Brief overview of South Africa

South Africa, officially the Republic of South Africa, is a country located at the southern
tip of Africa. It is divided into nine provinces and has 2,798 kilometers (1,739 mi) of coastline
often called ‘rainbow nation’, South Africa is one of the most ethnically diverse countries in
Africa. It was inhabited by patroal Khoekhoe (Khoi), the hunter-gatherer San, the Xhosa, and the
Zulu nations and various other indigenous tribes, when Dutch settlers arrived in middle of the
17th century, much to the disadvantage of the Khoekhoe along the southern and western coastal
strips. Diversity is a key feature of South Africa, where 11 languages are recognized as official.

South Africa is a middle-income country, with a relatively well-educated population and

many natural resources. There are, however, large disparities in income and many long-term
social and economic challenges, including a high rate of unemployment, the HIV/AIDS
pandemic and high levels of violent crime. For South Africa’s skilled population there is also a
strong economic incentive to migrate. South Africa’s HDI in 2011 was 0.62, ranking the country
123 out of 187 countries. Although this ranking is quite low in international terms, South
Africa’s HDI of 0.62 was well above the the regional average of 0.46 for Sub-Saharan Africa in
2011.

South Africa’s transition from apartheid to constitutional democracy remains one of the most
important and impressive political transitions of our time. It is a powerful demonstration of the
proposition that a peaceful, negotiated path from conflict and injustice to cooperation and
reconciliation is possible despite the complex history of oppression, institutionalized violence,
and diverse social fabric that has defined South Africa.

Since 1994, the African National Congress (ANC) has won landslide victories in all four
democratic elections. Elections are well-managed and fair, and the press is unrestrained.
Opposition parties, among them the Democratic Alliance, Independent Democrats, and the
Congress of the People (COPE) enjoy full political freedoms.

In April 2009, the country held its fourth general elections. The ANC won with a 65.9%
majority. H.E. Jacob Zuma was sworn in as President in May 2009. A new cabinet was
announced as a tripartite alliance that includes the Congress of South African Trade Unions
(COSATU) and the South African Communist Party (SACP). The cabinet was expanded from 28
to 34 ministries to include improved planning, performance monitoring, and service delivery
functions.

South Africa is ranked as an upper-middle income economy by the World Bank. It has the
largest economy in Africa and the 28th-largest in the world. By purchasing power parity, South
Africa has the 5th highest per capita income in Africa. It is considered a newly industrialized
country. However, about a quarter of the population is unemployed and lives on less than US
$1.25 a day.

 Geography: Southern Africa, at the southern tip of the African continent.

 Full name: Republic of South Africa.

 Population: 50.5 million (UN, 2011)

 Capitals: Pretoria (executive capital); Cape Town (legislative capital); Bloemfontein

(judicial capital)

 Largest city: Johannesburg

 Area: 1.22 million sq km (470,693 sq miles) Terrain: Plateau, savanna, desert,

mountains, and coastal plains. Climate: moderate; similar to southern California.

 Major languages: 11 official languages including English, Afrikaans, Sesotho,

Setswana, Xhosa and Zulu

 Major religion: Christianity, Islam, indigenous beliefs

 Life expectancy: 53 years (men), 54 years (women)

 Monetary unit: 1 Rand = 100 cents

 Main exports: Gold, diamonds, metals and minerals, cars, machinery.

 Ethnic group: 79.2% black African,

8.9% Colored

8.9% white

2.5% Indian/Asian

0 .5% Other

 Government: Constitutional parliament republic

President: Jacob Zuma
Deputy President: Kgalema Motlanthe
NCOP Chairman: M.J. Mahlangu
National Assembly speaker: Max Sisulu
Chief Justice: Mogoeng Mogoeng

 Political parties: African National Congress (ANC), Democratic Alliance (DA),

Congress of the People (COPE), Inkatha Freedom Party (IFP), Pan-African Congress
(PAC), Vryheidsfront Plus/Freedom Front Plus (FF+), United Democratic Movement
(UDM), African Christian Democratic Party (ACDP), and Azanian Peoples Organization
(Azapo).

 Independence

Union 31 May 1910

Statute of Westminster 11 Dec 1931

Republic 31 May 1961

 Education: Years compulsory 7-15 years of age for all children. The South African
Schools Act (Act 84), passed by Parliament in 1996, aims to achieve greater educational
opportunities for black children. This Act mandated a single syllabus and more equitable
funding for schools.

 Natural resources: Gold, chromium, antimony, coal, iron ore, manganese, nickel,
phosphates, tin, uranium, gem diamonds, platinum, copper, vanadium, salt, natural gas.
 According to the annual mid-year estimates from Statistics South Africa, in July 2011 the
country's population was 50 586 757, of which 26 071 721 (52%) were female and 24 515 036
(48%) were male. Africans are in the majority at 40.2-million, making up 79.5% of the total
population. The white population and the coloureds population are both estimated at 4.5-million
(9.0%) and the Indian/Asian population at 1.3-million (2.5%).

 Agriculture products: Corn, wheat, sugarcane, fruits, vegetables; beef, poultry, mutton,
wool, dairy products.

 Industries: Mining (world's largest producer of platinum, gold, chromium), automobile

assembly, metalworking, machinery, textile, iron and steel, chemicals, fertilizer,
foodstuffs.

 Birth rate: 19.48 births/1,000 population (2011 est.)

 Death rate: 17.09 deaths/1,000 population (July 2011 est.)

Country Title 2002 2003 2010 2011

South Africa GNI per capita 7070 7320 10310 10710
PPP (current
international
$)

South Africa GDP (current 111100.9 168219.3 363523.2 408236.8

US$) (in
millions)
South Africa GDP growth 3.7 2.9 2.9 3.1
(annual %)
South Africa Life 52.8 52 52.1 52.8
expectancy at
birth total
(years)
Sex ratio

0.99 male(s)/female (2011 est.)

Total:

1.02 male(s)/female
At birth:

1 male(s)/female
Under 15:

1.02 male(s)/female
15-64 years:

0.68 male(s)/female
65-over:
Business environment
Favorable legal and Business Environment

In global South Africa stands 39th rank of 185 economics on ease of starting business.
South Africa is one of the emerging countries that is rapidly growing its economy and offering
lot opportunities for foreign investment. Although the country has huge potential for economy
growth offering access to a large market and considerable saving in labor cost, caution must be
identified due to differences in the political and cultural environment that may create risk and
uncertainty for foreign investors. This report helps us to identify the economic, political and
culture factor that influence business practices in South Africa from which Indian businessman
can be benefited.

South Africa has a world-class, progressive legal framework. Legislation pertaining to

commerce, labor and maritime issues is particularly well developed, while laws relating to
competition policy, copyright, patents, trademarks and disputes conform to international norms
and conventions.

South Africa trade and industrial policy is continuing its change towards an
internationally competitive economy capitalizing on its competitive and comparative advantages.
Already tariff barriers have been reduced; exchange controls relaxed and greater labor market
flexibility has been introduced.

Sanctity of contract is protected under common law, and independent courts ensure
respect for commercial rights and obligations. The independence of the judiciary is guaranteed
by the Constitution.

South Africa's financial systems are sophisticated, robust and well regulated. South
African banking regulations rank with the best in the world, while the sector has long been rated
among the top 10 globally. Foreign banks are well represented and electronic banking facilities
are extensive, with internet banking a growth feature of the sector.

Access to markets

Located at the southernmost tip of the African continent, South Africa is ideally
positioned for access to the 14 countries comprising the Southern African Development
Community (SADC) – with a combined market of over 250-million people – as well as the
islands off Africa's east coast, and even the Gulf States and India. South Africa also serves as a
trans-shipment point between the emerging markets of Central and South America and the newly
industrialized nations of South and Far East Asia.
 Major shipping lanes pass along the South African coastline in the South Atlantic and
Indian oceans, and its seven commercial ports form by far the largest, best equipped and most
efficient network on the continent. These ports are the conduits for trade between South Africa
and her partners in the SADC and the South African Customs Union, as well as hubs for traffic
to and from Europe, Asia, the Americas and the east and west coasts of Africa.

Trade reform, strategic alliances

Since signing the Global Agreement on Tariffs and Trade in 1994, South Africa has
become a player in the global trading system, and a series of trade reforms – including a tariff
reduction and rationalisation programme – have been implemented. Market access has been
enhanced through free trade agreements with the European Union and the Southern African
Development Community and the implementation of the Africa Growth and Opportunity Act by
the United States.

In recent years, South Africa has also developed strong relations with markets in the rest
of Africa, Asia and Latin America. The India-Brazil-South Africa (IBSA) alliance, formed in
2003, aims to increase trade between the three countries from the current level of around US$6-
billion to $10-billion within the next few years. And the country has become a key trade and
investment partner to China, which over the past decade has become a major player on the
African continent.

World class infrastructure

South Africa has world-class infrastructure- including a modern transport network,

relatively low—cost and widely available energy, and sophisticated telecommunications
facilities. The government has identified massive infrastructure projects as key to boosting the
country’s economic growth rate and creating employment, and is spending billions of rands on
getting the investment ball rolling.
Cost of doing business in SA
South Africa's exchange rate makes it one of the least expensive countries for foreigners
to live and do business in – with a first-world infrastructure and high living standards ensuring
good value for money.
South Africa's energy costs are still among the lowest in the world, and the country
compares favourably for petroleum prices, with private sector and multinational oil companies
refining and marketing nearly all imported petroleum products in southern Africa.
And telecommunications costs are coming down and the government is taking steps to
ensure cheaper and more widely available bandwidth capacity. And major projects are under way
to lay submarine fiber-optic cables along both the east and west coasts of Africa to boost the
continent's connection with the rest of the world.
 South Africa's unit labor costs are lower than those of other key emerging markets,
including Mexico, Hungary, Malaysia and Singapore, and the country’s labor productivity has
improved markedly in recent years. Comprehensive labor legislation has contributed to a marked
decline in the number of man-days lost due to industrial action since 1994.
South Africa's corporate tax rate – down to 28% for 2008/09 – compares favourably
against a number of developing companies, and the prospects of further reductions are good.

Where does the economy stand today?

What does it take to start a business in South Africa? According to data collected by
Doing Business, starting a business there requires 5 procedures, takes 19 days, costs 0.3% of
income per capita and requires paid-in minimum capital of 0.0% of income per capita.

What it takes to start a business in South Africa?

Source: Doing Business database

 rank by south africa on doing business(185)
Starting
Business
150
Registering Getting
Propoerty 100 electicity

50 Resolving
Getting Credit
Insolvency rank by south africa on doing
0
business(185)

Protecting Enforcing
Investors Contracts
Trading Across
Paying Taxes
Broders

Source: Doing Business Database

Business opportunities
South Africa is the richest country in Africa. It is also the most populous state in southern
Africa as well as the most industrialized state in Africa. Many do not know that South Africa has
a developed and well-maintained infrastructure. Its electrical power, telecommunication system,
its road network and its banking facilities fall under the first class category. Also, other Asian
countries like India, Pakistan, China, and Thailand are doing business with South Africa.
Predominantly in the fields of electronic products and garments. The Indian Ocean is the
connecting link. The Indian and the Atlantic Oceans converge at Cape Point, a place near Cape
Town, the legislative capital of South Africa. The absence of direct shipping facilities between
our country and South Africa – like what Singapore and Hongkong have, also increases the cost
of doing business with South Africa and lessens our competitiveness vis-à-vis the other Asians.

While a financial pandemic sweeps over the rest of the world, South Africa set new
investment records last year, with its private equity funds growing to R103 billion, or 3.2% of its
gross domestic product (GDP), compared to the global average of 2.7%

International investors are taking a chance on South Africa start-ups, especially in

internet related industries. However, investors are finding great opportunities to fund a wide
range of start-ups, such as business specializing in healthcare, crafts and communications
technology. There has also been a movement to invest in “green” business, like renewable
energy and sustainable technologies. The 2012 FIFA World Cup has provided business
opportunities. The Tourism Enterprises Partnership was established in 2008 to facilitate the
world cup and growth and development of small, medium and micro enterprises (SMMEs) in the
tourism sector. South Africa also has a growing film industry. With its beautiful landscapes and
low production costs – forty percent less than in Europe and the US, twenty percent less than in
Australia.

The Multilateral Development Banks (MDBs) are international financial institutions that
promote economic and social progress in their developing member countries. Each year, the
MDBs (the World Bank, the Inter-American Development Bank, the Asian Development Bank,
the African Development Bank, and the European Bank for Reconstruction and Development)
extend a combined total of almost $50 billion in loans, grants, and investments to the public and
private sectors for economic and social development in developing markets.

Modern Infrastructure

South Africa is the excellent physical infrastructure including modern rail, road, air and
other transportation services. The harbor and road systems are well maintained and hold
immense potential for public-private partnership.

The power parastatal Eskom, supplies roughly half of Africa's electricity with a
generating capacity of 157 million GWh. Its rates are amongst the cheapest in the world and a
massive electricity connection programme has met its target of connecting an additional 300,000
new households per year. As a consequence, numerous small industries have emerged and
people are being skilled in various business operations.

Sophisticated Financial Markets

South Africa's well-developed financial system is unrivalled in any emerging market.

Corporations operating in South Africa are well served by merchant banks, brokerage firms,
corporate finance houses, and a wide variety of financial services specialists, both in terms of
application of modern technology and skill in international finance. The sophisticated legislation
governing the financial sector has been streamlined to meet international norms and provides the
platform for the introduction of major foreign financial institutions into the local market.

Legal, accounting, management consortia and advertising fees are considerably lower
than in most developed economies, with most of the leading international service firms operating
major South African subsidiaries. The Johannesburg stock exchange, formed in 1887, is the 11th
largest stock exchange in the world by market capitalization and has already replaced the 'open-
outcry' system with automated screen based trading.
Technology

South Africa's history has led to the development of unique and sophisticated
technologies. Today these technologies are sustaining the industrial and mineral beneficiation
mega-projects that form the cornerstone of the new global industrial strategy. Sasol, a South
African energy giant, is the world's most successful producer of liquid fuel from coal. It
possesses unique technology to produce both fuel and chemical components from coal in a single
process. The South African mining industry has become a world leader in developing cost-
efficient mining technology for deep level and high pressure operations.

World Class Telecommunications and Information Technology Industry

Telecommunications is one of the fastest growing industries in South Africa, with a

growth rate of 45 % driven largely by the introduction of cellular telephones and the recent
partial privatization of Telkom. Telkom installed at SAT-2 digital fiber-optic cable in 1993,
which effectively provides southern Africa with access to the global telecommunications
highways. Overall South Africa has one of the most advanced telecommunications systems of all
emerging markets. So IT Company of other country can invest inside South African market and
can earn more chunks of profit.

Diverse, cost efficient Mineral and Agro-Industry Inputs

South Africa has the competitive advantage in beneficiation of mineral and agricultural
inputs due to the immense concentration of reserves of important minerals, its low-cost coal-
based electricity supply, a world class infrastructure with considerable capacity, a developed and
skilled technology base and proven entrepreneurial abilities. South Africa has the world's largest
reserves of chrome ore (68 %), vanadium (45 %), andalusite (90 %), manganese ore (3.9 billion
tons). It also holds substantial reserves of antimony, asbestos, diamonds, coal, fluorspar, iron,
lead, zinc, phosphates, uranium, vermiculite, zirconium and platinum group metals.

The agriculture, forestry and fishing industries provide the growing agro-processing
industry with abundant resources and are well-positioned to export to the northern hemisphere
'out of season'. South Africa has developed one of the largest planted forestry resources in the
world. Plantations cover more than 1.4 million hectares with exports accounting for 35% of total
turnover of forestry products. South Africa's pulp and paper manufacturers rank amongst the
largest companies of their kind in the southern hemisphere.
Government Commitment to Investment Facilitation

The South African government welcomes foreign investors. All exchange controls on
non-residents have been lifted so that investors are free to take their money out of the country at
any time. Against the background of rapidly transforming the national economy, striving to
expand and increase its competitive edge in world markets, the South African government has
implemented a plethora of incentive programmes. These are aimed at accelerating and
facilitating the transition to competitive and sustainable manufacturing industries. The

The national and provincial governments have developed investment promotion and
facilitation strategies, which are focused on the needs of international competitive companies and
their search for new and profitable markets. A national network of investment promotion
agencies is focused on the new global industrial strategy of the Department of Trade and
Industry. This is a component of the government's Growth, Employment and Redistribution
(Gear) strategy and impacts on the investment decisions facing world class companies.

The national investment promotion agency, Investment South Africa (ISA) will provide
access to:

• A sector specific marketing strategy linked to your field of operations;

• An online database focusing on the regulatory, commercial and operating environment

affecting your company

• Links to local joint venture partners, and tailor made itineraries for inward investment missions.

India is increasingly becoming a major trading partner with the region and South African
businesses should take the opportunity that our ties with India, both historically and through new
initiatives such as BRICS afford for local businesses, to establish a foot print on the Indian
continent.

Economy conclusion

South Africa has a relatively large and diverse economy, which is the power-house of
Africa. Total GDP was about $112 billion in 2000, with a population currently estimated at 50
million. South Africa contributes 73% of total GDP in the 14-member Southern African
Development Community (SADC), but accommodates only 22% of the SADC population. The
formal sector has outgrown the dependence on primary activity. Currently agriculture contributes
less than 5% to GDP, and mining less than 8%. The secondary sector represents just under a
third of the economy and the tertiary sector contributes more 54% to GDP. It is widely
recognized that the GDP is substantially higher than reflected in official figures as a result of the
large informal sector, which is inadequately measured in the national accounts. The South
African economy is an open economy, with 27.7 % of its GDP exported. Despite the transitional
challenges, the South African economy has proved its resilience, as demonstrated by its
consistent export performance. The South African business community has proved it's world
class caliber in the face of international competition, at home and abroad, as South Africa has
deregulated and opened up to the global economy

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Education statistics in South Africa 2010 Published by the Department of Basic

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Mid-year population estimates, 2010". Statistics South Africa. 20 July 2010. Retrieved 23
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