To many outsiders, South Africa has long been an unstable business environment with an economy overly dependent on natural resources.
Optimal Energy is preparing to produce the Joule, Africa's first battery-powered car.
Now, the government and a new breed of entrepreneurs are optimistic that they can change perceptions and scale the industrial ladder.
A clutch of companies are working in sectors like clean energy, aviation, engineering, defense and mining, hoping to benefit from positive growth forecasts for the region.
The state wants spin-off benefits, notably job creation, and has played its part in some cases by offering direct funding and other sweeteners. It has also backed new university research chairs and is trying to promote centers of excellence.
“We are a producer and exporter,” said Naledi Pandor, minister of science and technology. “Now we’re saying: let’s become an innovator.”
South Africa’s many hurdles — notably unemployment, crime, illegal immigration, corruption, income inequality and health problems — have not disappeared. But executives and officials believe that the environment is improving and that the successful hosting of the recent soccer World Cup can act as a catalyst.
“There has never been a greater opportunity for South Africa than today,” said Ivor Ichikowitz, a South African of Lithuanian descent who controls and runs an integrated defense company, Paramount Group.
The security obsession and regional conflicts of the apartheid era left an industrial and research legacy — and comparatively strong infrastructure. That, he said, makes South Africa an ideal place from which to penetrate a continent often neglected by Western companies.
“Africa is the current economic battleground and the last frontier,” Mr. Ichikowitz said recently in Paris, where he was attending a conference. “The Chinese and the Indians are coming in with huge amounts of cheap capital and a very open approach.”
Based in Johannesburg, Paramount makes mine-protected vehicles, sold primarily to African clients for peace-keeping missions. It also refurbishes and upgrades Mirage jet fighters, and finances and supplies security and peace-keeping operations.
Created in 1994, it had African countries involved in peacekeeping, like Uganda and Ghana, for its initial clients. More recently, it has signed deals to manufacture vehicles in Jordan, India and Azerbaijan, and it has alliances as far off as Singapore, raising its profile in global procurement bids.
Last year, it added a 19 percent stake in Aerosud, South Africa’s largest independent aerospace company, which manufactures parts for Airbus and Boeing including galleys, fuel supply systems and wing and fuselage components.
Paramount employs 3,500 people and is privately held. Mr. Ichikowitz would not divulge financial data except to say that the group is “very profitable.”
A recent report on the country by Jane’s World Defense Industry said that the military budget has fallen in recent years as the government focuses on social programs. But in 2008, South Africa authorized export deals worth $2.6 billion, up from $406 million a year earlier and sold equipment, munitions and components to 96 countries.
The country’s biggest defense company is state-owned Denel, which posted a loss of 543 million rand, or $74 million, on sales of 4.05 billion rand last year.
Mr. Ichikowitz, a longtime member of the governing party, the African National Congress, owns a venture capital firm, an oil business, a teddy bear retailer and an exclusive luxury retreat in the bush.
“You cannot be in business in Africa if you are not respectful of the political environment,” he said. “A lot has to do with faith in people, trust and personal relationships.”
The democratic government that came to power in 1994 inherited an economy racked by internal conflict and external sanctions. Yet between 2004 and 2007, gross domestic product grew on average over 5 percent annually. It contracted by 1.8 percent in 2009, affected by energy shortages, slower consumption and the global recession, but it is expected to grow at 3.3 percent in 2010 and 5 percent next year, according to the O.E.C.D.
Mining accounts for almost a tenth of output, but in contrast to much of the rest of the continent, South Africa also boasts well-developed manufacturing, whose output accounts for over 50 percent of exports.
“South Africa’s ambition to climb the value-added chain is valid, justified and doable,” said Andreas Wörgötter, an economist at the O.E.C.D. who wrote a recent study of the country. The main challenges, he said, will be to “broaden economic activity” by creating jobs, moderating wages and improving the regulatory environment.
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