Why South African companies are looking at the rest of the continent

South Africa’s domestic market is not providing local companies with enough growth opportunities, prompting many of them to look at the rest of the continent.

So said Michael Lalor, leader of Ernst & Young’s Africa Business Centre, during a recent online press conference.

“While South Africa is still growing well compared to the advanced economies, it’s certainly not keeping up with some of the other rapid-growth markets.”

He said many of the other emerging markets, such as China and South America, are difficult to enter, making the rest of Africa the obvious choice. “Asia’s an intensely competitive market. Latin America is a very difficult market to compete in, given the strength of Brazil in that market. So Africa . . . given its sustainable growth story and given its potential, is an obvious region for South African companies to grow into,” Lalor explained.

“There’s no doubt that growth into the rest of Africa should be at the heart of most South African companies’ growth story,” he added.

Lalor said that most Johannesburg Stock Exchange-listed companies are currently developing strategies for the rest of the continent.

According to Lalor, Ernst & Young is experiencing strong interest from foreign companies to invest in the continent. “I’m in Korea this week. I was in Brazil two weeks ago. Some colleagues of mine . . . have been in India and in China. We travel often to the States, to the UK . . . And what we do is we talk about Africa. The response from our clients and from potential investors . . . is overwhelmingly positive, to the extent that we simply cannot keep up. So there’s no doubt that we are seeing significant interest, both spoken, interest in spirit, but also people putting their money where their mouths are,” he said.