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 for the
opportunity that exists to use the country as a gateway to the rest of the
continent, a market of nearly 1-billion people.
South Africa has enormous
potential as an investment destination, offering a unique combination of highly
developed first-world economic infrastructure with a vibrant emerging market
economy.
It is also one of the most
advanced, broad-based industrial and productive economies in Africa.
Here are just some of the
reasons for doing business in South Africa:
- Sound economic policies
- Favourable legal and business environment
- World-class infrastructure
- Access to markets
- Gateway to Africa
- Trade reform, strategic alliances
- Cost of doing business in SA
- Ease of doing business in SA
- Industrial capability, cutting-edge technology
- Competitiveness
South Africa's disciplined
fiscal framework is aimed at promoting domestic competitiveness, growth and
employment and increasing the economy's outward orientation.
Key economic reforms have
given rise to a high level of macro-economic stability. Taxes have been
reduced, tariffs lowered, the fiscal deficit brought under control, and
exchange controls relaxed.
Despite its bright
prospects, South Africa still faces key challenges of poverty, unemployment and
inequality. The government is addressing these through two key economic
frameworks:
- the New
Growth Path, which aims to create a more developed and equitable economy,
largely through creating 5-million jobs.
- The
Industrial Policy Action Plan, which aims to promote broader participation
by historically disadvantaged groups in the mainstream of the industrial economy.
The strategy here involves large-scale state investment in infrastructure,
small business and skills development, and interventions targeting
specific areas of the economy.
South Africa's central
bank, the SA Reserve Bank, maintains its independence from
the government. The Bank's programme of inflation targeting has shown good
results: the real interest rate has stabilised and the currency remains at
competitive levels.
The government has made it
clear that foreign investment is welcome in South Africa, and its
investor-friendly policies support the public pronouncements.
- Read more:
South Africa's economic policies
South African law is
founded on the Roman-Dutch law, although aspects of our law (particularly the
company laws and the law of evidence) have been heavily influenced by English
law.
General commercial legal
practices relating to transactions and the drafting of commercial agreements
are generally globally applicable and in line with international norms and
conventions.
There is a world-class and
modern Constitution (including a Bill of Rights) in
place that regulates human rights and all legislation. It guarantees the
independence of the judiciary.
Trade and industry is
undertaken within the framework of a free enterprise economy. The courts are
open to foreigners on exactly the same terms and conditions as South African
citizens, although many commercial disputes are resolved through arbitration by
agreement between the parties.
Sanctity of contract is
protected under common law, and independent courts ensure respect for
commercial rights and obligations.
The JSE Limited rates among the top 20 stock
exchanges in the world by market capitalisation.
The JSE is regarded as a
mature, efficient, secure market with world-class regulation, trading,
clearing, settlement assurance and risk management. It has harmonised its
listing requirements, disclosure and continuing obligations with those of the
London Stock Exchange (LSE) and offers superb investor protection.
South Africa has
world-class infrastructure – including a modern transport network, widely
available energy, and sophisticated telecommunications facilities.
The government has
identified massive infrastructure projects as key to boosting the country's
economic growth rate and creating employment, and is spending billions of rands
on getting the investment ball rolling.
South Africa’s success in
hosting the world’s largest sporting event, the 2010 FIFA World Cup, has shown
that the country is capable of undertaking – and successfully completing –
major projects on time.
- Read more:
South Africa's infrastructure
Located at the southernmost
tip of the African continent, South Africa is ideally positioned for access to
the 14 countries comprising the Southern African Development Community (SADC) –
with a combined market of over 250-million people – as well as the islands off
Africa's east coast, and even the Gulf States and India.
South Africa is a
trans-shipment point between the emerging markets of Central and South America
and the newly industrialised nations of South and Far East Asia.
Major shipping lanes pass
along the South African coastline in the South Atlantic and Indian oceans, and
its seven commercial ports form by far the largest, best equipped and most
efficient network on the continent.
Africa, with 200- to
300-million of its people approaching relative middle-class status, is seen as
the next great growth story after China and India.
The McKinsey Global
Institute has identified Africa as the world's second-fastest growing region. This
growth is "creating substantial new business opportunities" for
global companies.
South Africa facilitates
easy access to other sub-Saharan markets, in particular. The country is the
economic powerhouse of Africa and it is rightly considered a dynamic force
within the 14-member Southern African Development Community.
Bordering Namibia,
Botswana, Zimbabwe, Mozambique, Swaziland and Lesotho, its well-developed road
and rail links provide the platform and infrastructure for ground transportation
deep into sub-Saharan Africa.
Moreover, South Africa has
the resident marketing skills and distribution channels to open up commercial
ventures into Africa.
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 is aimed at positioning South Africa as a
holding company gateway for foreign multinationals investing into Africa.
South Africa has trading
relationships with more than 200 countries and territories. It was admitted to
the BRIC group of countries of Brazil, Russia, India and China (now called
BRICS) in 2011.
The country has special
relationships with the Southern African Customs Union (Botswana, Namibia,
Lesotho and Swaziland), the Southern African Development Community, as well as
the European Union. There are also bilateral agreements in place with
Mozambique and Zimbabwe.
It also has strong
relations with markets in the rest of Africa, Asia and Latin America –
especially via its economic alliance with other BRICS members.
South Africa has become a
key trade and investment partner to China, which over the past decade has
become a major player on the African continent.
African leaders have called
for a continental free trade area by 2017 to boost trade within the continent,
which should boost the opportunities available to South African companies.
Trade agreements further
the aims of the South African government to accelerate growth and industrial
development. The Economic Development Division (ITED) within the Department of Trade and Industry is the section
responsible for such trade negotiations.
South Africa's exchange
rate makes it one of the least expensive countries for foreigners to live and
do business in – with a first-world infrastructure and high living standards
ensuring good value for money.
South Africa's energy costs
have increased in recent years, but the government is determined to meet its
growing energy needs through renewable and efficient sources.
The country compares
favourably for petroleum prices, with private sector and multinational oil
companies refining and marketing nearly all imported petroleum products in
southern Africa.
And telecommunications costs
are coming down. The government is taking steps to ensure cheaper and more
widely available bandwidth capacity, while the landing of several submarine
fibre-optic cables along both the east and west coasts of Africa has boosted
the continent's connection with the rest of the world.
Labour unrest in 2011 has
brought with it demands for higher wages, which may affect business input
costs. However, professional labour costs remain low compared to Europe.
South Africa's corporate
tax rate – at 28% in 2013 – compares favourably against a number of developing
companies.
South Africa moved up two
spots to rank 39th out of 185 countries in the World Bank and International
Finance Corporation's Doing Business 2013 report, an annual survey that
measures the time, cost and hassle for businesses to comply with legal and
administrative requirements.
South Africa fell between
developed countries such as France (34) and Spain (38), and above major
developing economies such as Mexico (48), China (91), Russia (112), Brazil
(130) and India (132).
The report placed South
Africa tenth for its protection of investors, the best of all African
countries, and it recorded significant improvements in the areas of trading
across borders and enforcing contracts.
All companies planning to
do business with the South African government and the general business
community must comply with Broad-Based Black Economic Empowerment (B-BBEE)
policies which are aimed at redressing economic imbalances among historically
disadvantaged communities.
The country's manufacturing
output is increasingly technology-intensive, with high-tech manufacturing
sectors – such as machinery, scientific equipment and motor vehicles – enjoying
a growing share of total manufacturing production.
South Africa's
technological research and quality standards are world-renowned. The country
has developed a number of leading technologies, particularly in the fields of
energy and fuels, steel production, deep-level mining, telecommunications and
information technology.
South Africa was ranked 52nd out of 144 countries in the World
Economic Forum's Global Competitiveness Index for 2012. It remains the highest
ranked country in sub-Saharan Africa, and claimed third place among the BRICS
countries.
The government has provided
incentives for value-added manufacturing projects, support for industrial
innovation, improved access to finance, and an enabling environment for small
business development.
Industrial development
zones have been established in close proximity to major ports and airports,
offering world-class infrastructure, dedicated customs support and reduced
taxation.
South Africa has a
well-developed and regulated competition regime based on best international
practice. Competition legislation follows European Union, US and Canadian
models.
The law places various
prohibitions on anti-competitive conduct, restrictive practices (such as price
fixing, predatory pricing and collusive tendering) and "abuses" by
"dominant" firms (firms with a market share of 35% or more).
SOURCE _ http://www.southafrica.info/
BUSINESS
