Economic relations between South Africa and France

The French South African economic relation (June 2017)

South Africa is France’s leading economic and trade partner (number one customer and second largest supplier) in Sub-Saharan Africa. Thanks to the presence of most major CAC 40 groups, France ranks 13th among foreign investors in the country, with an FDI stock of EUR 1.1 bn. Nearly 370 French subsidiaries, providing multi-sector coverage, are present locally, employing directly more than 37,000 people.

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

The former French Minister for economy and finance Michel Sapin has met the former Minister for finance of the Republic of South Africa Pravin Gordhan during his visit to South Africa (2 & 3 February 2017). This meeting was the opportunity to deal with major issues for our economic relation. The South Africa-France Joint Economic Committee also took place in Paris on the 13th of April, under the presidency of Rob Davies, Minister of trade and industry of South Africa and Harlem Désir, French Minister of State for foreign trade. It was a good opportunity to reinforce our partnership, in particular through a growing cooperation in different sectors. In the field of Transport, former French Minister Vidalies met with both South African Minister of Transport and South African Deputy Minister of Agriculture, Forestry and Fisheries during his visit in South Africa in March 2017 to strengthen the institutional and industrial cooperation between France and South Africa. In June, the new French Transport Minister Ms Borne and South African Deputy Minister Ms Chikunga met on the margins of the Le Bourget Airshow.

The French economic influence (Exports and Direct Investment inflows) is growing in South Africa. In 2016, bilateral trade (exports + imports) between France and South Africa increased by +4.4 % (against -6.4 % in 2015) to reach 2 758 M EUR thanks to the double increase of French exports to South Africa (+ 0.8 %) and imports from France (+ 12.2 %). Last year, while South Africa represented only the 41th export market for France (0.4 % of total French exports) and the 55 th 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. On a global scale, if it shows a decline for the second consecutive year (-9.1 % in 2016 to EUR 878.6 million), trade with South Africa is surplus for France (14th largest trade surplus).

Investments: France, 13th largest foreign investor in South Africa with 371 companies

According to the Banque de France, the French capital stock in South Africa has almost tripled since 2000, from EUR 337.6 million in 2000 to EUR 1 971 million in 2015. Most of the French investment stock is concentrated in manufacturing, construction and financial activities. Within the manufacturing industry, French investments are mainly oriented towards the chemical and pharmaceutical industries. According to data from the South African Central Bank, France held, at the end of 2015 (last available year), 0.8% of the stock of FDI in South Africa (ZAR 16.1 billion, EUR 1.1 billion) and ranked 13th among foreign investors. In 2016, the French market share in South Africa reached 3 %, ahead of the United Kingdom and Italy.

According to the latest data from INSEE (2013), the number of French companies in South Africa is 371, employing directly more than 29,000 people (37,000 according to the 2016 survey from the Department of Economic Affairs for Southern Africa). Many major French companies benefit from a historic base in the country (Alstom, Total, Air Liquide, Renault, Air France and L’Oréal, to name just a few). Many more - CAC 40 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 (the Decathlon and Leroy Merlin groups, among others, last year).

French investments in South Africa are diverse and comprehensive: in the industrial sector: energy (EDF, AREVA, Engie), transport & logistic (Alstom, RATP DEV, Bollore, Necotrans, CMA-CGM), aeronautics and defense (AIRBUS, Thales, Safran), pharmaceuticals (Sanofi-Aventis, Servier, Virbac, Ceva, Biomerieux), petrol and chemicals (Total, Air Liquide) electric equipment (Schneider, Nexans), mining (Imerys, Saint Gobain), vehicle manufacturers (Renault, PSA, Faurecia, Michelin), construction materials (Lafarge, Saint Gobain, Colas, etc.). In services: advertising (JC Decaux, Publicis), engineering (Ingerop, Begreen), control (Veritas), telecoms (Orange), consumer goods (L’Oréal, Danone), distribution (Decathlon, Leroy Merlin), financial services & audit (BNP, Mazars). In addition, there are nearly 4,500 French companies exporting to South Africa, and there are an estimated 200 French entrepreneurs who have built up their local structure, employing more than 5,000 people.

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, now Areva NP), the two new power stations of Medupi and Kusile (2007/2008, Alstom), the Gautrain regional express train linking Johannesburg to OR Tambo airport and Pretoria (2010, RATP Dev 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 (2013). In addition, major contracts have been won by French companies over the recent period: 10-year supply of 600 trains by Alstom, replacement by Areva of 6 steam generators at the Koeberg generating station, several contracts in the field of renewable energies (EDF Energies Nouvelles, Engie, Tenesol, Sunpower, Areva, etc.), delivery of 5 A330 leases by Airbus.

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 created the French Tech Hub Cape Town and made it alive in Cape Town as well as in the Gauteng province. This French technological quality, open to the world, is at home in South Africa. The signature of the SEDA financing agreement for the French South African Tech Labs in Cape Town is a strong element of the innovation relationship between our two countries. This incubator will be a major lever for the development of start-ups and the transformation of the South African economy.

French companies are particularly invested in South Africa’s economic transformation, including local content, training and social action. One good example is the Gibela contract to supply 600 trains to PRASA where Alstom employs 99.6 % of local employees and works significantly with local suppliers. 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.

A vibrant business community

At the institutional level, the French business community is structured around the local branch of the Foreign Trade Advisors (more than 30 members) and the French-African Chamber of Commerce and Industry - FSACCI. French companies in South Africa also naturally rely on the services of the State: the Department of Economic Affairs for Southern Africa based in Pretoria and the Business France office which accompanies French SMEs internationally. In addition, the French Development Agency (AFD - at the heart of the French aid scheme for developing countries), Proparco (an AFD subsidiary dedicated to the private sector) and the French Public Investment bank Bpifrance, which has just opened a local office. 77 international volunteers (VIEs), spread over 50 structures, are present in French companies. The number of French people registered in South Africa amounts to nearly 8,000.

publie le 04/07/2017

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