Economic relations between South Africa and France

South Africa is France’s leading economic and trade partner (number one customer and second largest supplier) in Sub-Saharan Africa. France ranks 14th among foreign investors in the country, with an FDI stock of EUR 2.5 bn. Nearly 400 French subsidiaries, providing multi-sector coverage, are present locally, employing directly nearly 40,000 people and with large commitments regarding training, skill transfers and black economic empowerment.

Bilateral trade: South Africa, main trading partner in Sub-Saharan Africa

The French economic influence (Exports and Direct Investment inflows) is growing in South Africa. In 2018, bilateral trade (exports + imports) between France and South Africa increased by +2.8% to reach EUR 3 bn mainly thanks to the increase of French imports from South Africa (+25%). In 2018, while South Africa represented only the 46th export market for France (0.3% of total French exports) and the 49th largest supplier (0.2% of French imports), the country remains an important partner. In Sub-Saharan Africa, it is France’s number one customer and it’s second largest supplier. These bilateral trade flows are almost balanced, with a EUR 221 M trade surplus in 2018 for France.

Investments: France, 14th largest foreign investor in South Africa with 370 companies

The French capital stock in South Africa has increased since 2000, from EUR 91 M to EUR 2.5 bn in 2017. Most of the French investment stock is concentrated in manufacturing, extractive industry and financial activities. France held, at the end of 2017, 0.7% of the stock of FDI in South Africa and ranked 14th among foreign investors and 7th among European investors.

There are around 370 subsidiaries of French companies in South Africa, from more than 160 French groups, employing directly close to 40,000 people. Many major French companies benefit from a historic base in the country (Alstom, Total, Air Liquide, Air France and L’Oréal, to name just a few). Many more big international companies, but also a growing number of SMEs and start-ups - have come since the birth of the new South Africa and continue to settle (recently the Decathlon and Leroy Merlin groups, among others).

French investments in South Africa are diverse and comprehensive: examples in the industrial sector: food & drinks (Limagrain, Danone, Parmalat-Lactalis, LVMH, Pernod-Ricard, Remy Cointreau), agro-equipment (Roullier, Pellenc), energy (EDF, Engie, Total), water (Veolia), waste (Séché Environnement), transport & logistic (Alstom, RATP DEV, Bolloré, CMA-CGM, Air France, ID Logistic, Mobilitas), aeronautics and defense (AIRBUS, Thales, Safran), pharmaceuticals (Sanofi, Servier, Pierre Fabre, Virbac, Ceva, Biomerieux), petrol-industrial gas and chemicals (Total, Air Liquide), electric equipment (Schneider Electric, Legrand, Nexans, Socomec), mining (Imerys, Saint Gobain), vehicle manufacturers (Renault, PSA, Faurecia, Michelin), construction materials (Lafarge, Saint Gobain, Colas), construction (Vinci), consumer goods (L’Oréal). Examples in services: communication-events (JCDecaux, Publicis, GL Events, Havas), software-IoT (Dassault Systèmes, Idemia, Sigfox, Gemalto, Atos), engineering (Ingerop, Systra, Begreen), control-testing-certification (Bureau Veritas, Merieux Nutrisciences), telecoms-TV (Orange Business Services, Trace), catering (Newrest), distribution (Decathlon, Leroy Merlin), financial services and audit (BNP, Mazars, Société Générale, Euler Hermes, COFACE).

A multisector presence contributing to iconic projects

Several of these companies have contributed to iconic infrastructure projects such as the Koeberg nuclear power plant (1984 consortium consisting of Spie Batignolles, Alstom and Framatome), the two new power stations of Medupi and Kusile (Alstom Energy and Endel), the Gautrain regional express train linking Johannesburg to OR Tambo airport and Pretoria (2010, RATP Dev, Thales and Bouygues), the Durban Wastewater recycling plant (2001, Veolia, the first PPP in the water sector) and the construction of the world’s largest industrial gas production unit by Air Liquide inaugurated in 2018. In addition, major contracts have been won by French companies over the recent period: replacement by Framatome of 6 steam generators at the Koeberg generating station, delivery of 5 A330 leases by Airbus, the Gibela contract won by Alstom to produce locally 3,600 train coaches to PRASA. Finally, EDF, Engie and Total developed several wind, solar and CSP projects within the Renewable Energy Independent Power Producer Procurement Programme.

In addition, the French presence in key sectors of the economy such as agribusiness or ICT, allows France to enjoy an excellent visibility in terms of know-how and skills. Regarding Innovation, French entrepreneurs are animating a French Tech Community Cape Town – Johannesburg with South African partners in Cape Town as well as in the Gauteng province. One French company of this community, Methys, has organised since 2017 the AfricArena conference to close the gap between African start-ups, big groups and international investors. The French South African Tech Labs in Cape Town, created by an agreement between SEDA and Methys, is also a strong contribution to the innovation relationship between our two countries.

French companies are particularly invested in South Africa’s economic transformation, including local content, training and CSR initiatives. One good example is the Gibela contract where Alstom employs 99.6% of local employees, works significantly with local suppliers and will train 19,000 people in the overall project. Another one is Schneider Electric, which is particularly active in training South Africans, both internally and also through the French South Africa Schneider Electric Centers, developed together with South African universities. And the Saint Gobain Academy is the only training provider accredited by the CETA (Construction Education Training Authority) to facilitate the National Certificate Ceiling & Partition Installation NQF 3 in sub-Saharan Africa.

A vibrant business community

At the institutional level, the French business community is structured around the French-African Chamber of Commerce and Industry - FSACCI. French companies in South Africa also naturally rely on the services of the Embassy: the Department of Economic Affairs for Southern Africa ; the Cooperation and Cultural Action Department (for scholarship programmes and partnership with universities) ; the Trade Commission (Business France) which accompanies French SMEs internationally (with the support of a representative from BPI, the French Public Investment Bank) and is in charge of the International Internship Programme: close to 80 international interns (VIEs) are working in South Africa for French companies and are sharing their expertise with South-African employees.

In addition, the French Development Agency (AFD) has committed more than EUR 2.3 bn in South Africa since 1994. With Proparco, its subsidiary dedicated to the private sector, they are currently working on 3 main topics: sustainable and balanced urban development, energy transition and access to employment.

The number of French people registered in South Africa amounts to nearly 8,000.

publie le 23/07/2019

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