International giants want to invest more in South Africa

German companies operating in South Africa are optimistic about their prospects in the country, with many looking to invest further in South Africa.

Months after the latest national elections, German companies in South Africa and Southern Africa are optimistic about their business prospects for 2025, with 64% expecting their sales to increase.

According to the survey findings from the German-Southern African Business Outlook 2025, 48% of companies in South Africa are also optimistic about their profit expectations for the year.

KPMG Germany (KPMG) and the Southern African-German Chamber of Commerce and Industry (AHK Southern Africa) conducted the survey in November and December 2024.

The survey analysed the member companies in the region, with many expected to pump money into South Africa over the next few years.

44% of German companies plan to invest in South Africa in the next three years—10% of them with a volume of at least three million euros (about R60 million).

Moreover, 77% of respondents believe that the outcome of the recent elections will positively impact the economic climate. That said, 65% expect only a moderate improvement.

“Following the parliamentary elections in South Africa in May 2024, the new government of national unity was formed,” Andreas Glunz, Managing Partner International Business at KPMG Germany. 

“Local companies are cautiously optimistic that reforms could come from this government and that their businesses will grow in 2025.

“In recent years, problems with energy and water supply and transport logistics as well as rising costs coupled with falling productivity have put a strain on the business activities of many companies.”

“The new government now has the opportunity to create the conditions for growth through infrastructure programs and a sustained fight against corruption and crime.”

46% of companies see the systematic fight against corruption and crime as the most important task of the government of national unity.

39% see the expansion and modernization of infrastructure as a crucial field of action, while 28% see a stable energy supply as essential.

What companies want to see

Sales growth is the top priority for the companies surveyed in South Africa, with 61% wanting to expand their market share and 42% aiming to reduce their costs.

“South Africa is an attractive location for the German economy. Many companies are focusing on the medium-term prospects and potential in the country – and these are huge,” said Simone Pohl, AHK Southern Africa CEO.

“Many of our more than 500 member companies have been in the country for a long time and are correspondingly resilient and operating successfully.”

Moreover, 50% of companies see reliable political framework conditions as the most important influencing factor for their future business development in South Africa.

47% also seek to reduce bureaucratic hurdles, while 35% are convinced that stricter anti-corruption measures would positively impact their own businesses.

30% also wanted reliable energy and water supply, while 29% wanted an improved security environment.

“The current reform efforts in South Africa are opening up new opportunities for economic growth,” said Peter van Binsbergen, President of AHK Southern Africa.

“If the government continues to pursue its course consistently, the country can further consolidate its position as a leading business location in sub-Saharan Africa.”

“German companies are ready to actively shape this change and make long-term investments.”

44% of companies also said that access to other markets in sub-Saharan Africa is a major advantage for South Africa.

“For many German companies, South Africa is the first port of call for tapping into other markets in sub-Saharan Africa,” said Glunz.

“But overall, the German economy is still underrepresented on the African continent of opportunity despite the increasing global geopolitical challenges.”

“The continent has a rapidly growing population, an increasing middle class, untapped markets and an abundance of labour, natural resources and solar energy.”