Euler Hermes : opens South Africa business to help leading companies and exporters

During his opening comments, Gregory Nosworthy, Euler Hermes South Africa country manager, said: "As the global market leader, Euler Hermes is well-positioned to play a prominent role in helping leading South African, and in time broader African companies and exporters grow their businesses, which in turn can only benefit Africans. Our proprietary intelligence network tracks and analyses daily changes in corporate solvency of over 40 million businesses globally. This means that we cover more than 200 countries representing over 92% of the global GDP, and we are now making that knowledge available here."

During the event, Euler Hermes presented its study "South Africa: Rainbow - after or before the rain?" providing a detailed focus on growth opportunities in 2015/16.

"As we forecast South African GDP will rise to 2% this year and 3% in 2016, South Africa could unleash its growth and jobs potential by bridging its infrastructure and manufacturing gaps," said Wilfried Verstraete, chairman of the Board of Management of Euler Hermes. "However, South Africa also has key strengths such as advanced service platforms enabling companies to act as connectors between continents, and especially to untapped African markets."

"The business climate for South African companies has improved: payment terms are relatively low and stable (50 days in 2014) and insolvencies posted a fifth consecutive year of decrease (-13%) in 2014," added Ludovic Subran, chief economist at Euler Hermes. "This declining trend has clearly softened in recent months. We now expect the overall number of insolvencies to decline by 3% in 2015 to roughly 2,000 cases and plateau (0% y/y) around this level in 2016."

The drop in oil prices benefits South Africa's trade balance, in contrast to the decline in gold prices. Euler Hermes estimates that USD68 billion is needed in the next 15 years to fill the infrastructure gap.

"In the medium term, good demographics and firmer commodity demand globally could continue to create opportunities for South African businesses," stated Subran.

Euler Hermes expects ZAR26 billion in additional goods exports in 2015, to a total of ZAR1,025 billion. Jewellery (ZAR9.3 billion) and non-ferrous metals (ZAR 5.8 billion) are the highest potential winners. Exports of food and beverages are also on the rise (estimated ZAR3 billion in 2015). The U.S. (ZAR8.5 billion) and China (ZAR 7.3 billion) should drive export growth in 2015, with 61% of additional demand generated by these two countries.

Intra-Africa trade flows will remain strong and South Africa, with its comparatively better transport infrastructure and links with the global economy, will be pivotal in maintaining the momentum that has seen intra-sub-Saharan flows almost double since 2007. While Europe and North America remain important trade partners, Euler Hermes expects more commercial transactions across the Indian Ocean, particularly with India which currently accounts for 6% of South Africa exports and an anticipated additional ZAR 2.3 billion worth of exports.