By Nawa Mutumweno (Zambia) – It boggles the mind to note that one could be in Zambia but would end up flying, eating, banking and shopping South African and then retire to a South African hotel to watch South African television.

This brings into sharp focus how deep inroads the African economic giant has made into the affairs of its neighbors and beyond.

The collapse of apartheid in 1994 opened up South Africa to the rest of the world. It also opened the rest of Africa to South Africa.  Apart from the rise in exports of goods to other African countries, South Africa’s service industry pushed upwards into the continent extensively and dramatically.  South African banks, supermarkets, restaurant chains, telecommunications companies and construction firms have in recent times clouded the regional economic landscape.

The benefits of such trade and investment are tremendous. It is a stark reality that South African firms have created new capital, employment, technology and ideas which have enhanced competition and economic development.

Game, Shoprite and Mr. Price, among others, have transformed retail trading in the region while Nandos  has revolutionalised and brought a new dimension to chicken eateries.

In a bid to quantify and profile the activities and performance of South African service companies on the continent, Development Network Africa (DNA) Economics, a South African research consultancy, undertook a scoping exercise with support from the World Bank.

A number of interesting sector and country trends emerged from this initial analysis:-

–          South Africa is a major player in the African media industry being the dominant provider of satellite television services.

–          South Africa’s mass market retailers, restaurants and mobile phone companies have been extremely aggressive across Africa – opening a large number of stores and operations and attracting substantial numbers of customers.

–          South Africa’s construction, engineering and IT firms have significant African operations – but most of this kind of work takes place on project-by-project basis (with local companies often established in order to undertake work in a specific country).

–          Except for Standard Bank (Stanbic) – which has an extensive network of branches and investments across sub-Saharan Africa – most of South Africa’s banks have not ventured beyond the country’s immediate neighbors. It is only in the past one year that the First National Bank (FNB) has opened branches in Zambia, for instance.

–          South Africa’s freight, logistics and distribution companies do significant work in and between African countries; and the biggest of these have established agencies and dealerships throughout southern Africa.

–          South Africa’s major hotel; groups have made steady in-roads into Africa, with Namibia and Zambia  being favorable destinations.

–          South African airlines, hospital groups, educational institutions and professional service firms (law and accounting) are large and globally competitive – but they have made little direct investments into African markets. Instead, they prefer to operate from their base in South Africa and undoubtedly attract substantial number of African customers.

The DNA/World Bank scoping study also identifies a number of South African companies that  stand out as particularly active in Africa – and have emerged as genuine multinational corporations, active in 10 or more African countries (outside of South Africa). Particular success stories include:-

–          In the construction and engineering sector, Aveng and Murray and Roberts are South Africa’s largest firms; but whereas Murray and Roberts has a larger domestic portfolio, Aveng has a more extensive African client base. Group 5 also has extensive African operations but does not compare to the other two in absolute size.

–          Naspers’ Africa operation is focused on print media and pay television, namely the Media 24 and MultiChoice brands and products. MultiChoice (including DSTV, Supersport, Mnet) is the largest provider of satellite television in Sub-Saharan Africa (SSA) and has almost one million subscribers in 48 countries (outside of South Africa). Media 24 is primarily involved in the publication of educational books and magazines. The company owns publishing companies and has established branches in six African countries.

–          The Famous Brands Group boasts 87 restaurants throughout Africa (in addition to its 1 330 outlets in South Africa). Well known brands include Steers, Wimpy, Debonairs Pizza, Mugg &Bean and FishAways. They have also developed a significant presence outside of Africa with 183 outlets in the UK (largely Wimpy) and two in the United Arab Emirates (UAE).

–          The Bidvest Group is South Africa’s largest distribution and trading company, with interests across multiple sub-sectors and continents. The company employs 4 135 people in its African operations (outside of South Africa). Imperial Holdings and Barloworld are smaller than Bidvest in revenue terms, but their African operations appear to be more extensive.

–          In the transport sector, Grindrod is South Africa’s largest (private sector) operator, with freight, shipping and trading operations throughout the region. The company has a 25 percent stake in the concession to rehabilitate and operate the Port of Maputo and owns the long-term lease on a number of terminals in this port. It also owns and operates terminals in the Ports of Walvis Bay (Namibia) and Dar es Salaam (Tanzania).

–          The South African air space is dominated by South African Airways – the second largest airline on the continent – and its feeder airlines SA Express (state-owned) and SA Airlink (private). The only other South African airline providing services into the region is Comair, which owns the low cost airline All four airlines provide regular flights to a wide range of African countries – but until recently, there was little interest in investing into any of these markets. Earlier this year, SA Express announces the establishment of Congo Express,  a joint venture in the DRC in which SA Express holds 49 percent, to service the domestic market; and Airlink launched a new airline as a joint venture with TTA of Mozambique (also 49 percent), to operate flights between Johannesburg and Maputo and within Mozambique. Airlink already owns a 40 percent  share in Airlink Swaziland (the majority share is owned by the government).

–          Most of South Africa’s major retailers have a wide African network, though the largest number of stores  are found within the Southern Africa Customs Union (SACU) (Botswana, Lesotho, Namibia and Swaziland). Shoprite is undoubtedly the market leader in this aspect – with more than 200 stores across Africa (in addition to 1 146 stores in South Africa). Massmart (Game), Woolworths and Mr Price are not far behind in terms of country coverage and are all looking to increase their exposure to these markets.

–          South Africa’s big-four banks have a strong presence in neighboring countries. Apart from SA’s established banks operating a network of branches in the sub-region, recently, South African banks have also acquired equity in a number of national banks in a wider range of countries. For instance, ABSA has entered Tanzania through a 55 percent interest in the National Bank of Commerce; and Standard Bank acquired a 55 percent interest in IBTC Nigeria.

–          The Protea Hospitality Group owns, operates and manages hotels under the Protea and African Pride brands. The company has the most extensive network of hotels across Africa, with 24 hotels in eight countries. Most of these hotels are not directly owned by Protea, but it provides branding, reservation and hotel management services.

–          MTN is the market leader in the telecoms sector with more than 40 million subscribers in 15 African countries (outside of SA). In all but three countries, these operations are run in partnership with a local shareholder. Vodacom has been somewhat constrained by its links with Vodafone and in 10 of the 14 countries in which it has a presence, the firm provides telecommunications technology and support services, but does not have a mobile operation or license.

Indeed the story of African business and trade is not complete without mentioning South Africa. It is an integral part of the equation. Indications are that its footprint is becoming larger and more pronounced with time.