South Africa Country Profile
SOUTH AFRICA: GENERAL INFORMATION
Official name : Republic of South Africa
Surface : 1.221.041 sq. mt
Population : 55 million
GDP nominal : 723,5 billion USD
GDP per capita : around 13.154 USD
Capital : Pretoria, Cape Town, Bloemfontein; Johannesburg
Largest cities : Johannesburg (3.800.000), Durban (3.100.000), Port Elizabeth (1.500.000), East London (800.080), Pietermaritzburg (553.000);
Government : Unitary parliamentary republic
President : Jacob Zuma, elected in 2009 re-elected in 2014
Religions : Catholic, protestant e indipendentista
Lingua : 11 official languages; afrikaans, English, zulu, xhosa, tswana, sotho, tsonga, swazi, venda, ndebele
Currency : Rand (Z), Exchange rate: 1Euro=17,75 ZAR
SOUTH AFRICA: MACROECONOMIC FRAMEWORK
The South Africa economy is the most developed African economy, it is divided into different developed sectors , and it represents one third of the African revenue.
40% of the continent industrial production;
25% of African GDP
50% of electricity generation
45% of mineral production
South Africa has complex infrastructures, productive manufacturing sectors and a highly developed service sector with an efficient financial sector and strong institutions.
It is a perfect country for investments and trades, especially with South Sahara areas, that provides the access to the south African region markets for trade, logistics and finance.
Main business activities are focused on metropolitan areas such as: Johannesburg, Durban / Pinetown, Cape Peninsula e Porth Elizabeth / UitenHage.
South Africa has a strategic position because it is crossed by a strong transport network, that links goods and people with eastern and western world. It is a management and distribution hub that allows to access to neighbouring countries.
South Africa has on average 4.8 billion (with a peak of 9.5 billion) dollars of foreign direct investments every year. Generally these investments aim to expand trades in neighbouring countries such as: Mozambique, Angola, Zambia, Kenya, Madagascar and Namibia.
South Africa ranks position:
1st country for possibilities of credit facilities and local banks loans.
10th country for local and foreign investments protection
35th country in the “ease of doing business” ranking. Italy and China position respectively 87th and 91st
The public sector has always had a key role to develop South Africa economy, however the government is working to involve private sector in governmental enterprises.
SOUTH AFRICA: SECTORS AND GDP DISTRIBUTION
Service sector: 65.2%
SOUTH AFRICA : ECONOMIC FORECAST
The capital goods sector gives great investment opportunities, because South Africa is enlarging and modernising its infrastructures (with public investments), to promote a sustainable development for manufacturing productions but also for prime materials production and export.
Market spaces for intermediate goods: plants, agricultural and food service machineries, systems and equipments to produce, transmit and supply electricity, services and plants for telecommunications, products and services for highways, railways and planes; means of transport parts, mechanical goods for manufacturing industry, materials and equipments for constructions, civil works and civilian facilities, technologies for sustainable and renewable energy, security equipments and plants, technologies for environmental control and land protection; equipment for mining sector and IT technologies.
Consumer goods opportunities for leather and footwear, in other sectors there aren’t enough possibilities because of Asian countries competitiveness.
It is essential to encourage new investments in order to provide important technology investments, to hire local workforces and to manufacture goods intended to export.
According to the Department of Trade and industry (DTI), primary sectors are agri-food, chemical and pharmaceutical sectors ( 5% of GDP); automotive sector (6% of GDP) with 300.000 employees; transport sector, mining sector, energy and tourism sectors (3.4 of GDP with an average annual growth of 2.3%). In 2011 the Green Economy Accord was signed to create qualified green jobs in South Africa thanks to partnership between public and private sector. The goal is create by 2020 300.000 more jobs in the energy production, manufacture CO2 reduction products, agriculture for biofuel production, environmental heritage protection and sustainable tourism.
Other key points are: increase renewable energy consumption, produce ecofriendly stoves, use of trains for transport, creation programs to support sustainable projects and subsidies for a high educational program for young people.
FOREIGN DIRECT INVESTEMENT IN SOUTH AFRICA
In South Africa local and foreign investors are treated equally. Foreign investors are allowed to choose investment programs, type of business entity, kind of goods (except for defence and security goods) and use of internal funds.
FISCAL ASPECTS IN SOUTH AFRICA
Foreign companies are taxed only for the revenue made in South Africa and for capital gains of properties and assets income. Corporate income tax is 28%. From 2007 the Secondary Tax on Companies (STC), 10% on net shares of profit, added to the basic taxation have created a 36.89% tax. Branches and offices of foreign companies which operate in South Africa have a 33% tax on their profits.
LEGAL SYSTEM CHARACTERISTICS AND LEGAL ASPECTS IN SOUTH AFRICA
The Private Company is the most common business entity, it can be composed of an associate/sole manager and a legal representative residing in South Africa. Subsidiary societies (society managed by other societies) and foreign branches are under the South African law and they must be registered.
SOUTH AFRICA BILATERAL AGREEMENTS
- Double taxation agreements
- Agreements for investments promotion and protection
- Agreements for cooperation in arts, culture, education and sport fields
- Cinema coproduction agreements
INSURANCE ASPECTS IN SOUTH AFRICA
Insurability conditions SACE (foreign trade insurance services) without possibility of sovereign risk, bank risk, private risk and insurance policy transfer SACE for export and foreign direct investments.
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