The School of Economics of the North West University (NWU) South Africa, and the Columbia Center on Sustainable Investment (CCSI), a joint center of Columbia Law School and The Earth Institute at Columbia University in New York, are releasing the results of the first survey of South African multinationals today. The survey, conducted from November 2015 to April 2016, is part of a long-term study of the global expansion of emerging market non-financial multinational enterprises (MNEs). This report, the first of its kind for MNEs in South Africa, covers the period 2013-2015.
At year-end 2015, the top 20 ranked South African non-financial MNEs had a shared total of nearly US$ 50 billion in foreign assets (Table 1), almost the same figure (US$ 49.0 billion) in foreign sales and in excess of 222,000 employees abroad (Table 2). In terms of foreign assets, Sasol (Energy & Chemicals) led the way with US$ 9.1 billion,3 followed by Retail-giant Steinhoff (US$ 8.7 billion) and Goldfields (Mining) (US$ 5.3 billion). The top five MNEs dominated the list, accounting for more than two-thirds of the foreign asset-share. Adding the following five MNEs on the list, the combined share of foreign assets held by the top 10 ranked MNEs rose above 90% of the total. Mining (Goldfields, AngloGold, Impala Platinum, Harmony Gold) was the largest contributing sector (Annex Figure 1), accounting for 23% of foreign assets, followed by Retail (Steinhoff, Barloworld, Shoprite, Pick n Play) with 20% of total foreign assets, and the Energy and Chemicals sector, represented solely by Sasol, was the third largest contributor with 18% of total foreign assets. The only other sector represented by multiple firms was the Transport and Logistics industry (Imperial, Supergroup). Of the top 20 ranked firms, foreign assets, foreign sales and foreign employees accounted for 40%, 44% and 27% of the respective firms’ totals in 2015 (Table 2).
The geographical footprint of the top 20 ranked South African non-financial MNEs was primarily in Sub-Saharan Africa. Of the 1,178 foreign affiliates controlled by the top 20 ranked firms, 443 were in Sub-Saharan Africa, followed by Europe with 225 foreign affiliates (Annex Tables 1 and 2). The Transnationality Index (TNI) greatly varies among the top 20 (Annex Table 1). With an average overall TNI of 36% for all ranked firms, the two firms at opposite extremes were Goldfields, with the highest TNI (84%) and Harmony Gold with the lowest (5%) – surprising as both are predominantly gold-mining firms. The disparity in TNI between the two firms can be attributed to their differing market strategies. Since acquiring Glencor in 1998, Goldfields has largely focused on its Australian-based operation. Goldfields’ foreign assets share further increased when affiliate Sibanye Gold Limited was created in 2011 through the unbundling of a substantial amount of Goldfields’ South African assets. Harmony Gold, on the other hand, has focused its attention on the domestic market, with nine underground mines, one open-pit operation and several surface sources in South Africa. Harmony Gold had a history of operations in Australia but sold its Mount Magnet investment in 2007. The company’s 5% remaining foreign asset base was represented by the remainder of Harmony Gold Australia Pty Ltd and a 50% joint venture in Papua New Guinea with Newcrest Mining Limited of Australia. Other firms with a notably large foreign presence were Datatec (73%), AngloGold (67%) and Naspers (61%).
All of the top 20 MNEs were publicly owned and listed on the Johannesburg Stock Exchange (JSE), with seven firms also having secondary (or more) listing on foreign stock exchanges. Notable listing included all three gold-mining entities (Goldfields, AngloGold and Harmony Gold), which were listed on the New York Stock Exchange (Annex Table 3).