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US Companies Tap into Southern Africa's Economic Potential

Strategic Insights

— 1 min read

President Clinton's recent tour of southern Africa highlighted the region's growing economic importance, attracting US companies like Motorola and Sara Lee to invest in the area. The region's GDP is substantial, with South Africa being the largest economy in sub-Saharan Africa, boasting a gross national product nearly equal to the other 47 countries combined. US companies are capitalizing on the region's labor and market potential, with Sara Lee employing 4,200 people and generating $150 million in annual sales in South Africa alone.

Key Takeaways:

  • The US exports more to sub-Saharan Africa than to the entire former Soviet Union combined, with an estimated $2 billion of American private investment made in South Africa since 1994.
  • 100,000 Americans have jobs directly tied to U.S. exports to Africa, with the Clinton administration planning to offer trade incentives to prospective investors in the region.
  • Sara Lee is one of South Africa's largest employers, with 4,200 employees and annual sales of $150 million, making it the company's biggest commitment in Africa.
  • McDonald's has expanded its operations in South Africa, with 36 franchised sites and plans to expand into Botswana and Zimbabwe within a year.
  • The region's largest economy, South Africa, has a GDP growth rate of 1.7 percent, while neighboring countries like Botswana have experienced growth rates of 5-6 percent.
  • Zimbabwe's economy has been impacted by food and student riots, while Nigeria's economy is in disarray, highlighting the high business risk levels associated with emerging markets.

Statistics:

  • The US exports 1 percent of its trade to Africa and 7 percent of Africa's imports are American.
  • The US has invested an estimated $2 billion in South Africa since 1994.
  • South Africa's inflation rate is approximately 8 percent and its current account deficit is 0.6 percent of the GDP.
  • Sara Lee generates $150 million in annual sales in South Africa and employs 4,200 people.
  • McDonald's has 36 franchised sites in South Africa and plans to expand into Botswana and Zimbabwe.

Sources:

  • Daily Herald
  • William Daley, US Secretary of Commerce
  • Phil Crane, Wauconda Republican
  • John Bryan Jr., Chairman of Sara Lee
  • Brad Trask, Senior Manager for International Communications for McDonald's
  • Stuart Berkson, Attorney at McDermott Will & Emery

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