- Cape Town and nearby Stellenbosch ostensibly serve as South Africa’s hub for the service sector. The two cities host a wide variety of service industries, ranging from insurance, to health care providers, to pharmaceutical groups, to retailers of various types.
- Two themes were prevalent in my meetings with the various service sector companies around Cape Town. First, South Africa’s national government is attempting to undertake a number of major policy revisions, including the potential implementation of a national healthcare scheme and major revisions to financial regulation. My impression was that established business models might face substantial challenges in the future – past winners have no guarantee of success. However, those companies nimble enough to adapt still have room to prosper.
- Second, it was very apparent that the growth prospects of greater Africa are present and tangible. Nearly every South African company alluded to the potential that currently exists throughout the continent. It is tempting to believe a narrative in which South Africa’s economy is at the forefront of that growth, helping to lead and channel it, guiding smaller and less developed African nations – “frontier markets” – to integrate with the rest of the world. Yet I seriously doubt it will unfold this way in practice. As far as I can tell, the most ambitious and organized countries are likely to forge ties for trade and finance directly with the rest of the world – they have no need for South Africa’s markets to play middleman. Still, I believe that some of the best-run service sector companies in South Africa – particularly in insurance and technology – may yet be able to build valuable trans-African businesses, especially if they move decisively to do so. It will not be easy, but I think the continent’s growth prospects make it a worthwhile endeavor.
- The views and information discussed in this commentary are as of the date of publication, are subject to change, and may not reflect the writer’s current views. The views expressed represent an assessment of market conditions at a specific point in time, are opinions only and should not be relied upon as investment advice regarding a particular investment or markets in general. Such information does not constitute a recommendation to buy or sell specific securities or investment vehicles. It should not be assumed that any investment will be profitable or will equal the performance of the portfolios or any securities or any sectors mentioned herein. The subject matter contained herein has been derived from several sources believed to be reliable and accurate at the time of compilation. Seafarer does not accept any liability for losses either direct or consequential caused by the use of this information.