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Investing in South Africa
South Africa is one of the most sophisticated, diverse and promising emerging markets globally. Strategically located at the tip of the African continent, South Africa is a key investment location, both for the market opportunities that lie within its borders and as a gateway to the rest of the continent, a market of approximately one billion people.
South Africa is the economic powerhouse of Africa and forms part of the BRICS group of countries with Brazil, Russia, India and China. It has a favourable demographic profile and its rapidly expanding middle class has growing spending power.
South Africa has a wealth of natural resources (including coal, platinum, gold, iron ore, manganese nickel, uranium and chromium) and it has been enjoying increased attention from international exploration companies, particularly in the oil and gas sector.
It has world-class infrastructure, exciting innovation, research and development capabilities and an established manufacturing base. It is at the forefront of the development and rollout of new green technologies and industries, creating new and sustainable jobs in the process and reducing environmental impact.
South Africa has sophisticated financial, legal and telecommunications sectors, and a number of global business process outsourcing (BPO) operations are located in the country.
It has political and macro-economic stability, an abundant supply of semi-skilled and unskilled labour, and compares favourably to other emerging markets in terms of the overall cost of doing business. For professional jobs, labour costs are less than half of the cost of European countries. For manufacturing jobs, labour costs are around one-third of the cost of Europe.
The South African Government has introduced wide-ranging legislation to promote training and skills development and fast-track the building of world-class skills and competences.
One of the main reasons for South Africa becoming one of the most popular trade and investment destinations in the world is due to the country ensuring that it can meet the specific trade and investment requirements of prospective investors.
South Africa has a host of investment incentives and industrial financing interventions that are aimed at encouraging commercial activity and its trade rules favour a further expansion in South Africa’s burgeoning levels of international trade.
The special International Headquarter Company (IHQ) regime makes South Africa an attractive location for multinational companies wanting to invest into Africa.
South Africa’s unrivalled scenic beauty and reputation for delivering value-for-money make it an attractive leisure and business travel destination.
Registering a business in SA
The first step in starting a business is reserving a company name, while simultaneously registering the business with the CIPC. Once the company registration is completed, the entrepreneur opens a bank account. The next interactions are with SARS—first the registration for income and withholding taxes, and then for VAT. The last steps are with the Department of Labour—registering the business with the Compensation Fund and the Unemployment Insurance Fund. Businesses engaged in general industrial or commercial activities do not need a separate municipal approval to operate.
Only businesses that supply meals or perishable foodstuffs, or provide certain types of health facilities or entertainment, are required to obtain a municipal license. Although the licensing process is also regulated at the national level, it is implemented by the respective municipalities.
- CIPC: www.cipc.co.za – registering a business
- Banking Association South Africa: www.banking.org.za - list of major registered banks
- SARS: www.sars.gov.za – SA Revenue Services
- Labour: www.labour.gov.za – Department of Labour?
South Africa’s exchange controls
- Exchange controls are administered by the South African Reserve Bank (SARB)
- South Africa does not impose exchange controls over non-residents, only over residents and transactions between residents and non-residents.
- In principle: No restrictions on foreign nationals acquiring companies/Businesses in SA, No approval needed for acquisition of shares or introduction of capital
- Acceptance of foreign loans by SA residents or subsidiary or branch of foreign company requires prior approval. Repayment of foreign loans by SA residents also requires approval.
- Repatriation of funds: There are no restrictions on repatriation of funds (Dividends; Interest; Equity investments; Royalties where prior approval was received)
- SARB:www.resbank.co.za/…/FinancialSurveilanceAnd ExchangeControl/ - Exchange control manual.
Key Sectors for Investment
- Capital/ Transport equipment, metals & electrical machinery and apparatus
- Textile Clothing and Leather
- Electro technical
- Consumer Goods
- Business Process Outsourcing and IT enabled Services
- Boatbuilding
- Automotives and components
- Green economy industries
- Pulp, paper and furniture
- Advanced manufacturing
- Bio-manufacturing
- Chemicals, plastic fabrication & pharmaceuticals
- Agro-processing
- Oil & Gas
- Infrastructure
IMPORTING FROM SOUTH AFRICA
The SA Embassy in China is a crucial enabler of South Africa's economic strategy in in China and enjoys direct access at the highest levels to South African business sectors. The SA Embassy is positioned as the essential point of contact for Chinese companies involved in trade and investment in South Africa. The Embassy works to build equitable and strong trade links with key Provinces and Municipalities in China, in line with South Africa’s strategy of supporting African regional economic integration and co-operation. Globally, South Africa has trading relationships with more than 200 countries and territories.
South Africa’s export process is sector-specific, and sector strategies offer the framework within which exports are encouraged and incentivised. The SA Department of Trade and Industry (DTI) focuses on promoting sectors of the economy that have shown the greatest growth potential and marketability. The Embassy’s Economic unit have a clear understanding of, and access to, the various industries, and are able to provide advice on all current export processes and procedures.
In collaboration with the DTI and in partnership with Provincial Investment Promotion Agencies (PIPAs), the Embassy promotes value added South African manufactured products to Chinese importers and distributors. South Africa has offices in Beijing, Shanghai and Hong Kong providing market intelligence and identifying export opportunities for South African companies, as well advice on export processes and procedures.
Export-oriented companies in SA have, in partnership with the DTI, organised themselves into Export Councils, which target specific markets. These Councils assist exporters in reaching their targets, and specifically enable foreign importers to access manufacturers and suppliers in South Africa.
Assistance offered to investors
- Assistance with information on the Economic environment, Regulatory environment, legal environment, Compliance, Industrial Development and Financial Support.
- Advice on location analysis and facilitation, licensing, company registration and work permits, critical infrastructure and utilities
- Advice on customs clearing
- Company verifications
- Partnerships with Stakeholders
Site visits and Business programs |
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