Taking African market into consideration.

If your organisation is going to foray into Africa, present a

SWOT analysis for your organisation.

Africa is the world’s second biggest and the most densely populated continent in the world. With a
population of 1.22 billion and an area of 30.4 million sqkm, Africa is also home to a variety of flora and
fauna making it one of the world’s most lucrative destinations for naturalists and wildlife enthusiasts.

We are in the field of Constructions, Infrastructure & Real Estate.

Many people make the mistake of underestimating the continent, particularly in terms of investment
opportunities, for example in real estate. Yes, Africa’s real estate markets have traditionally lagged behind
those of developed and most developing economies, and the level of property investment in Sub-Saharan
Africa is still comparably low, while tapping potential opportunities sometimes can be met by practical
challenges. Nonetheless, most of Africa is not standing still, but moving up the development ladder at an
impressive pace.

Africa’s young population will drive the demand for real estate and different types of real estate. Across
Africa there will be continued urbanisation, an expansion of current cities and the rise of new cities.
Growth sectors will continue to create demand for infrastructure investment. Connections to road, rail and
public transport are vital for urban success. Doing business in Africa remains a challenge as infrastructure
lags well behind the rest of the world, but there are distinct regional differences. Recent PwC research
suggests that infrastructure spending in sub-Saharan Africa will exceed US$180* billion per annum by
2025, a growth rate of 10% per annum.6 Major infrastructure investment programmes in Nigeria and
South Africa are now being accompanied by significant projects in other countries like Ghana, Kenya,
Mozambique and Tanzania. However, a huge shortfall in government funding creates opportunities for
private investors to support this development need through direct investment and public-private
partnership (PPP) agreements.

Investment returns from real estate in Africa’s rapidly expanding economies significantly exceed those
achievable in almost all developed markets. Forecasts of 20% net annual returns7 from investing in
shopping malls, office blocks or industrial complexes in countries across Africa continue to draw in new
investors. The opportunities across Africa are significant and span every sector. In almost all markets,
demand for high-quality retail, office and industrial space continues to outstrip supply as international and
local occupiers respond to new economic opportunities. Huge shortfalls in residential property across the
continent give rise to opportunities for private development on a grand scale, while a lack of local funding
for infrastructure projects provides a platform for new private partnerships with the public sector.
Demographic shifts and changes in consumer behaviour create demand for different types of real estate,
allowing the entry of more specialist investors into the market.

Swot Analysis:-

Strength

 Several well established local and international real estate firms have pursued or are pursuing
projects, including gated communities, game agricultural farms and resorts.
  South Africa’s real estate market presents itself well in the performance measurement of real
estate due to available indices and sufficient real estate networking possibilities
 The construction industry is the third largest employer in the country and provides work for more
than 1.3 million people. The industry may need to double its output over the next 10 years to meet
investment demand and this has implications for workforce participation.
 The government is undertaking land reforms and, over the long term, these should help the
industry to find a balance that is sustainable for the population.
 Strong system of government providing country stability.

WEAKNESSES

 The construction industry has a high liquidation rate caused by the instability of small firms,
volatility in demand and high levels of competition.
 The country’s capital market is still in its early stages of development and only consists of non-
property related debt securities such as treasury and corporate bonds and a stock exchange (DSE),
which does not list real estate companies.
 Many in the business community regard the labour market as over regulated.
 The hangover from the 2010 World Cup continues to affect the market.
 There is a lack of skilled labourers.

OPPORTUNITIES

 Many South African real estate companies have pursued international alliances and offer specialist
services with foreign investors and buyers.
 In the long-term the real estate markets of Tanzania and South Africa could profit from a stable
political situation as systematic risks would decrease and more companies and entrepreneurs
would decide to invest or settle down within the region.
 The construction industry amounts to just less than 3% of GDP, but on-going government
development policies offer strong opportunities for industry growth.

THREATS

 Power shortages sometimes lead to project delays particularly in Gauteng.

 At present, bureaucratic barriers and corruption in regards to the issue of licensing and
authorisations for private enterprises hold back potential entrepreneurs from fully exercising their
investment initiatives. Whereas South Africa is considered to have the most developed
infrastructure system in Sub-Saharan Africa, Tanzania shows serious deficiencies in the energy and
transport infrastructure. Consequently, these obstacles have a negative effect on business life in
the region and on the pace of the countries’ economic and infrastructure development.
 South Africa’s banking and finance sector still struggles to provide finance seeking investors with
sufficient capital and the increasing unemployment rate impedes the country’s recovery from the
recent economic crisis, the country remains Sub-Saharan Africa’s most developed and leading
economy.
 The supply and demand imbalance will persist if economic growth stalls.
 Further state fracture in neighbouring Zimbabwe could affect South African markets.

Regards
Sandeep Sharma

6010311804390