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Western Cape business confidence has delinked - CEO

Aug 16 2016 19:04
Carin Smith

Cape Town - Since 2014 there has been a "delink" of business confidence in the Western Cape from the rest of South Africa, with higher business confidence in the province compared to the rest of the country, Tim Harris, CEO of Wesgro, told members of the SA-German Chamber of Commerce on Tuesday.

In his view, this is one of the reasons for the "incredible migration" into the province - especially from Gauteng.

"People are voting with their feet for quality of life and it shows business is not necessarily synonymous with Johannesburg," said Harris. He emphasised that a large part of the "semigration" from Gauteng consists of young entrepreneurs - especially in the tech and services industry - who bring their skills, capital and experience to the province.

After visiting different regions in Germany in an official capacity, Harris realised South Africa actually needs to embrace internal competition among its regions. In his view, that is what turned the German economy into "the most competitive in the world".

READ: SA business confidence could be on the mend - economist

Research by Wesgro - the official destination marketing and investment and trade promotion agency for the Western Cape - shows Germany is the 6th largest export market for the Western Cape. Wine is the largest Western Cape export to the German market.

Germany is also the third largest investor in the Western Cape after the UK and the US. Anja Tambusso-Ferraz, regional representative of the SA-German Chamber in the Western and Eastern Cape, cautioned, however, that it is very important for investors to have policy certainty within the framework before and when they invest in a country.

Germany is also a very important source market for the Western Cape's tourism industry according to Harris. To him it is a good sign that the demographic of tourists from Germany to the province is the youngest among all visitors from Europe.

"The depth of connection between the Western Cape and Germany can still be improved in terms of connectivity. That is why it was good news to hear that Lufthansa, for instance, has decided to extend its direct flights between Cape Town and Frankfurt all year round," said Harris.

He sees this as part of the positive impact of a special unit at Wesgro with the mandate to increase direct air connectivity.

READ: Lufthansa extends direct CT-Frankfurt flights

“Cape Town is one of the most important markets for the Lufthansa Group in Southern Africa and the new gateway will offer our customers access to some 200 destinations from the Frankfurt hub. It also unlocks new tourism opportunities for those coming in from Germany by offering attractive combination options to other destinations in Southern Africa through our Star Alliance partners," commented Dr André Schulz, Lufthansa's general manager for Southern Africa.

Harris is optimistic about greater investments by German companies in the Western Cape, but emphasised that there are also opportunities for local companies in Germany. To put things in perspective, he said that if the Western Cape had to be a country, it would be the 13th largest in Africa and if Cape Town had to be a country, it would be the 17th largest country on the continent.

Wesgro sees a lot of opportunities for companies operating in the services industry in the Western Cape to expand into the rest of Africa's untapped markets.

"Just because growth in Africa has slowed, it does not mean opportunities are not there. There are still a billion consumers on the continent. The question is just how to sell more services into those markets," said Harris.

ALSO READ: SA business confidence lowest in more than two decades

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