Doing Business in South Africa

World Law Group
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World Law Group

[authors: ENS]

In World Law Group's Doing Business In Guide, member firms around the globe share how to successfully do business in their countries, key investment sectors, and what business opportunities are hot in the market right now. In this chapter we cover South Africa.

Part 1: Doing Business in SOUTH AFRICA

1. What is the current business climate in your jurisdiction including major political, economic, and/or legal activities on the horizon in your country that could have a big impact on businesses?

South Africa has a well-established democracy following its transition to democracy in 1994. The country is a regional leader with a highly developed economy and advanced economic infrastructure. It is rich in natural resources, with a diverse economy that spans mining, agriculture, manufacturing, and services.

Electricity supply shortages have constrained South Africa’s growth for several years, and after experiencing a sharp GDP decline due to the COVID-19 pandemic, the economy made a recovery in 2021. Significant policy improvements are being made by the government to restore macroeconomic stability in the country. In recent years, efforts have been to address corruption and streamline regulations, which bode well for business operations. The government has also launched initiatives to promote foreign investment and ease the process of doing business.

2. From what countries do you see the most inbound investment? What about outbound?

South Africa receives inbound investment from the Netherlands, the United Kingdom, Belgium, the United States, and Germany. The Netherlands, the United Kingdom, the United States, Mauritius, and Switzerland are the primary recipients of outbound investment.

3. In what industries/sectors are you seeing the most opportunity for foreign investment?

Foreign investment opportunities are available in various industries/sectors, including healthcare and life sciences; chemicals; consumer goods; clothing, textiles, leather and footwear; automotive and components; digital economy and information and communications technology; agribusiness; mining and mineral processing; transport and industrial; forestry; and metals.

4. What advantages and pitfalls should others know about doing business in South Africa?

South Africa has a potentially restrictive regulatory environment, restrictive immigration system, and extensive exchange controls on capital movements. Local and foreign investors should also consider the country's Broad-Based Black Economic Empowerment legislation, which promotes the accelerated integration of formerly disadvantaged citizens into the South African economy.

South Africa has large market potential, well-developed physical infrastructure, and a competitive domestic economy. The country, the most industrialized, technologically advanced, and diversified economy on the African continent, has sophisticated mining, commercial, financial, and industrial sectors. South Africa is generally open to foreign investment to drive economic growth, improve international competitiveness, and access foreign markets. There are few limitations on foreign and local investment, and South Africa offers several incentives to attract foreign investment, which include those available to operations in special economic zones, grants available to public-private partnerships under the Support Programme for Industrial Innovation as a subsidy towards the cost of developing new products or processes to reduce infrastructure backlogs in both urban and rural areas; the Manufacturing Competitive Enhancement Programme of the Department of Trade and Industry which provides incentives in the manufacturing sector; and a headquarter company regime to attract the establishment of intermediary foreign investment or finance companies.

Investors are offered a conducive environment for doing business through the country’s wide network of Double Taxation Agreements and Investment Promotion and Protection Agreements.

5. What is one cultural fact or custom about your country that others should know when doing business there?

When doing business in South Africa, it is essential to consider the country's rich and diverse cultures. The typical South African greeting is a handshake. Take the time to get to know your business partners and colleagues, both professionally and personally, as building personal relationships is important in South African business culture.

Part 2: About Your Firm

1. What distinguishes your firm from others in your market?

With offices in Eastern, Southern and Western Africa, we have deep expertise and the capacity to solve all our client's legal, tax, forensics, and IP requirements and help them navigate regulatory hurdles, no matter where in Africa they do business.

Because we have many years of practical experience working on the ground throughout Africa, we have developed a proven track record and a solid understanding of local cultural, commercial and geopolitical contexts, as well as long-standing partnerships with trusted firms with whom we work.

Our practitioners are qualified to practice English law and French law and we have extensive experience in the legal codes of OHADA used in West and Central Africa.

Our tagline at ENS is 'Original Thinking,' meaning we thrive on ingenuity and producing the best solutions for our clients and their needs.

2. What are three words that describe the culture of your firm?

Smart, Open-minded, Caring.

3. How does your firm participate in Corporate Social Responsibility (CSR) and/or Environmental, Social, and Governance (ESG) initiatives?

We invest thousands of hours every year in a wide variety of pro bono work across the African continent. In South Africa, our efforts are focused on our two permanent pro bono offices—a first for a law firm. These offices are located in areas with difficult living conditions, including high levels of unemployment and numerous challenges.

Our pro bono project has a multipronged approach which consists of the provision of advice and assistance, as well as legal education and skills development, in order to equip community members with knowledge and vital skills, thereby contributing to access to justice and the fostering of entrepreneurship and the growth of sustainable small businesses.

We run annual business management training programmes and courses in human rights and constitutional law, with the aim of empowering leaders and activists with important information which will be shared in their communities.

4. Are there any new and exciting initiatives, practice areas, or industry focuses in your firm?

We have recently introduced our Public Law practice, showcasing our experience in providing opinion and advisory services, administrative law services relating to the performance of public powers and functions, transactional services relating to public-private partnerships, drafting legislation supporting investigative and reporting work, and conducting judicial reviews of decisions by organs of state and public functionaries.

Our Public Law practice has advised clients from a number of industries, namely banking and finance, basic education, construction, electronic communications, early childhood development, energy, electricity, mining, port services, private and public higher education, transport and logistics, strategic oil reserves, telecommunications, human settlements, media, electoral issues, real estate, prisons, and pharmaceuticals.

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