South Africa and the United States (US) enjoy a solid and cordial relationship underpinned by robust political and economic interests with cooperation on regional and global issues. Since South Africa’s transition to democracy in 1994, the United States and South Africa have built a solid bilateral relationship. Our successful working visit to the US reaffirmed the importance of keeping the channels of dialogue open. We are pleased that our visit to Washington established a basis for greater engagement and cooperation.
South Africa has always regarded the United States as a strong investment and trading partner. Our countries and our economies are bound together in many ways. We are operating from a firm base. In 1990, soon after his release from prison, Nelson Mandela addressed the US Congress. South Africa and the United States have extensive bilateral relations that cover a wide spectrum of issues, which are aligned to South Africa’s domestic priorities.
In 2022, South Africa GDP was an estimated $405,8 billion (World Bank); and the population was estimated at 60,6 million.
Trade and Investment Overview
The US is a key export market for South African goods, products and services, including motor vehicles, agricultural products and, increasingly, critical minerals. The US is a major source of investment in South Africa. Bilateral economic relations between South Africa and the United States are characterised by a mutually beneficial relationship underpinned by several bilateral agreements, including the amended Trade and Investment Framework Agreement (TIFA), which was signed in 2012.
In 2022, the two countries enjoyed a total two-way goods trade of $18.35 billion. South Africa enjoys preferential trade benefits under the African Growth and Opportunity Act (AGOA) as well as the US Generalized System of Preferences (GSP) trade preference program. South Africa is due to host the next AGOA Forum in 2023, which is a Forum that would allow the United States and all AGOA-eligible countries to reflect on ways to promote and expand trade. In addition, South Africa belongs to the Southern African Customs Union, which signed a Trade, Investment, and Development Cooperative Agreement (TIDCA) with the United States in 2008.
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This provides eligible sub-Saharan African countries with duty-free access to the U.S market for over 1,800 products, in addition to the more than 5,000 products that are eligible for duty-free access under the Generalised System of Preferences program.
Here's a summary of the trade statistics:
| Year | Total Two-Way Goods Trade | US Imports from SA |
|---|---|---|
| 2019 | $13.3 billion | $7.9 billion |
| 2020 | $15.9 billion | $11.5 billion |
| 2021 | $21.4 billion | $15.9 billion |
| 2022 | $18.35 billion | Data not specified |
In June 2023, the US ranked 2nd largest destination for SA’s exports after China and followed by the UK. As a source of imports, the US ranked 2nd after China and followed by Germany. Bilateral trade increased to US$21.4 billion in 2021, from US$15.9 billion in 2020 and US$13.3 billion in 2019. US imports from SA increased to US$15.9 billion in 2021, from US$11.5 billion in 2020 and US$7.9 billion in 2019. include: Precious stones and metals, motor vehicles, parts and accessories; iron and steel, machinery; aluminium products, ores , organic chemicals, edible fruit, chemical products and nickel products.
goods and services trade with South Africa totalled an estimated $18.35 billion in 2022. Exports were $10.47 billion; imports were $7.8 billion.
American Companies' Presence
Approximately 600 American businesses operate in South Africa, and many of those use South Africa as a regional headquarters. Equally, there are a couple of South African businesses that are operating in the United States. According to data from the US Department of Commerce, these South Africa-based US companies employ around 148,000 South Africans.
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By way of example, earlier this year tech giant Microsoft announced plans to invest an additional R5.4 billion in expanding its cloud and AI infrastructure in South Africa over the next two years.
InvestSA is a division of the South African Department of Trade, Industry Competition (the dtic). It supports investors exploring opportunities in South Africa by helping with information, facilitation and aftercare. Mr.
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South Africa as a BPO Destination
There is a distinct preference by US organizations to outsource more of their customer service, technical support and back-office processes to South Africa. The US is one of the largest international source markets, comprising over 20% of South Africa’s international GBS market. Our US clients find tremendous value in South Africa’s BPO offering. We are not the cheapest in the world, and it is not our intention to be.
It’s really very clear than when it comes to quality BPO services, location and proximity are more irrelevant than ever. Rather, our US clients are looking at our solid track record and experience in managing, training and supporting their operations remotely, no matter where we find ourselves in the world.
BPO providers that can bring together digital channels, data and analytics, artificial intelligence (AI), automation and cloud services to work in tandem with traditional voice-based BPO services are in demand. Demand for niche BPO services is growing in areas such as back-office/virtual assistants, finance & accounting, medical/healthcare and debt recovery and collections.
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Our take is that this level of specialization of required BPO services also requires that agents are suitably experienced and trained in these industry sectors to deliver a far more professionalized and qualified service. It’s an area where South Africa has tremendous opportunity to upskill and professionalize the role of agents to suit sector specific requirements through on the job training, executive training, mentoring, and coaching.
It’s one of the areas where OKIN Process has a distinct advantage through its group Learning and Development partners - SA Business School, the Future Fit Academy and the Impact Sourcing Institute of South Africa - as well as collections and recoveries BPO provider, Shapiro Shaik Defries and Associates. Leveraging the capabilities across OKIN Group and Alefbet Holdings companies really delivers efficiencies for our clients that are greater than the sum of all our parts.
Challenges and Opportunities
Since 1994, South Africa has made notable strides toward building an inclusive democracy that provides increased opportunity for its people. Nevertheless, the country faces many challenges, including slow economic growth, high rates of crime and unemployment, lingering corruption, and a persistent HIV/AIDS epidemic.
Recession, hyper-inflation and socio-political volatility remain top of mind and across the board there is a need to reduce costs and limit risk as priorities. The US, as in many developed markets, is experiencing serious skills and labor shortages. Finding skilled people to work in contact centers, as well as in most customer service roles, is massively challenging. It can currently be challenging to recruit in the US given that the country is sitting with less than a 3% unemployment rate.
Compared to a country like South Africa which is grappling with a youth unemployment rate of nearly 70%, the contrasts are stark. On the upside though, this means that South Africa, as a BPO destination, offers a deep pool of labor and great talent for rapid scale as and when needed.
COVID-19 Support
Since July, 2021 the United States has donated 7,877,610 safe and effective COVID-19 vaccine doses with the people of South Africa. This includes 7,877,610 Pfizer doses. Of the 7,877,610 vaccine doses, 100% were donated in partnership with COVAX. The United States is committed to leading an international and coordinated effort to accelerate access to safe and effective COVID-19 vaccines to meet global needs.
South Africa continues to be a tourist destination to many US citizens. We also discussed exploring new opportunities for companies from South Africa and the US in each other’s markets.
