South Africa

Investing

FDI in figures

Being largely a free-market economy, South African encourages foreign investment in both private and public sectors. Factors attracting FDI into the country include a transparent regulatory system and political stability; however criminal violence, petty corruption and a highly regulated labour market are some of the impediments. FDI stocks as a percentage of GDP have marginally declined from 32.7% in 2000 to 30.2% in 2006.

According to the World Investment Report 2007 of the UNCTAD, the potential attractiveness for foreign investment in South Africa is strong compared with other countries in the world, but performances are poor in terms of the reception of the FDI made. In fact, of the 141 countries studied, Japan is ranked as the 73rd in the world as far as potential attractiveness for FDI is concerned. However, in terms of performance, it drops to 105th place.

Why you should choose South Africa

Strong points

High market potential, developed infrastructure, reasonably competitive domestic economy, economic reforms have led to macroeconomic stability, tax and tariff reduction. The country has a large and active stock exchange. South Africa has shifted from its traditional industries to manufacturing and financial services which mainly contribute to GDP. Tourism and retail sector have huge potential.

Weak points

Criminal violence, petty corruption and a highly regulated labour market. Moreover, poor or unclear regulations in some of the key sectors like telecommunications act as barriers to foreign investment.

Government measures to motivate or restrict FDI

Nearly all the business sectors are open to foreign investors. No government approval is required, and there are almost no restrictions on the form or extent of foreign investment. Other measures taken by the government are simple tax rules, investment incentives, better competition & regulatory policy, protection of IP rights, etc.

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..

Administrative procedures relative to foreign investment

Freedom of establishment

Guaranteed

Acquisition of holdings

Possible.

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.

Finding assistance or further information

Investment aid agency

Trade and Investment South Africa (TISA)

Other useful resources

Trade and Investment South Africa

© Export Entreprises SA, All rights reserved.