South Africa is one of the most sophisticated emerging markets in the world and has a unique combination of a highly developed first world economic infrastructure with a vibrant economy. Gateway to the entire southern African region, South Africa is a major industrial power positioned at the southern part of the sub continent.

South Africa is classified as an emerging economy with a fast growing middle class and producing most of the industrial and mining output in the continent.

The country secured the right to host the FIDA 2010 Soccer World Cup event partly due to its modern infrastructure. The right to host such a prestigious world event has given the country an opportunity to speed up its infrastructure investment that will result in the economic benefits for the country during and post World Cup event.

The country’s population is estimated at around 48 million (2008 estimate) with nominal GDP of around US$ 270 billion, and income per capita of US$ 5,800. The economy is fast growing into a service economy with the services sector contributing over 60% to the country’s GDP.

The constitution of South Africa comprises national, provincial and local spheres of government that are interrelated. In terms of the constitution, the country is divided into nine self-governing provinces, each with their own legislature, premier and members of executive councils. Each province features it own distinctive vegetation and climate with variances therein.

South Africa is a competitive investment destination due to the following factors:

• 100% foreign ownership of a business is permitted
• No government approval is required for foreign investment
• Foreign investment is actively encouraged
• Excellent financial services are available
• Profits are freely remit table back to investors home country
• South Africa is a signatory to several international investment protection agreements via the World Trade Organisation (WTO)
• South Africa have negotiated a large number of multilateral and bilateral trade agreements

The country has abundant natural resources, well-developed financial, legal and communications, energy and transport sectors. It has modern infrastructure supporting efficient distribution of goods throughout the southern African region.

South Africa’s real GDP expanded at an annualised rate of 5.1% in 2007. This was slightly down on the growth rate recorded for 2006 which was 5,45.

Despite lower taxes across the board, improved tax compliance and a steadily improving tax and customs administration have seen government revenues surging.

The current financial global crisis has not been felt as badly in South Africa and it is anticipated that the country will during 2010 experience growth rates above 2%.

Investment Framework

South Africa has an impressive history of foreign investment, especially with European and American companies. The South African government actively encourages foreign investment which is seen through their wide range of investment grants.

In 2008 South African was ranked in 35th position out of 178 economies for ease of doing business. Ranked particularly high were those aspects of protecting investors and ease of obtaining credit. The average number of days to start a business was given as 31 days.

The economy is predominately based on free market principles, with some state control. Foreign investment in all areas of the economy is active in both the private and public sectors.

The only sectors in which certain restrictions apply are in banking, insurance and the broadcasting sectors. There are generally few restrictions on investment. No permits to operate business are required however work permits are required. (Please refer to the section on visas and work permits) Income from an investment by a foreign investor and the proceeds of any sale of assets in South Africa may be transferred to a non-resident seller.

There are initiatives in place for the empowerment of previously disadvantaged individuals and include increasing empowerment through employment equity and preferential procurement guidelines.

Regulatory Framework

Doing business in South Africa is similar to doing business in any other first world country and is standard throughout the whole of the country.

Government policy welcomes and encourages foreign investment, which is reflected in their continual efforts to lower taxes and tariffs, budget deficits, their ongoing quest to improve infrastructure, inflation kept in check through a disciplined economic policy.

A body of legislation covers labour relations, competition law, intellectual property, copyright patents, transport, environmental and other essential matters.

South Africa has well qualified domestic and international law firms, accounting firms and management consultants who can give advice on all aspects of doing business in South Africa.

Establishing a Business

South African law regulates the establishment and conduct of business, they regulate imports and exports. There is a large availability of human resources, excellent infrastructure and support services and a wonderful quality of life. Investing in South Africa is relatively simple and foreign investment is a basic thrust of national and provincial policy.