The South African economy is highlighted as a fast-growing and diverse economy in Africa, known for its multi-sector growth and political stability. Since the COVID-19 pandemic, much has changed and new opportunities for growth have risen in the markets. There are new emerging industries which are rapidly growing, presenting new opportunities for entrepreneurs.
South Africa has a knowledge-based economy with a good focus on technology, e-commerce and financial services. The IMF (International Monetary Fund) forecasts that South Africa’s economic growth will be at 3.1 percent in 2021, a 0.3 percent [1] increase from 2020. It is one of Africa’s economic powerhouses because its R1.9 trillion Gross Domestic Product (GDP) is 30 percent [2] of the entire continent’s GDP. Highlighted below are three emerging industries that can be leveraged for entrepreneurial opportunities.
Telecommunications and ICT Technology
The Telecommunications sector in South Africa can advance digital technologies that help increase economic competition across industries. It provides the building blocks for the digital revolution and can aid in socio-economic development.
One of the current challenges facing the industry post-COVID-19 is that the increased demand for telecommunications and ICT comes from a subscriber base that is facing harsh economic conditions. This adds pressure to cash flows to manage the digitisation process in the industry. A framework developed by Deloitte highlights that solutions to these challenges are through cost reduction strategies; partnerships across operations, products and financing; network optimisation and product innovation.
The sector contributes to this gap through provision of fibre optic cables, security systems and the mobile software field. The country also exports solar cells, integrated circuits and cell phone software development to international markets. The South African Government runs programmes and agencies that offer extensive Robotics development skills, Artificial Intelligence (AI), Coding, Cloud computing, and Networking to young people. The Government has not allocated a funding budget to ICT entrepreneurial projects in the industry. However, there are private funding opportunities which can be found on IdeaNav’s site.
Agriculture & Agro-processing
Agriculture contributes sustainably to South Africa’s gross domestic product (GDP) because of the growing population that increases the demand for food supplies. Statistics South Africa shows that agriculture was the only sector with positive growth in the last quarter of 2020, compared to its previous quarter’s performance—highlighting that despite the economic downturn across other industries during the pandemic, agriculture increased. There has been a consistent contribution of 4 percent annually to the GDP [3], and this sector feeds into other industries such as food and beverages, and manufacturing. There is also a constant production of fruits and vegetables in surplus for international markets. This industry contributes sustainably to employment creation, food and nutrition security, and equality through land reform.
Agro-processing is one of the key sub-industries within this sector. It covers the processing of freshwater aquaculture and mariculture, exotic and indigenous meats, nuts, herbs and fruit. This processing also involves the production and export of luxury fruit and wine; confectionery manufacturing and export. It showcases South Africa’s degree of competitive advantages globally through our natural landmarks, biodiversity and marine resources.
The Government offers various grants and opportunities for entrepreneurs entering this space, including LRAD grant (land redistribution for Agricultural Development), IFSNP Programme (Integrated food security and nutrition programme), CASP (Comprehensive agricultural support programme) and MAFISA (Micro-agricultural financial institutions of South Africa). There are also some private found here.
Financial Technology (Fintech) and Banking
The South African Reserve Bank (SARB) manages the banking services industry while the Financial Service Board (FSB) oversees the non-banking financial services industry. Banking in South Africa is gradually adopting mobile methods like Electronic Fund Transfer methods (EFTs), mobile banking and digital wallet payments (e-wallets), and more.
South Africa’s retail banking sector is dominated by five JSE-listed banking groups. However, with the entry of new banks into the market, the banking landscape is becoming less consolidated and more competitive. Online banks offer new advantages as well as threats. The increased competition has allowed for a decrease in traditional bank charges, especially for entry-level accounts.
The fintech industry covers a wide range of services from cryptocurrencies, digital payments, online banks, investment applications and sites, and more. Start-ups in this industry continuously revise their business models to become more sustainable. Fintech’s opens up inclusivity by making services accessible to a larger base of customers as opposed to reserving certain financial services to the middle and upper class, or those with financial and physical access. This expands the customer base and market share as SA’s middle class is under intense strain to maintain traditional banking standards and systems.
The Government’s Intergovernmental Fintech Working Group (IFWG) is doing good work on cryptocurrency, digital banks, digital payments, open-loop systems and regulation. Some more funding opportunities from investors can be found here on the SME Funding site and through various venture capital firms.
The sectors highlighted above are not the only means to enter the entrepreneurial market, but represent viable entry points for entrepreneurs who are looking to grow and expand with stability over time. These sectors demonstrate where supplies are needed to satisfy demand in the medium to long term.
[1] https://businesstech.co.za/news/business/481071/imf-forecasts-south-africas-gdp-will-grow-3-1-in-2021/[2] https://briefly.co.za/27937-fastest-growing-industries-south-africa-2021.html[3] http://www.statssa.gov.za/wp-content/uploads/2021/05/StatsBiz_April2021.pdf