Top 10 fastest growing industries in South Africa in 2022
Researching the market and opportunities in it is vital before starting a business. The information will enable you to gauge prospective profits from your venture. Invest in the fastest growing industries in South Africa because it is a sophisticated and promising emerging market globally. Mzansi is Africa's economic powerhouse because its R1.9 trillion (US$283bn) Gross Domestic Product (GDP) is 30% of the entire continent's GDP.
Source: UGC
South Africa's diverse economy has multiple fastest-growing industries. The country is gradually becoming self-sufficient because it does not rely on a single sector to generate income. The emerging middle-class community and political stability are some of the many factors that are spearheading Mzansi's economic success.
Fastest growing industries in South Africa
There are numerous business opportunities in South Africa. Gaining insights into the country's fastest-growing industries is a prudent step towards making the right investment decisions. Luckily, South Africa's economy accommodates anyone, regardless of the amount of money they are willing to invest. Profitable business sectors in South Africa include:
- Pharmaceuticals and healthcare sector
- Transport and logistics sector
- Finance and banking sector
- Mining sector
- Communications and information technology sector
- Finance and banking sector
- Agriculture and agro-processing
- Fashion and beauty sector
- Automobile sector
- Real estate sector
PwC economists forecasted a 75% probability of improved economic growth in South Africa under President Cyril Ramaphosa's leadership. Below details about the performance level of the sectors suggested above.
1. Finance and banking sector
Source: UGC
The South African Reserve Bank (SARB) manages the banking services industry while the Financial Service Board (FSB) oversees the non-banking financial services industry. The recent years' transformations in the finance and banking sector attract many foreign banks and financial institutions into South Africa's market.
Mzansi is gradually adopting mobile Electronic Fund Transfer methods (EFTs) like mobile banking and digital wallet payments (e-wallets), online banking through mobile apps, and more modern banking technologies.
2. Communications and information technology industries
Source: UGC
South Africa is a regional hub and a supply base of ICT products and services to neighbouring countries. International ICT corporates Systems Application Protocol (SAP), IBM, Microsoft, Dell, Intel, Unisys, Novell, and Compaq have subsidiaries in Mzansi.
Mzansi demands internet connection (fibre optic cables), security systems, mobile software field, and electronic banking systems more than any other country on the continent. Furthermore, South Africa has the fourth-largest smartphone market in the world. The country also exports solar cells, cell phone hardware, integrated circuits, cell phone software development, processing of silicon for fibre optics.
The South African government runs programs and agencies that offer extensive skills development in Robotics, Artificial Intelligence, Coding, Cloud computing, and Networking to millions of local young people. The country's data protection law, the Protection of Personal Information (POPI) Act, prevents ICT investors and other organizations from misusing the people's and organization's private data.
3. Transport and logistics sector
Source: UGC
The government invests heavily in modern and extensive transport infrastructures to promote economic growth. Transnet, a state-owned enterprise, is the biggest logistics company in the country. The company's branches offer services like rail transport (Spoornet), port authority (Portnet), road transport (Autonet), liquid petroleum (Petronet), and container shipments (Fast Forwards).
On the other hand, South African Airways (SAA), the government-owned national airline carrier, provides air transportation and shipment services to more than 700 destinations globally. There are several foreign and local logistics companies in South Africa, even though SAA and Transnet dominate the market. Moreover, the market still has enough room for more investors.
4. Mining industry
Source: UGC
Africa has 30% of the world's natural reserves, and South Africa has the largest share in that percentage. The country also boasts of being the world's largest producer of platinum and gold, the fourth producer of diamonds worldwide, and the home to the best quality base metals and coal.
The country's mining sector has a bright future because the world’s major automakers are shifting to developing electric vehicles; hence global demand for battery metals (copper, cobalt, vanadium, lithium, nickel, lead, and graphite) will rise. SA has some of the metals in plenty.
Menar Holdings company aims to produce 30,000 tpm of manganese from its new mine in the Northern Cape. Moreover, this mining company plans to earn R7 billion by 2022 from its two major coal projects in Mpumalanga and because the coal industry outlook remains good.
5. Agriculture and agro-processing
Source: UGC
Agriculture contributes massively to South Africa's gross domestic product (GDP) because of the growing population that increases the demand for food supplies. Statistics South Africa (StatsSA) show that agriculture was the only sector that encountered a positive growth in the last quarter of 2020 compared to its previous quarter's performance.
Selling agricultural supplies like agrochemicals and machinery is a great business idea in South Africa. The agro-processing sector's growth is directly proportional to the growth rate of the agricultural sector. Export agro-processed groceries, meat, and herbs to the western world guarantee good returns.
6. Pharmaceuticals and healthcare sector
Source: UGC
Cases of HIV/AIDS, TB, diabetes, cardiovascular diseases, hypertension, and cancer are increasing. The country is the largest pharmaceutical market in Sub-Saharan Africa. The prescription drugs market is worth around $3.0 billion, while the innovator/patented drugs' market is approximately $1.7 billion. Meanwhile, counter medicines are worth $378 million.
If the government's National Health Insurance plan actualizes, demand for generic prescription drugs and improved healthcare infrastructure will rise. More pharmaceutical companies producing generic drugs will invest in the country because 85% of South Africa's population depends on public health. The people will gladly register for the National Health Insurance plan to access the generic drugs at a subsidized cost.
7. Insurance sector
Source: UGC
The South African insurance sector is growing rapidly. More locals are buying insurance policies unlike five years ago because they are enlightened about they have come to understand the benefits of insuring their assets and lives.
The Oxford Business Group's reports show that the short-term insurance sector alone is worth $6 Billion. These insurance policies attract low-income earners and youths, and these are the largest percentage of SA's population.
South Africa Insurance Association (SAIA) disclosed that 35% of cars in the country have short-term insurance. However, insurance companies should invest in technology to improve transparency since this will benefit both the policyholders and insurers to benefit in the long run.
8. Real estate sector
Source: UGC
The growing population from high birth rates and increasing immigration rates from neighbouring countries are causing a property and housing shortage in South Africa. The property cycle is also impressive because graduates rent small apartments when they land their first jobs. They later buy the rental apartments and sell them when they financially capable of buying small townhouses or building homes.
South Africa is a top tourist destination; thus, there is a high demand for vacation homes, resorts, and hotels, and businesses need offices. All these factors prove that South Africa is the best place to set up a real estate or construction company. Moreover, policies like tax breaks for renovation projects and no stamp duty and VAT on property purchases support the industry.
9. Automobile sector
Source: UGC
The vehicle and automotive industry made 6.4% of South Africa's GDP in 2019. The industry comprises the manufacture, distribution, servicing, and maintenance of motor vehicles and components. Consider starting an automobile import business and deal with cars from Germany, the US, and Japan. The total automotive trade between Germany and South Africa was $9.53 billion in 2019.
South African speciality equipment and accessory wholesalers and retailers expand their product range by signing distributor/agent agreements with foreign firms. Attend international exhibitions such as SEMA, Performance Racing Industry (PRI), AAPEX, and Automechanika expands their knowledge as they interact with potential foreign partners.
10. Fashion and beauty sector
Source: Twitter
The fashion and beauty industry is one of the most underrated sectors in South Africa. The cosmetics sector makes R25 billion at the retail level and more than R5 billion at the manufacturing level. The industry has a mix of multinational giants and local brands established by entrepreneurs.
Pioneers in this sector preserved its secrets for a long time. The massive sprouting of fashion and beauty YouTube channels, social media influencers, and more are because of the recent wake-up call among South Africans. It is the least expensive sector to invest in, especially when you focus on selling cosmetics produced from natural ingredients.
The fastest growing industries in South Africa promise you a fortune if you are a smart investor. Do not hold back from investing when you have the chance. Save money or request financial help from financial institutions and begin your journey towards success.
DISCLAIMER: This article is intended for general informational purposes only and does not address individual circumstances. It is not a substitute for professional advice or help and should not be relied on to make any decisions. Any action you take upon the information presented in this article is strictly at your own risk and responsibility!
READ ALSO: Here are 5 best tax-free savings account in South Africa 2021
Briefly.co.za shared the 5 best tax-free savings account in South Africa. You need to save money to start or expand your business. After establishing which sector you will invest in, have you determined where you will save your money?
Tax-free savings accounts are popular among goal-oriented people because they increase their disposable income. The tax burden can slow you down from achieving your financial ambitions. Please tap on the link for more information.
Source: Briefly News
