The Risks
As more mega-malls like Maponya open up throughout South Africa, it would be smart for quick-serves to consider expansion into the country. But while South Africa has a lot of things going its way, there are still a lot of problems.
Although they have been dropping somewhat in recent years, crime rates in South Africa are still alarmingly high. According to the latest figures released in July 2007 by the South African Police Service, street/public robberies increased more than 72 percent and robberies at business premises were up more than 5 percent over the previous year. In 2006, the Restaurant Association of South Africa reported it had been informed of at least 280 restaurant robberies across the country.
The prevalence of AIDS is also a concern. There are an estimated 5.3 million people in the country infected with HIV, making up about 11 percent of the population in 2007, according to Statistics South Africa. As a result, life expectancy rates for South Africans have been reduced to 48.4 years for males and 51.6 years for females.
Another problem facing South Africa is the legacy left by apartheid. Despite the fact that more black South Africans are entering the middle class, economic inequalities are still a reality. For instance, Statistics South Africa reports that while the country’s white population had an unemployment rate of 4.5 percent in September 2006, joblessness for blacks was more than 30 percent.
In order to abolish those disparities and further stimulate economic growth, the government of South Africa has instituted a number of Black Economic Empowerment (bee) reforms aimed at leveling the playing field. Companies in different industries are evaluated with a scorecard that measures how well they achieve empowerment of blacks and other nonwhite citizens through ownership, management, employment equity, skills development, preferential procurement, enterprise development, and socio-economic development. Allowances and incentives are offered for companies that meet benchmarks.
“BEE is very much the future of doing business in South Africa,” Drum says.
With its stores, restaurants, and eager shoppers, Maponya Mall is a symbol of South Africa’s future. But for quick-serves that wish to have a place in that future, it’s important to move fast, the experts agree.
“If you’re looking to enter South Africa, do it now, because the economy is booming and competition is increasing all the time,” Miller says. “It’s not going to get any easier.”