South Africa is always open for business.
As a result, many opportunities await international investors in all sectors of the economy and throughout the country. South Africa holds immense potential as a representative of the continent and offers easy access to inter-continental and East-West trade.
South Africa’s large skilled labour force comes from a variety of universities, colleges as well as a well-developed corporate training sector. A strong union structure provides protection and supports employee labour rights. Important and innovative work is ongoing in a wide number of fields, including biotechnology, Nano-technology, indigenous/traditional medicine, sports science, and many more.
Overview
South Africa is amongst the biggest economies on the Continent and is ranked by the World Bank as an upper-middle income country, along with other SADC Counties. The economy is dualistic, with a sophisticated industrial and financial sector existing side by side with a large informal sector.
South Africa’s economy has traditionally been rooted in primary sectors – the result of a wealth of mineral resources and favourable agricultural conditions. However, the economy has been characterised by a structural shift in output over the past four decades. Since the early 1990s, economic growth has been driven mainly by the tertiary sector, which includes wholesale and retail trade, tourism and communications. South Africa is currently moving towards a knowledge-based economy, with a greater focus on technology, e-commerce and financial and other services.
The sectors that contributed to South Africa’s GDP in 2018, and have kept the economic engine running are:
- Agriculture:
- Mining:
- Manufacturing:
- Electricity and water:
- Construction:
- Wholesale, retail and motor trade:
- Transport, storage and communication:
- Finance, real estate and business services:
- Government services:
- Personal services:
Increasingly, the “Green Economy” is taking prominence as the country is moving away from traditional coal-fired power stations to cleaner energy production. South Africa’s strategy is to make cleaner, more efficient use of the country’s abundant, low-cost coal reserves in the near term while at the same time expanding the use of low-emission energy technologies and renewables.
Macroeconomic Policy
Government’s stated intention is to encourage business activity, investment and job creation by providing a stable economic environment with low interest rates, a modest budget deficit, moderate inflation and a competitive currency. Investment incentives and industrial financing assistance are offered as a means of actively seeking foreign direct investment.
The New Growth Plan (NGP), launched in 2010, aims at restructuring the economy to provide greater and more inclusive growth. The NGP’s ambitious goal is to create 5 million new jobs by 2020 and lower the unemployment rate. The key areas targeted for job creation include infrastructure development, agriculture (and agro-processing), minerals (and mineral beneficiation), manufacturing and tourism. A longer-range NDP, the product of discussion between government, business and labour, hopes to create 11 million new jobs and reduce poverty substantially by 2030.
Monetary and Fiscal Policy
The South African Reserve Bank (SARB) is responsible for formulating and implementing monetary policy. Its primary objectives are keeping inflation within a targeted rate of 3 to 6 per cent and maintaining a stable, competitive currency. The Bank is opposed to intervention to manipulate the exchange rate.
Taxation
South Africa has a residence-based tax system, which means residents are – subject to certain exclusions – taxed on their worldwide income, irrespective of where their income was earned. Non-residents are, however, taxed on their income from a South African source, but subject to the provisions of international agreements for the avoidance of double tax. In broad terms, tax is levied on taxable income, which is calculated as gross income excluding certain income of a capital nature less exemptions and permissible deductions.
Trade Agreements
The South African Government’s economic development strategy aims to accelerate growth and industrial development along a path that generates decent jobs. The Government, through the Department of Trade and Industry (the dti), seeks to support the objectives of industrial development and upgrading, employment growth and increased value-added exports by negotiating trade agreements with other countries. The International Trade and Economic Development Division (ITED) within the dti is the section responsible for such trade negotiations.
USEFUL LINKS
Government departments
Investment promotion agencies
- Trade and Investment South Africa (TISA), www.thedti.gov.za
- Durban Investment Promotion Agency (DIPA), www.dipa.co.za
- City of Johannesburg, www.joburg.org.za
- Free State Development Corporation (FDC), www.fdc.co.za
- Gauteng Growth and Development Agency (GGDA), www.ggda.co.za
- North West Development Corporation, www.nwdc.co.za
- Trade and Investment KwaZulu-Natal (TIKZN), www.tikzn.co.za
- Trade and Investment Limpopo, www.til.co.za
- Wesgro, www.wesgro.co.za
- Eastern Cape Development Corporation (ECDC), www.ecdc.co.za
- Northern Cape Economic Development Trade and Investment Promotion Agency, www.nceda.co.za
- Mpumalanga Economic Growth Agency, www.mega.gov.za
Business information services
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