Investment Opportunities in South Africa
Protection of Foreign Investment
- Bilateral Investment Conventions Signed By South Africa
- South Africa is a signatory to 35 conventions. UNCTAD allows you to visualize the list of conventions signed by South Africa, and and to download these conventions.
- International Controversies Registered By UNCTAD
- UNCTAD offers a database listing disagreements and the countries involved.
- Organizations Offering Their Assistance in Case of Disagreement
ICCWBO , International Chamber of Commerce
- Member of the Multilateral Investment Guarantee Agency
- Yes, Visit: MIGA
Country Comparison For the Protection of Investors
|South Africa||Sub-Saharan Africa||United States||Germany|
|Index of Transaction Transparency*||8.0||4.8||7.0||5.0|
|Index of Manager’s Responsibility**||8.0||3.4||9.0||5.0|
|Index of Shareholders’ Power***||8.0||5.0||9.0||5.0|
|Index of Investor Protection****||8.0||4.4||8.3||5.0|
Source: Doing Business
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.
Procedures Relative to Foreign Investment
- Freedom of Establishment
- Acquisition of Holdings
Companies have to appoint a South African resident as the company's legal representative. Moreover, foreign companies have to appoint an auditor.
- Obligation to Declare
No government approval is required for foreign investors to
establish a new business or invest in South Africa apart from the
approval required under the exchange control regulations.
The investor will be required to appoint a consultants, auditors, and/or legal advisors to register a company on his/her behalf. The company should be registered within 21days; it should also register for tax.
- Competent Organization For the Declaration
South African Reserve Bank (SARB)
- Requests For Specific Authorizations
Virtually all sectors are open to foreign investors. Very few restrictions apply only to foreign companies.
For example, a foreign bank establishing a branch in South Africa may be required to employ a certain minimum number of local residents in order to obtain a banking license and may be obliged to have a minimum capital base.
Restrictions also exist regarding the ownership of immovable property by foreign companies. Foreign companies are required to register as external companies before immovable property may be registered in their names.
Office Real Estate and Land Ownership
- Possible Temporary Solutions
However in case the foreign company is of national interest, the South African government provides temporary space for a limited period, say up to 2 years.
- The Possibility of Buying Land and Industrial and Commercial Buildings
- Risk of Expropriation
- As per the Expropriation Act of 1975 and the Expropriation Act Amendment of 1992 , the government is entitled to expropriate private property for reasons of public necessity or utility.
- Forms of Aid
The various forms of aid and incentives provided by government are:
- Foreign Investment Grant: provide up to 15 % of the value of new machinery per entity for relocation to South Africa.
- Industrial Development Zones: provide duty-free import of production-related materials and zero VAT on materials sourced from South Africa.
- The Skills Support Program : provides up to 50% of training costs and 30% of worker salaries for a maximum of three years to encourage the development of advanced skills.
- The Strategic Investment Project Program : offers a tax allowance of up to 100% (maximum if USD 86 million per project) on the cost of buildings, plant and machinery, for strategic investments of at least USD 70 million).
- The Critical Infrastructure Facility: supplements funds up to 30% of the development costs of qualifying infrastructure projects.
- Privileged Domains
- Infrastructure development (sectors like transportation, telecommunications, and energy), job creation, environment protection, development of manpower skills, creation of healthy competitiveness.
- Privileged Geographical Zones
The first Industrial Development Zone (IDZ) was set up in South
Africa in 2001. IDZs offer duty-free import of production-related
materials and zero VAT on materials sourced from South Africa, along
with the right to sell into South Africa upon payment of normal import
duties on finished goods. There are no exemptions from other laws or
regulations, such as environmental and labor laws.
IDZs are currently located at Coega near Port Elizabeth, in East London, Richards Bay, and at Johannesburg International Airport.
- Free Zones
- No free zones or free ports exist in South Africa.
- Organizations Which Finance
- Industrial Development Corporation (IDC)
- The Key Sectors of the National Economy
- Mineral exports, Manufacturing sector which includes railway rolling stock, synthetic fuels, and mining equipment and machinery, tourism, health and fruit production.
- High Potential Sectors
- Business process outsourcing which includes call centres.
- Privatization Programs
- Postal service, the telecommunications services (TELKOM) and railway lines scheduled for privatization.
- Tenders, Projects and Public Procurement
South African Government Information, Tenders
Tenders.co, Tenders in South Africa
Cape Business News, Trade Offers
Tenders Info, Tenders in South Africa
DgMarket, Tenders Worldwide
Sectors Where Investment Opportunities Are Fewer
- Monopolistic Sectors
- Banking, insurance and broadcasting industries. Also there are some restrictions on the borrowing levels of foreign-controlled companies.
- Sectors in Decline
- Textiles and clothing.
Finding Assistance For Further Information
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