Despite the ongoing
negative influences of the apartheid economic policies of the past,
a high (but diminishing) crime rate, erratic oil prices and a low
rand gold price, South Africa still has the strongest economy on
the African continent. Indeed, the 40% appreciation of the rand
against the United States dollar over the past year confirms this.
Gauteng Province, of which Johannesburg is the capital city, supplies
over 40% of South Africa’s Gross Domestic Product
(GDP), while covering only 7% of its surface area. A sophisticated
1st world economy is exemplified by the JSE (Johannesburg Stock
Exchange, recently renamed Johannesburg Securities Exchange), which
is the 10th richest in the world.
A struggling 3rd world economy, however, coexists alongside, as
shown by large squatter settlements in the city. Unemployment
in Johannesburg is 30% up from 27% 3 years ago. There are 4,500
homeless people in Johannesburg. About 116,827 families live in
shack settlements, whilst around 108,000 families live in illegal
backyard shacks. Unemployment rates, at 36.4% in 2003, were still
lesser than the national average, which stood at 40%.
Johannesburg is South Africa’s centre for all rail and road
connections, it also has the chief container terminal at Kaserne
and the busiest international airport. Greater Johannesburg and
its neighboring areas attracts approximately 76% of foreigners
visiting South Africa from the rest of Africa and 60% of those visit
Johannesburg mainly to shop and look for capitalist opportunities,
over and above leisure pursuits. Johannesburg is the economic epicentre
of South Africa and the government has recognised that in order
to attract domestic and foreign investment, it must essentially
be a clean, functioning city.
Much of downtown Johannesburg has been victim of capital flight
to the (perceived) safer, less overcrowded and cleaner suburbs and
satellite towns, such as Midrand and Sandton. Indicative of this
growing inner city decay is the fact that the JSE has recently followed
the path of several major corporations, by migrating from the Central
Business District (CBD) to Sandton, 10 kilometres (6 miles)
north. Efforts are being made to attract investment back into the
city centre and national rail provider Spoornet’s relocation
here already suggests a degree of success. A programme labelled
iGoli 2002, which aims to once more make the Central Business District
secure and attractive to businesspeople and tourists alike, has
been introduced. Managers are being put on performance contracts,
while workers are being transferred to new, private enterprises
that will run the several municipal services along business lines.
This is being strongly opposed by unions, such
as SA Municipal Workers Union (SAMWU), which has rejected the restructuring
due to numerous jobs that will be lost.
Black Economic Empowerment and Affirmative
Action are still debatable issues, both in the business
and political arenas. Business is still largely dominated by white
people, however, there are numerous black controlled groups on the
JSE and several JSE stockbroker firms are black owned. Major black
empowerment acquisitions include JCI and Johnnic (from Anglo American)
and Zenex Oil (from the Zenex Trust). Several companies have well
designed programmes of Affirmative Action, intended to correct the
inequities of the past and accelerate the development of historically
disadvantaged employees. However, others make ‘politically
correct’ affirmative action appointments, which are very well
paid but often secluded from real decision making.
Through its growth, employment
and redistribution (GEAR) policy, the South African
government has shown its dedication to privatisation, free trade
and the fostering of a favourable investment climate. The heavy
industry (Iscor Vanderbijlpark, AECI) and mining (Anglo American
has its African head office in Johannesburg) sectors are fast being
eclipsed by financial services (First National, Johannesburg Stock
Exchange, ABSA, Barclays, Western Union and Standard banks), telecommunications
(Vodacom, Telkom, MTN), retailing (Pick’n’Pay / Wooltru
Holdings) and technology (PQ Holdings, IBM, Dimension Data). The
tourism sector’s contribution to the Gross Domestic Products
of South Africa (presently around 11%) continues to be damaged by
crime. Throughout August 2003, figures show that a total of 160,470
foreign travellers visited South Africa by air alone (80% via Johannesburg
International), down 3.5 % on the record 2002 figures.
The most successful way for one to become familiar with business
practice and opportunity in Johannesburg is to contact the Johannesburg
Chamber of Commerce and Industry (JCCI, founded in 1890).
Their website
is reliable, respected and informative. Detailed information and
statistics regarding Johannesburg’s and the rest of South
Africa’s business and economic climate can be found online,
while the City of Johannesburg also publishes its procurement needs
online.
Business Etiquette
The South African population is characterised by heterogeneity.
This is more evident in cosmopolitan Johannesburg than anywhere
else, where some areas have the feel of a large European city, while
other parts are clearly 3rd world Africa. South Africa has 11 official
languages, although English is the most largely used language in
government (both national and provincial) and commerce. Normal business
hours are 8.00 am to 5.00 pm, although not much happens after 3.00
pm on Fridays.
Although South African business people have, in the past, been regarded
as quite conservative and formal in both manner and dress, the influence
of newly empowered black entrepreneurs has introduced a business
culture that is more informal, friendly
and comfortable. Businessmen and women in Johannesburg
tend to wear suits, although ethnic outfits are gradually more obvious.
It can, however, become bitterly cold during winter and extremely
hot during summer and in this part of South Africa, so this should
be taken into account, lightweight materials in the warm months
(October to April) and heavy overcoats for the cold period (May
to September).
Punctuality is still highly prized and it is recommended
to address hosts as ‘Mr’ or ‘Ms’ until requested
to use 1st names, which generally happens soon after the formal
greetings. The triple handshake is usual among black businesspeople,
although, even in these situations, the standard handshake may well
take preference with an international visitor. Gifts are not expected
in either social or business situations. Business cards
are often exchanged where businesspeople meet informally, such as
in airport lounges, hotel lobbies and at product launches. Most
initial business related social contact is along the lines of ‘let’s
do lunch,’ while dinner and breakfast appointments are far
less regular. |
