KZN, Seychelles and Swaziland. The products have been identified through analysing the key exports from Mozambique because it is deemed vital that Mozambique build upon and harness already existing competitive advantages within the country. Table 9.2: Key Mozambican products for regional export Product

Reasoning

Vegetables and Vegetable

Mozambique has a well-established vegetable industry and it is one of the country’s principle

Products

exports (exporting higher quantities of exports than KZN). Mozambique could harness the potential of already existing vegetable markets and farms and expanding exports into Swaziland, KZN and Seychelles.

Prepared foodstuffs

Again the close location of Mozambique to KZN and Swaziland allows for the transport and export of foodstuffs, while maintaining a top quality. Mozambique already exports a high number of prepared foodstuffs. Swaziland imports nearly 20%of its food, therefore there is clearly a market for prepared foodstuffs from Mozambique.

Automotive and automotive products

Historically, Durban and KZN has dominated this market, but with the current investment into the Maputo port and automotive terminals, Mozambique’s automotive industry is expected to boom. It could prove beneficial as KZN and Mozambique harness the potential of their respective automotive industries and work together to grow the industry. Exporting parts and automotive between these countries is a great possibility.

Products of Chemical / Allied

This is one of Mozambique’s primary exports and also one of KZN’s chief imports. There is clear

Industries

potential to harness trade expansion in this area. Although KZN exports a large amount of these products as well, there is potential for both markets to work together to maximize development.

OUR JOURNEY TOGETHER

9.1.3. Key Swaziland Exports Products grown and manufactured in Swaziland have the potential to be imported regionally by KZN, Mozambique and Seychelles. They have been identified through analysing the key exports from Swaziland because it is deemed vital that Swaziland build upon and harness already existing competitive advantages within the country. Table 9.3: Swaziland’s key exports for the regional market48 Product Machinery

Reasoning Machinery is one of Swaziland’s top five exports and contributes greatly to the total exports from the country, and Mozambique’s second greatest import, indicating great market potential in that area. Given the rapid industrialization of these three regions, there is undoubtedly demand for machinery.

Textiles

Textiles from Swaziland are key contributors to their total export value. This is especially so for articles of apparel and accessories (knitted/crocheted etc). Both South Africa and Mozambique import apparel and could benefit from a market textile that is close and accessible.

Sugars and sugar confectionery

The sugar industry is a primary contributor to Swaziland’s export value. It is therefore deemed ideal that Swaziland expand its sugar industry into regional markets like KZN and Mozambique (especially so for Mozambique because the sugar industry is well established in KZN).

Fruits and Vegetables

Given the fact that agriculture employs 75% of the labour force of Swaziland, but does not contribute significantly to GDP, there is a clear need to work on and expand the agricultural markets of Swaziland. Mozambique is a large importer of vegetables and would benefit from a market for fresh vegetables on their boarder.

From the above, it is evident that very little trading is occurring between Mozambique, Seychelles and Swaziland. The majority of the trading is occurring between South Africa and the other countries. This creates opportunities to grow exports in Mozambique, Seychelles and Swaziland by increasing trade between these countries and, at the same time, increasing the trade to and from South Africa. The major opportunities include trade of the following: •

Vegetables and vegetable products

•

Automotive parts

•

Textiles

•

Sugars and sugar confectionary

•

Prepared foodstuffs (specifically tuna canned and frozen)

9.2. BUSINESSES, INVESTORS AND INVESTMENT OPPORTUNITIES This section provides an overview of the identified major investors as well as emerging business and investment opportunities within the East3Route. As a starting point, the levels of existing business support infrastructure are reviewed along with the past 5 years of realised investment into the region on a per country basis. Table 9.4 below examines the existing physical trade infrastructure across all modes of transport in the region as well as existing levels of information and communication technology, energy resources and accessibility to labour.

Derived from Trade Map export figures.

east3ROUTE ECONOMIC REPORT 2015

Table 9.4 Comparison of Business Support Infrastructure in the e3Route Region4950515253545556 Business Support Infrastructure Roads

KwaZulu Natal (South Africa)

Mozambique

Seychelles

Swaziland

Well developed, i.e.

Insufficient networks.

Developed network.

Developed network. It is

Western Freeway and

However, there have

It is able to service

able to service domestic

the N2 connecting to

been upgrades and

domestic and

and international

other major cities 49.

developments, i.e. Nacala

international

businesses 52 .

and Beira Corridor, and

businesses . 51

Pemba developments 50 . Rail

Well-developed. It is

Insufficient for business.

There are currently no

Developed networks.

managed by national

There are proposed

railway networks in the

There are existing projects

government.

projects to develop a

country.

to upgrade links between

railway network from the

Swaziland and South

Nacala Port as part of its

African ports.

corridor development. Air

Well developed,

Infrastructure is available

Well developed, i.e.

Limited.

i.e. King Shaka

but required upgrading is

New Praslin airport will

The country has a number

International Airport.

necessary.

see a big increase in

of regional airfields

passengers.

rather than international airports 53 .

Ports

Well developed.

Limited. Although there are

Well developed.

Swaziland, as a

The KZN Sharks Board

proposed developments,

Port of Mahé and Port

landlocked nation,

presented a proposal

i.e. Nacala Corridor

of Victoria are the

capitalises on the Durban

for building an R1bn

Development.

gateway to the island’s

and Richards Bay ports

import and export

located approximately

maritime training

activities.

400km-600km away.

Well developed.

Developing system.

Well developed.

Well developed. Sufficient

In 2013, the KZN

Movitel – the joint

Sufficient cellular and

cellular and internet

Regional Innovation

venture between Viettel

internet connections

connections which are

and Technology

and Mozambique’s SPI

which are favourable

favourable for businesses.

Hub Project was

Company have built 2,800

for businesses.

launched 55 .

2G/3G base stations and

school and museum 54 . ICT

25,000 km of fibre optic cables covering 100% of districts and highways, serving nearly 80% of the Mozambican population 56 .

49 KZN Top Business http://kzntopbusiness.co.za/site/kzn-infrastructure 50 Transport World Africa – Posted 19 December 2013 (http://www.transportworldafrica.co.za/2013/12/19/transport-infrastructure-projects-in-central-and-northern-mozambique/) 51 Seychelles Investment Board http://www.sib.gov.sc/ 52 Swaziland Investor Roadmap http://www.swaziland.co.sz/ 53 Maps of the World http://www.mapsofworld.com/international-airports/africa/swaziland.html 54 Business Report: KZN seeks billions for major projects – Posted 25 October 2013 http://www.iol.co.za/business/news/kzn-seeks-billions-for-major-projects-1.1597592#.VDfp8vmSwe0 55 KZN Provincial Treasury http://www.kzntreasury.gov.za/LinkClick.aspx?fileticket=PK8emfWVXSg%3D&tabid=528&mid=1630 56 African Press Organisation – Posted 25 August 2014 http://appablog.wordpress.com/2014/08/25/the-impact-of-movitel-on-ict-in-mozambique/

OUR JOURNEY TOGETHER

Business Support Infrastructure

KwaZulu Natal (South Africa)

Mozambique

Seychelles

Swaziland

Energy (including

Under developed. A

Developing.

renewable energy)

renewable energy

Research has shown that

The recent upgrading of

manufacturing

the country is at the brink

the electricity network

hub is proposed

of an oil and natural gas

to 400kV means that the

in iLembe Local

boom, which is attracting

country has additional

Municipality. It will

energy57 companies from

power supply to meet the

focus on components

various parts of the world.

needs of large industries.

Developed.

manufacturing and

In terms of renewable

not generation.

sources, Hydro energy is the most developed but on a small scale.

Labour Force

Doing business, overall

Favourable skilled

Relatively favourable but

Favourable skilled

Favourable skilled labour

labour across different

with a limited range of

labour with a national

force.

economic sectors.

skills.

literacy rate of 86.4%.

In addition to the

Mozambique is currently

The government

The country has interlink

above, the region has

implementing major

policies support both

ages in rail, road and

a highly developed

infrastructure projects.

local and international

telecommunications

commercial and

Foreign companies

investment. Getting a

networks, which connect

financial business

have acknowledged the

work permit is relatively

with SADC, COMESA and

culture which is

country’s business potential

simple and no visas

regions beyond. It offers

complemented by a

and are investing billions of

are required. The

a low cost base, investor

spectra of professional

dollars.

tax regimes are also

protection and safety.

services and good

favourable thus doing

access to overseas

business can be done

markets.

with ease.

As noted in the table above, KZN has a diverse commercial and financial infrastructure balanced by excellent physical infrastructure. Mozambique has attracted significant levels of foreign direct investment into major infrastructure projects including ports and road infrastructure. This is anticipated to assist in unlocking local potential through reduction of development timelines. The Seychelles supportive national policies in investment, tax framework and the ease of labour movement due to no work visa requirements makes the country highly attractive for FDI. Swaziland’s integrated infrastructure – notably rail, road and telecommunications networks with the SADC, COMESA and regions beyond offers a lower transportation cost base, investor protection and safety. 9.2.1. KwaZulu-Natal Business support infrastructure in KZN is well developed overall. Prior to 2010, a number of infrastructure development projects were implemented, such as the R110 million upgrading of the Western Freeway and a R1.34 billion investment to upgrade existing facilities at the Durban Port. The establishment and growth of the Dube Tradeport in the same year, 2010, opened new opportunities for local and international businesses. Dube Tradeport caters to new generation aircrafts at the King Shaka airport and incorporates an industrial development zone, intermodal freight transfer facility and other commercial and retail opportunities. The platform is linked with the seaports of Durban and Richards Bay. Sixty infrastructure projects in the province worth a collective R6 billion, were put out to attract both national and international funders in October 2014. The projects, in size and industry, are all geared at improving the current infrastructure for both residents and businesses.

57 Africa oil & gas review – PwC http://www.pwc.co.za/en_ZA/za/assets/pdf/oil-and-gas-review-2014-gc.pdf

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9.2.2. Mozambique The Mozambican government, which has identified transport infrastructure as fundamental for economic development, has launched various public-private partnerships and grants concessions to consortia that build or rehabilitate roads. Major players on the global construction market have been contracted for these projects. Portuguese companies, in particular Conduril, MotaEngil and Zagope, are predominant. Chinese enterprises – China Communications Construction Company, China Henan International Cooperation Group and Weihai International Economic & Technical Cooperative – have been granted most, but not the largest, contracts. Construction companies from other countries are much less involved, with Cooperativa Muratori & Cementisti (CMC) di Ravenna from Italy being an important exception. Upgrading the railway system is an even more pressing need than road infrastructure because exporting the tremendous amount of resources from central Mozambique depends upon transport by rail. Over USD30 billion of infrastructure projects are in the pipeline and investor interest continues to grow, propelling growth in Mozambique’s construction sector. Business Monitor International estimates the construction sector will average 6.7% growth per annum over our forecast period from 2014 to 2023. Significant interest and investment in Mozambique’s vast natural resources has prompted an infrastructure investment drive. 9.2.3. Seychelles The overall business support infrastructure in Seychelles favours domestic and international investment. To ensure security of supply, and at the same time replace some of the older diesel generator sets due for retirement, PUC (Electricity) has invested USD48.7 million in a new 50 Mega Watt (MW) power station which is situated at Roche Caïman, on the east coast of Mahé. This investment doubled the generating capacity in the country. Praslin and La Digue have also benefited from this project through the transfer of the existing smaller generator sets from Mahé to the Baie Sainte Anne power plant on Praslin in order to boost capacity. 9.2.4. Swaziland Two key infrastructure projects, a rail link to South Africa and a new airport, have contrasting prospects for success. The rail link, which is currently in its design phase and will run from Lothair in South Africa’s Mpumalanga province (which borders Swaziland) to the Swaziland Railway (SR) railhead at Sidvokodvo, south of Manzini (the largest Swazi city), will strengthen the integration of the railway system in the region and will boost freight traffic. However, the newly built airport located at Sikhupe, 80 km east of Manzini, is, due to its location, anticipated to have little impact on further unlocking of regional trade.

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10. CONCLUSIONS AND RECOMMENDATIONS The Economic Report 2015 provides a snapshot of each of the four regions in terms of the current political environment, the cost of doing business and trade and investment dynamics within and between each region. In addition, the report highlights recent investment flows and current investment opportunities that are available in order to boost trade and investment between the regions. The IMF Regional Economic Outlook for Sub-Saharan Africa (SSA) warns that fiscal vulnerability in the region requires monitoring, going forward. In many countries, the report says, the fiscal deficit reflects reflect timebound efforts to fill infrastructural gaps â&#x20AC;&#x201C; part of a developmental agenda financed in sufficiently concessional terms. However, there is a concern that in an increasing number of countries in the region, the expansionary fiscal stance is being driven by sharp growth in recurrent rather than developmental spending. This is an area of concern that the E3Route economies may want to keep alert to, so as to secure future competitiveness and catapulted growth paths. Data availability is a serious setback among developing countries, and the SSA is no exception. This makes comparability and reliability difficult, opening different research outputs to different empirical inferences on the region, which is likely to lead to misaligned policy proposals. In some instances, for example, statistics relate to 2001 or even as far back as 1997. The E3Route economies may want to address as a starting point availability of reliable and consistent data on the state of their economies, as this will assist in painting a stable picture and pave a way to relevant policy interventions. The SAA and E3Route region is almost always ranked low in a number of international benchmarking exercises. A World Bank paper on the impact of investment environment on FDI showed that there is a positive correlation between rankings of the DB Reports and growth in FDI inflows. In addition to business opportunities such as domestic market size and market growth potential, the paper showed the importance of investment climate features such as strong institutions and investor-friendly regulations to attracting FDI, as well as the availability of skilled labour force and presence of cluster, partner or supplier. As such, E3Route economies may want to work on improving their DB rankings so as to improve the added advantage of having increased FDI flows into their borders. This is important because FDI was reportedly responsible for a whopping 11% of global GDP and more than 80 million jobs across the world, in 2010. Research and empirical evidence have shown the danger of relying heavily on foreign investment, particularly portfolio investment, for addressing domestic development agenda. This kind of inflow is highly volatile and can swing development plans off course very rapidly. The key to offsetting such vulnerabilities lies in building domestic savings and national offshore reserves. The E3Route economies might also want to closely monitor these savings and ensure their steady growth for stability of their future infrastructure programmes. Based on the doing business rankings and business support infrastructure, it is evident that the four regions are implementing a number of initiatives and projects to improve the business environment, in order to attract investment. As with all developing nations, there remain areas that still require improvement, such as procedures required to access electricity, get credit, and resolve insolvencies, etc. However, positive strides have been made in easing the regulatory procedures relating to trading across borders, which will further support the opportunities that exist for trade and investment between these regions. The East3Route provides the opportunity for the countries to jointly tackle common issues, identify and promote cross-border trading solutions that optimises trade and investment in the regions.

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Positively, the real GDP growth for member nations of the East3Route has shown to be largely resilient to the global economic crisis, although South Africa was most impacted due to the dependence on the European markets and imports. Despite some continuing challenges, the medium-term outlook remains positive. Supported by investment in the resource sector, public infrastructure, and agriculture, GDP growth is projected to remain stable for the member countries. In the longer term, the outlook as always, is sensitive to downside risks from lower commodity prices, tightening global financial conditions, and political instability. These issues again can be mitigated not only on a national level but also on a regional route level. Foreign Direct Investment (FDI) into the regions has been significant within economies such as Seychelles and Swaziland, being highly dependent on these FDI inflows for economic growth. The majority of FDI has been in the extractive sectors, energy sector, and agriculture and infrastructure development. The analysis has also shown that significant trade is taking place between South Africa (KZN) and the other regions; however, little trade is being done between Mozambique, Seychelles and Swaziland. This creates opportunities to grow exports in Mozambique, Seychelles and Swaziland, by increasing trade between these countries and at the same time, increasing the trade to and from South Africa. The major potential opportunities include trade of the following commodities: •

Vegetable and vegetable products

•

Automotive parts

•

Textiles

•

Sugars and sugar confectionary

•

Prepared foodstuffs (specifically tuna canned and frozen)

Many investment opportunities are currently available within each region, and these present a direct opportunity for investment and enhanced potential for trade between the regions. A variety of industrial opportunities exist within KwaZulu-Natal, particularly around the Dube Trade Port and Richards Bay Industrial Development Zone. Numerous tourism and property development opportunities have been identified, as well as opportunities within the green economy sector, agricultural sector, and ICT/ Technology Sectors. Within Mozambique, industrial, agricultural and tourism opportunities have been identified all across the country. In addition, there are various large-scale infrastructure and energy-related opportunities that exist, which have the potential to boost economic growth and development within Mozambique, and provide a platform off which future trade and investment can occur. The Seychelles offers a range of tourism-related investment opportunities, particularly large-scale resort and island developments. In addition to the tourism offering, exciting opportunities are available within the fisheries sector, property development sector, energy sector, and professional services sector. Swaziland presents investment opportunities within the tourism industry, manufacturing and industrial sector and agricultural sector. Significant large-scale infrastructure and energy sector opportunities exist for investors, which assist with boosting the potential for investment into both the key sectors already identified and numerous emerging sectors too.

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11. List of references 1.

3S Media. Transport World Africa logistics publications. www.transportworldafrica.co.za

African Development Bank. 2014. African Economic Outlook Reports: South Africa

African Development Bank. 2014. African Economic Outlook Reports: Mozambique

African Development Bank. 2014. African Economic Outlook Reports: Seychelles

African Development Bank. 2014. African Economic Outlook Reports: Swaziland

African Press Organisation. 2014. The impact of Movitel on ICT in Mozambique.

Asoko Market Intelligence. 2015. South Africa is the most competitive country in the Africaâ&#x20AC;&#x2122;s tourism sector, according to a report released by the World Economic Forum (WEF). Online news publications. May 6

8. Business Report. 2013. KZN seeks billions for major projects. http://www.iol.co.za/business/news/kznseeks-billions-for-major-projects-1.1597592#.VDfp8vmSwe0 9. Central Intelligence Agency [CIA]. 2015. World Fact Book. Online databases: www.ciaworldfactbook. com. 10. Department of International Relations and Cooperations [DIRCO]. 2006. President Thabo Mbeki to CoChair South Africa - Mozambique Economic Bilateral Commission. www.dirco.gov.za 11. Department of International Relations and Cooperations [DIRCO]. Treaties: international agreements. www.dirco.gov.za 12. Financial Times [FT]. 2015. FDI intelligence databases. www.fdimarkets.com 13. Focus Africa. Helping Indian companies do business in Africa: http://focusafrica.gov.in/Seychelles_ Trade_Agreement.html 14. Hubs (Science Parks) 15. International Monetary Fund [IMF]. 2013. New Opportunities and New Risks: Prospects for Sub-Saharan Africa and Mozambique. 16. International Monetary Fund [IMF]. 2014. World Economic and Financial Surveys: Regional Economic Outlook â&#x20AC;&#x201C; Sub-Saharan Africa. 17. International Monetary Fund [IMF]. 2015. World Economic Outlook, April. 18. International Trade Centre [ITC]. 2015. TradeMap: world trade statistics databases 19.

KwaZulu-Natal Department of Economic Development, Tourism and Environmental Affairs. 2013. Industrial Hubs and Special Economic Zones

20.

KwaZulu-Natal Provincial Treasury. 2013. KwaZulu-Natal Regional Innovation and Technology

21.

KZN Top Business. KwaZulu-Natal infrastructure. http://kzntopbusiness.co.za/site/kzn-infrastructure

22. Maps of the World. International airports: airports in Swaziland 23. McKinsey & Company. 2010. Insights & publications: fulfilling the promise of sub-Saharan Africa. 24.

PriceWhaterhouseCoopers [PWC]. 2014. On the brink of a boom: Africa oil & gas review

25.

Quantec. 2015. Online databases

26.

Seychelles Investment Board [SIB]. www.sib.gov.sc

27.

Seychelles National Bureau of Statistics. 2015. http://www.nsb.gov.sc.

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28. South African Department on International Relations and Cooperation [DIRCO]. 2015. The South African Treaty Register. Pretoria, South Africa 29. Southern African Development Community [SADC]. Themes: foreign direct investment. www.sadc.int 30. Statistics South Africa [Stats SA]. 2015. Various reports and publications. www.statsa.gov.za. 31. Swaziland Bureau of Statistics. 2015. Various indicators. www.swazistats.org.sz Swaziland Investor Roadmap: a practical guide to doing business in Swaziland. http://www.swaziland.co.sz/ 32. Trading Economics. Online economic sources: www.tradingeconomimcs.com. 33. Travel Document Systems. Swaziland travel info. www.traveldocs.com 34.

United States Commercial Services. 2011. Doing Business in South Africa - 2011 Country Commercial Guide for U.S. Companies

35. World Bank. 2014. African Development Indicators 36. World Bank. 2014. Doing Business Report. Washington, DC. USA. 37. World Bank. 2014. Global economic prospects. Washington, DC. USA 38. World Bank. 2015. World development indicators databases. 39. World Economic Forum [WEF]. 2015. Global Competitiveness Report. Davos, Switzerland 40. World Trade Organisation [WTO]. 2015. Trade Profiles databases

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Notes

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Notes

OUR JOURNEY TOGETHER

www.sib.gov.sc www.seychelles.travel

www.cpi.co.mz www.inatur.org.mz

www.tikzn.co.za www.zulu.org.za

www.sipa.org.sz www.thekingdomofswaziland.com

w w w . e a s t 3 r o u t e . c o . z a