Setting up a company

FDI in figures

Why you should choose to invest South Africa

Strong points

South Africa has high market potential, developed infrastructures and a reasonably competitive domestic economy. The country has put into place economic reforms, which have led to macro-economic stability, tax and customs reduction. It also has a large and active stock exchange.
South Africa has shifted from its traditional industries to production and financial services which are the main contributors to the GDP. Tourism and the retail sector have great potential.

Weak points

South Africa has a certain amount of weaknesses: High rate of criminal violence and corruption, a highly regulated labour market and poor or unclear regulations in some of the key sectors like telecommunications. These factors contribute negatively 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 the extent of foreign investment. Other measures taken by the government are simple tax rules, investment incentives, a better regulatory policy on competition, protection of intellectual rights. We can quote :
- The Foreign Investment Grant up to 15% of the value of new machinery and equipment;
- The Skills Support Program which provides up to 50% of training costs and 30% of workers salaries;
- The Strategic Industrial Project program which offers tax allowances; and
- The Small and Medium Enterprise Development Program which offers tax free grants.

With 23.5% unemployment, Jacob Zuma recognising that the recession had delayed economic recovery and the private sector's capacity to create new opportunities, announced the remittance of some 303 million dollars in order to help company heads and employees who were in trouble due to the crisis.

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.

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 for further information

Investment aid agency

Trade and Investment South Africa (TISA)
The New Partnership for Africa's Development

Other useful resources

Doing business with South Africa
Economic Developments and Prospects in South Africa - African Economic Outlook

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Last updates: February 2012