South Africa, the 3rd largest economy in Africa, is considered one of the regional leaders of Sub-Saharan Africa and an important trade partner for many countries.
Among the most stable countries of the African continent, The Republic of South Africa is among the leading countries of the continent and its region in many fields such as economy, diplomacy, academia, culture and art. The Republic of South Africa, with a total area of 1,221,037 square kilometers, borders Namibia, Botswana, Zimbabwe, Mozambique, Lesotho and Eswatini. According to official data, in the country that hosts a population of 60.3 million, 62 percent of the population is under the age of 35.
The Republic of South Africa, the country with the largest number of capitals in the world, has 3 official capitals: Pretoria, the executive capital, Cape Town, the legislative capital, and Bloemfontein, the judicial capital. The country’s largest city, Johannesburg, is also the economic heart of South Africa.
The country is divided into 9 provinces, namely Gauteng, Kwa-Zulu Natal, Western Cape, Eastern Cape, Northern Cape, Limpopo, Mpumalanga, North-West and Free State. Gauteng, where the cities of Johannesburg and Pretoria are located, is the most crowded province in the country with a population of over 15 million. It is followed by the state of KwaZulu-Natal with a population of around 11 million, where Durban, the country’s second largest city with the most important port is located.
The only African G20 member
South Africa is the third largest economy of the continent, following Nigeria and Egypt, with a gross domestic product (GDP) of approximately $350 billion as of 2021. South Africa, the first and only African G-20 member, stands out a few steps ahead of its competitors with its industry, financial infrastructure, service quality and diversity, and corporate companies. South Africa, rich in minerals, is among the world’s largest producers of platinum, gold, titanium, chromium, magnesium, iron, coal and diamonds. The country is also among the BRICS countries, along with Brazil, China, India and Russia.
The country, which hosts hundreds of thousands of tourists from all over the world, especially from the United Kingdom and European countries, is one of the most important touristic attractions of Africa. Kruger National Park, one of the largest natural habitats of the continent, is among the most popular preferences of safari enthusiasts from around the world.
South Africa is a diversified and promising market full of natural resources. South Africa, which plays a significant role for the African continent with its developing economy, has strong financial, legal and commercial services and extensive transportation infrastructure. Home to many important ports for Africa, South Africa is an ideal gateway for sub-Saharan countries and markets. South Africa is ranked 84th in the World Bank’s Ease of Doing Business index.
A combination of state-owned enterprises and free market economy is aimed in South Africa, which has gained an integrated structure into the world economy with developments such as the reduction of internal turmoil and the transition to a flexible exchange rate regime after the abolishment of racial discrimination in 1994. While the ratio of agriculture to national income is 2.3%, the rate of fertile agricultural lands in the country is 10%.
South Africa’s foreign trade, which has been generally stable, had a surplus of 17 billion dollars in 2020 in the budget with a 22% decrease in imports. With a limited 5% decline in exports, the foreign trade volume decreased from 180 billion dollars to 155 billion dollars. In 2021, South African exports increased by 30% in rands and 45% in dollars, while imports increased by 23% in rands and 36% in dollars, thus contributing to the further increase in foreign trade surplus. According to preliminary data, South Africa’s exports and imports were $124 and $94 billion in 2021, respectively.
The South African bakery and cereals market reached a revenue of 2 billion 672 million dollars in 2020 with a compound annual growth rate (CAGR) of 4.4% between 2016 and 2020. The market consumption volume reached a total of 1 billion 636 million kilograms in 2020 with a compound annual growth rate of 1% between 2016 and 2020. With an expected CAGR of 4.8% for the 2020-2025 period, the performance of the market is expected to accelerate and reach a value of 3.380 million dollars by the end of 2025.
ONE OF FASTEST-GROWING MARKETS
Bakery products are always popular and communities all over the country have bakeries that locals frequently visit. In fact, the bakery and cereals market in South Africa is one of the fastest-growing markets worldwide. Owning a bakery may be a profitable business venture as long as you can establish a good presence in the market by developing a unique bakery business plan. It is expected that the bread section of the market will maintain steady growth.
Bread is the second most important food source in the country’s diet following corn products. According to data from the South African Chamber of Bakers, the country’s bread consumption increased in 2020, while the pandemic led to a shift to other staple foods such as cornmeal.
While bakery manufacturing is a growing industry in South Africa, the pandemic has resulted in the closure of many handcrafted bakeries. Larger bakeries benefited mostly from consumers who stocked up during the pandemic. However, the industry has led to higher flour and bread prices and increased costs for the wheat sector.
South Africa imports more than 40% of its wheat demand. It was reported that wheat production in the agricultural year to the end of June 2021 reached its highest level in 19 years thanks to the favorable weather conditions in the Western Cape. While this caused a decrease in imports, the price of bread did not decrease as wheat prices were largely dependent on developments in the global market and local currency fluctuations.
The bakery industry is seen by the government as a growing industry, as bakery products are sold at all food retail outlets. While large companies dominate the industry, there are opportunities for entrepreneurs to set up local communities and home-based bakeries.
The Dry Pasta market in South Africa recorded a positive compound annual growth rate (CAGR) of 4.01% in the period 2015-2020, increasing 10.72% compared to 2019 with a sales value of 2.051 billion ZAR in 2020. In 2020, the market achieved its strongest performance. According to the research conducted by Market Research, the size of the pasta market in South Africa was $343 million in 2015. By 2025, the South African pasta market is estimated to reach $752 million.
With $21.1 million of pasta, South Africa became the 48th pasta exporter country in the world in 2020. Pasta was recorded as the 341st exported product in the country. The biggest part of pasta export from South Africa is made to Botswana with $10.9 million and Namibia with $2.91 million.
In 2020, South Africa imported $58.8 million of pasta, which is almost three times the amount it exports. Italy ranks first in pasta imports of South Africa with 16 million dollars followed by Egypt with $9.38 million, Namibia with $8.79 million, China with $6.96 million and Lithuania with $4.88 million.