French companies are confident in the South African market and in its future, French embassy economic counsellor William Roos assured South African journalists at a recent briefing. He pointed out that some 400 French companies had already set up business in South Africa and others were interested in doing so.
Recently elected South African President Cyril Ramaphosa had taken steps to reform and improve governance in the State sector. These moves had been “very well received” by French business, Roos reported. South Africa and France are thus now both led by reformist Presidents – in the case of France, Emmanuel Macron, elected last year. As a candidate, Macron had made it clear that he had a reform agenda for his country.
“France needed reform,” stated French ambassador Christophe Farnaud. “Government has launched reforms. We have big potential. We are still the sixth-biggest economy globally. But we need reform to remain competitive. The economy is the centre of our position.”
Measures already passed into law are reforms of the labour laws and reform of the tax system. “We are still in the middle of the reforms, because it takes time,” he observed.
The labour market reforms have brought more flexibility into the country’s labour market, allowing companies and workers more room to manoeuvre in negotiating working conditions, instead of always having to follow rigid national frameworks. The tax reforms were intended to facilitate matters for business, including foreign investors, and to stimulate entrepreneurship. For example, the wealth tax has been repealed and the corporate tax has been cut. Further cuts in corporate tax will follow, with the aim of reducing it to 25% by 2022.
Reforms in the transport and education sectors are now being launched. Although France has a good education system, the aim is to ensure that no one is left outside that system. “We have a plan to improve the vocational education system,” highlighted Farnaud. The country invests nearly 5% of its gross domestic product (GDP) into its education system – a higher proportion than that in Germany, Italy or Spain. Some 44% of French people in the age group 25 years to 34 years have tertiary education, which is slightly above the average for Organisation for Economic Cooperation and Development countries of about 43% and significantly above the figure for Germany (30%).
One of the objectives of these reforms is to make France even more attractive for foreign investment. The country had, the ambassador pointed out, always been favourable towards foreign investment. Currently, there were some 25 000 foreign companies operating in France, providing work for 1.8-million people. Included in this number were South African companies, which had enjoyed significant success.
The country had excellent transport and other infrastructure. It had one of the lowest-cost electricity supplies in Europe. France had improved its cost competitiveness, particularly compared with Germany, over the past five years. “For years, France has been one of the top countries for innovation,” pointed out Farnaud. Three of Europe’s ten most competitive companies are French. “[Moreover], France has one of the highest productivity levels in the world.”
With a population of more than 66-million, the country had a per capita gross national income (GNI) of $42 510 in 2016. (GNI is basically GDP plus the net income received by a country from outside its borders.) Roos noted that his country was again experiencing good economic growth – 2% last year and forecast to be 2% again this year. GDP had risen by nearly 6% since the global financial crisis in 2008/09. This was 2% above the average for the eurozone. The country’s demographic growth rate was also good, at 0.6% a year.
“[The reforms] have worked pretty well so far,” affirmed Farnaud.