Investing in South Africa

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Where to Start

Trade and Investment

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Why Invest in South Africa?

Investing in South Africa

Public Investment in South Africa

Private Investment in South Africa

South African Economy

South African Political Risk

South African Investment Incentives

Regulations and Exchange Controls

Key South Africa Investment Terms

Trends and Growth in South Africa

Additional South Africa Resources

Where to Start

A good guide for investors about the dynamics and principles involved in the South African business environment is the Investor's Handbook Publication. The following issues are covered in this publication: - Entry and residence of foreign investors and expatriate labor.

Foreign exchange control;

Business entities and registration;

Sources of finance for the foreign investor;

Property and licences, including intellectual property, cellular and banking licences as well as prospecting and mining rights;

Land - acquisition, rezoning, sub-division and transfers;

Site development, including information about building permits, environment assessment, electricity, water and telephones;

Importing and exporting, which includes information about import and export permits, registration, customs, payment deferment, duty drawback, bonded warehouses and manufacturing under rebate;

Tax registration for businesses, which includes information on tax registration, value-added tax, employee tax, regional levies and accounting policies;

Other relevant laws, such as competition, environmental and labour laws; and

Contact information for the labour sector, national investment agencies and the provincial promotional agencies.

Source: http://www.dti.gov.za/investing/howtodobusinessinsa.htm

Trade and Investment

South Africa has rich mineral resources. It is the world's largest producer and exporter of platinum; is a significant producer of gold, manganese, chrome, vanadium, and titanium; and also exports a significant amount of coal. During 2000, platinum overtook gold as South Africa's largest foreign exchange earner. The value-added processing of minerals to produce ferroalloys, stainless steels, and similar products is a major industry and an important growth area. The country's diverse manufacturing industry is a world leader in several specialized sectors, including motor vehicles and parts, railway rolling stock, synthetic fuels, and mining equipment and machinery.

Primary agriculture accounts for about 3% of the gross domestic product. Major crops include citrus and deciduous fruits, corn, wheat, dairy products, sugarcane, tobacco, wine, and wool. South Africa has many developed irrigation schemes and is a net exporter of food.

The domestic telecommunications infrastructure provides modern and efficient service to urban areas, but at comparatively high costs and with limited coverage in rural areas. South Africa has made some strides towards liberalizing its telecommunication market; however, many obstacles exist for further progress. The passing of the Electronic Communications Act (ECA) of 2005 marked a new regulatory framework for liberalizing the telecommunication market in South Africa. Established entities such as Telkom and Multi-choice secured market-share under prior monopoly regimes, which make it difficult for new entrants to offer competitive telecommunications services (e.g. pay-TV and internet). The U.S.-led SEACOM project is the first of a series of undersea cable projects to become operational. SEACOM provides the first access to true broadband connectivity for countries on Africa’s eastern seaboard, which were previously 100% reliant on Telkom's expensive satellite-based technology. SEACOM's landing stations operate on a market-based, "open-access" system.

Exports amounted to 35.4% of GDP in 2008. South Africa's major trading partners include China, Germany, the United States, Japan, and the United Kingdom. Japan displaced the U.S. as South Africa's largest export market in 2008, and China overtook both in 2009. South Africa's trade with other Sub-Saharan African countries, particularly those in the southern Africa region, has increased substantially. South Africa is a member of the Southern African Customs Union (SACU) and the Southern African Development Community (SADC). In August 1996, South Africa signed a regional trade protocol agreement with its SADC partners. The agreement was ratified in December 1999, and implementation began in September 2000. It provided duty-free treatment for 85% of trade in 2008 and aims for 100% by 2012. A U.S.-SACU Trade, Investment and Development Cooperative Agreement was signed in July 2008. The four areas singled out for special attention under the TIDCA are customs cooperation, technical barriers to trade, sanitary/phytosanitary (SPS) issues, and trade and investment promotion.

South Africa has made great progress in dismantling its old economic system, which was based on import substitution, high tariffs and subsidies, anticompetitive behavior, and extensive government intervention in the economy. The leadership has moved to reduce the government's role in the economy and to promote private sector investment and competition. It has significantly reduced tariffs and export subsidies, loosened exchange controls, cut the secondary tax on corporate dividends, and improved enforcement of intellectual property laws. A competition law was passed and became effective on September 1, 1999. A U.S.-South Africa bilateral tax treaty went into effect on January 1, 1998, and a bilateral trade and investment framework agreement was signed in February 1999.

South Africa is a member of the World Trade Organization (WTO). U.S. products qualify for South Africa's most-favored-nation tariff rates. South Africa is also an eligible country for the benefits under the African Growth and Opportunity Act (AGOA), and most of its products can enter the United States market duty free. South Africa has done away with most import permits except on used products and products regulated by international treaties. It also remains committed to the simplification and continued reduction of tariffs within the WTO framework and maintains active discussions with that body and its major trading partners.

As a result of a November 1993 bilateral agreement, the Overseas Private Investment Corporation (OPIC) can assist U.S. investors in the South African market with services such as political risk insurance and loans and loan guarantees. In July 1996, the United States and South Africa signed an investment fund protocol for a $120 million OPIC fund to make equity investments in South Africa and southern Africa. The Trade and Development Agency also has been actively involved in funding feasibility studies and identifying investment opportunities in South Africa for U.S. businesses.

Source: http://www.state.gov/r/pa/ei/bgn/2898.htm#travel