MILESTONE 1: MINDING SOMEONE ELSE'S BUSINESS

HAFSAT SALIU

NEXFORD UNIVERSITY

BUS 5040 - INTERNATIONAL LEGAL ENVIRONMENT OF BUSINESS

PROF. AIMELLIA SIEMSON

FEBRUARY 24, 2023

COMPANY PA G E 1

PROFILE

Africana Couture ("Africana" or the "Company") is a premium Nigerian

fashion brand inspired by the philosophy “man, know thyself ”.

The Company was founded in Nigeria with the simple goal to become top

of mind fashion brand for the global citizen with a flare for fine tailoring and

exquisite materials.

The Africana Couture brand goes beyond the product. The Company

prides itself in its tradition of delivering impeccable customer experience in-

store and across all brand touch points (physical, digital, and otherwise)

(Africana Couture, n.d.).

COUNTRY PA G E 1

OVERVIEW - SOUTH AFRICA

Located in the southern parts of the African continent, South Africa is bordered

by Namibia, Botswana, Zimbabwe, and Eswatini. South Africa entirely

surrounds Lesotho in the east (The Commonwealth, 2017).

South Africa has three major zones: the broad interior plateau, the surrounding

mountainous Great Escarpment, and a narrow belt of the coastal plain. The

country is one of the world’s major producers and exporters of gold, coal,

diamonds, platinum, and vanadium (Britannica, n.d.).

South Africa is known for its varied topography, stunning natural beauty, and

cultural diversity, all of which have contributed to the country’s popularity as a

travel destination since after the apartheid was legally abolished in 1994.
COUNTRY PA G E 1

OVERVIEW - SOUTH AFRICA

With a current population of over 60m citizens, the country covers a

land area of 1,220,813 sq km. with 11 official languages (South

African Government, 2019).

With its market-based economy, South Africa is widely considered the

economic, commercial, and logistics hub of Southern Africa. The

country is one of the largest economies in Africa and has successfully

attracted large venture capital investments with its robust industrial

base. The country remains a leading destination for businesses and

brands looking to expand beyond their borders (Sidebrief Inc., 2022).

RECOMMENDATION - PA G E 1

LEGAL INTERNATIONAL BUSINESS FORM

In respect of the proposed expansion of Africana into South Africa, we hereby recommend Foreign Direct

Investment (FDI) as the international business form and Private Company Limited by Shares as its legal

structure.

An FDI involves the commitment by a foreign investor of substantial financial, capital, and human resources in a

country where it hopes to operate. It is a situation where a company buys or establishes an asset or investment in

another country (InvestSmall, 2020).

By establishing our business as a local Company/Subsidiary, we aim to leverage the talent pool of our new home in

acclimatizing with the culture and sustainably carve out our market share.
POLITICAL FACTORS PA G E 1

ANALYSIS

• South Africa is a parliamentary republic with the president being both the head of state and the head of

government. The country was ruled by an apartheid government in the past. However, a lot of things have

changed since the country’s first fully democratic election in 1994. Pretoria, Cape Town, and Bloemfontein

respectively are the administrative, legislative, and judicial capitals of the country.

• Before 1994 South Africa runs a parliamentary system of governance where the president is the head of state

and the head of government nominates the vice president and ministers to form a cabinet to administer state

affairs.

• The Country’s political environment is often clouded by corruption, mismanagement, political intolerance, popular

protests, and violence, which often leads to a slowdown in economic development and progress.
POLITICAL FACTORS
ANALYSIS
South Africa – Political Transformation
Stateness
South Africa is a recognized sovereign
state, with little to no external threats to
its legitimacy, and its citizens are entitled
to a series of legal, political, and
socioeconomic rights under the
constitution. While many South Africans
report that they are religious, the state is
clearly secular, and religion plays little to
no role in the functioning of the state.
The state’s bureaucratic authority spans
the length and breadth of the country,
but the quality of its administrative
capacity is uneven and has deteriorated
recently (The Bertelsmann Transformation
Index, n.d.).
Rule of Law
The South African state is divided into
three relatively independent spheres of
government: the legislature, judiciary,
and executive. There is a relatively clear
separation of powers between each
sphere, although the dominant nature of
the current government in the legislature
and the executive is dramatically
diminishing the independence of these
two spheres.
The Country’s constitution is widely
regarded as among the most progressive
in the world and much of this reverence
concerns the constitutional protections of
civil and socioeconomic rights. Although
all South Africans are nominally equal
under the law, discrimination on the
basis of race, gender, ability, nationality,
and sexual orientation is still widespread
(The Bertelsmann Transformation Index, n.d.).
Political Stability
South Africa is widely regarded as one of
the most successful democracies in
Africa. At all levels of government, South
Africa’s democracy is broadly
representative, using a combination of
party-list proportional representation at
national and provincial levels and a
mixed system for local government.
The Country’s electoral commission, the
IEC, is almost completely independent of
political influence and is widely regarded
as an impartial and credible election
authority (The Bertelsmann Transformation
Index, n.d.).
PA G E 1
Political & Social
Integration
The political parties in South Africa are
well-organized and institutionalized. The
most dominant party is ANC. The biggest
challenge of the political parties remains
to attract an increasing number of non-
voters as South Africans’ satisfaction
with democracy has waned over time.
The citizens’ frustrations with democracy
could be linked to rampant corruption,
the slow pace of economic growth, and
the lack of socioeconomic development
over the last decade.
South African society remains deeply
divided along lines of race, class, and
gender due to its historical legacies of
structural inequality. despite these
divisions, the country also has a long
history of self-organization and collective
action (The Bertelsmann Transformation Index,
n.d.).
ECONOMIC PA G E 1

FACTORS ANALYSIS

• South Africa's Real GDP grew at an estimated 0.7% in 2019, down from 0.8% in 2018, amid domestic and

global downside risks (Africa Development Bank, 2019). The country's GDP is expected to reach $420.28 billion

US dollars by the end of 2023 which is slightly up from the previous year (Trading Economics, 2023).

• The country is one of the BRICKS (Brazil, Russia, India, China, and South Africa) economic giants. It has a

system of mixed economy in place and has seen steady growth in recent years.

• South Africa has a well-developed financial system, with several banks and other financial institutions operating

in the country. The Johannesburg Stock Exchange is one of the popular exchanges in emerging economies.

• Corporate income tax in South Africa for both resident and non-resident companies is a flat 28% which is

scheduled to reduce by 27% from 31 March 2023 (PwC, 2023).

ECONOMIC
FACTORS ANALYSIS
South Africa – Political Transformation
Socioeconomic
Development
Socioeconomic exclusion is widespread
in South Africa. The country suffers from
a triple challenge in the economy: high
levels of unemployment, poverty, and
inequality. Many economic problems are
a legacy of apartheid, which
systematically excluded the black
majority from decent or skilled work
opportunities. But the post-apartheid
government has also failed to protect
existing jobs and promote sufficient new
employment opportunities. Economic
growth was stable during the 2000s, but
the last decade has seen consistently
low levels of GDP growth, especially
compared to other middle-income
countries (The Bertelsmann
Transformation Index, n.d.).
Market and
Competition
South Africa’s economy operates on the
principle of a liberal market-based
economy whereby legislation and
institutions are designed to encourage,
facilitate and regulate firms’ and
businesses’ participation a trade. In
2020, the World Bank’s Ease of Doing
Business report ranked South Africa at
84 out of 190, comparing poorly with
other countries and also it’s 2008
ranking. (The Bertelsmann
Transformation Index, n.d.).
Monetary and Fiscal
Stability
The South African Reserve Bank (SARB)
is responsible for determining monetary
policy and its primary mandate is to
ensure price stability to facilitate
sustainable economic growth. Consumer
price inflation (CPI) has been heavily
affected by the economic shock of the
COVID-19 pandemic and Ukraine -
Russia war.
South Africa’s fiscal stability has steadily
deteriorated over the last decade and
the COVID-19 pandemic has accelerated
economic decline. Structural
weaknesses in the economy have limited
fiscal space for investment in
developmental programs (The
Bertelsmann Transformation Index, n.d.).
PA G E 1
Economic
Performance
South Africa’s economic performance
has been declining over the last decade.
Levels of annual GDP growth have been
1-2% each year for several consecutive
years, only once exceeding 3% annual
growth. Compared to other middle-
income countries and emerging markets
in Africa, economic growth in South
Africa has been relatively poor. The
country entered a technical recession in
March 2020 with two consecutive
quarters of GDP decline, coinciding with
the detection of the first cases of COVID-
19. Slow economic growth is attributable
to a combination of financial
mismanagement and corruption within
the state, as well as high levels of
poverty, unemployment, and inequality,
which limit the potential for economic
growth (The Bertelsmann Transformation
Index, n.d.).
REFERENCE PAGE 1

References

Africa Development Bank. (2019, April 1). South Africa. African Development Bank - Building Today, a Better Africa Tomorrow.

https://www.afdb.org/en/countries/southern-africa/south-africa

Africana Couture. (n.d.). About – Africana Couture. Retrieved February 24, 2023, from https://africanacouture.com/about-2/

Britannica. (n.d.). Learn about the ethnic groups, languages, and apartheid in South Africa. Encyclopedia Britannica. Retrieved February 24, 2023, from

https://www.britannica.com/summary/South-Africa

InvestSmall. (2020, June 1). 4 Major Forms of International Business. InvestSmall. https://www.investsmall.co/4-major-forms-of-international-business/

Sidebrief Inc. (2022, April 21). The Fundamentals Of Registering Your Business With The CIPC In South Africa - Directors and Officers - South Africa. Www.mondaq.com.

https://www.mondaq.com/southafrica/directors-and-officers/1185330/the-fundamentals-of-registering-your-business-with-the-cipc-in-south-africa

South African Government. (2019). Welcome to the Official South African Government Online site! | South African Government. Www.gov.za. https://www.gov.za/

The Bertelsmann Transformation Index. (n.d.). BTI 2022 South Africa Country Report. BTI 2022. Retrieved February 25, 2023, from

https://bti-project.org/en/reports/country-report/ZAF#pos2

The Commonwealth. (2017). South Africa | The Commonwealth. Thecommonwealth.org. https://thecommonwealth.org/our-member-countries/south-africa