19
Analisys Of A New Subsidiary
Bartosz Gabryś
Wojciech Durski
Aleksander Kierul
Annastasia Eltsova
Jakub Jastrzębski
Paulina Flizik
Introduction
We, the management of Vistula, have been asked to prepare a detailed analysis regarding setting up a subsidiary in Sub-Saharan Africa in one of the two countries: Nigeria or South Africa. Our aim was to find out which of the two will be a more benefitial choice in regards to selling our clothing and footwear.
Introduction
Factors pt.1
We evaluated economic and social conditions in both and made our final decision basing on seventeen indicators, with the most important being:
-CIT Rate
-Average monthly salary
-Inflation
-Minimum Wage
-Import Fees
GDP
GDP
Nigeria
398.2 B USD
South Africa
368.3B USD
Sectors Composition
Composition of sectors
Nigeria
Services 52%
Industry 25.8%
Agriculture 21.2%
South Africa
Services 67.5%
Industry 29.7%
Agriculture 2.8%
Labour force participation rate
Labour Force Participation Rate
South Africa Nigeria
59.9% 23.2%
Corruption Ranking
`Corruption Ranking
South Africa Nigeria
70/180 146/180
Uneployment Rate
Unemployment rate
South Africa Nigeria
29.1% 23.1%
Avg. Monthly Salary
South Africa Nigeria
31,400ZAR ~$1650 205,000NGN ~$525
Avg. Monthly Salary
Factors pt.2
Inflation
South Africa Nigeria
~5% ~9.5%
Consumer spending
(quarterly)
Consumer Spending
South Africa Nigeria
~103B USD ~28B USD
Minimal Wage
South Africa Nigeria
~14,000ZAR ~$753 30,000NGN ~ $83
Labour Costs
South Africa Nigeria
~230$/Month ~64$/Month
Labour Costs
FDI Size
South Africa Nigeria
7.1B USD 1.9B USD
FDI Size
Import Fees
Nigeria
12% (average duty rate). All imports are also subject to a 7% port surcharge and a 5% VAT.
South Africa
Average tariff rate – 5.8%.
Duty rate for apparel – 40% VAT is 15%. VAT is payable on nearly all imports. However, goods imported for use in manufacturing or resale by registered trades may be exempt from VAT.
Ad valorem excise duties are levied on a range of “up market” consumer goods. The statutory rate is currently 10%
Import fees in the host country
Conclusions
Most of the factors included in this presentation overweight the convenience of South Africa over Nigeria. The decision about which country to select should be a formality≥.