Offshore Opportunities:

Although the initial entry into any country is full of pitfalls, South African business has become increasingly integrated into the international community. Foreign investment into the area has also grown substantially over the past few years. With its advantageous location and a government receptive to foreign direct investment, South Africa certainly looks as though it is becoming an international force to be reckoned with.

The South African business infrastructure is generally well developed, and could be seen as a model for other African countries to follow. It includes an efficient physical infrastructure by reliable electricity supplies, and a substantial financial support structure for companies established in the country including a network of merchant banks, brokers, and financial services specialists.(As a point of interest, the Johannesburg stock exchange is the 11^th largest in the world in terms of market capitalization). South Africa is a major coal producer and exporter; it has a highly developed synthetic fuel industry and small reserves of oil. It’s Africa’s second largest energy producer. Although the business infrastructure is not yet able to compete with those of the most developed western powers, it is certainly forging a path for other emerging markets countries to follow; increasing investment in telecommunications and technology should see it able to compete on an international level in the near future.

In common with almost every business jurisdiction, both on-and offshore, South Africa has hopes of becoming the e-commerce hub of its hemisphere. Although the groundwork has been laid, the industry still seems to be in the process of developing a coherent legislative framework and e-commerce strategy. However, we shouldn’t assume South Africa’s position at the very bottom of the African continent would be a disadvantage in terms of international business opportunities. It actually makes the country a very good trans-shipment point between the emerging markets of Central and South America and the newly industrialized nations of South and Far East Asia. South Africa is also ideally placed for access to countries in the Southern African Customs Union (SACU), and the Southern African Development Community (SADC), an alliance of 14 countries with a combined population of over 180 million.

For both international and domestic investors, there are many investment opportunities available in the modern South Africa: the country is the world leader in several specialized manufacturing areas: it produces and exports considerable amounts of coal; and it leads in the field of mineral processing to form ferroalloys and stainless steels. Several other areas, such as tourism, agriculture and livestock development, construction, and the service industry are undergoing rapid growth at the moment, and look likely to attract substantial foreign investment over the next few years.

Although South Africa’s economy is in many areas highly developed, there are some weaknesses. However, the new leadership is receptive to foreign investment, and South Africa has made good progress in dismantling its old economic system which was based on import substitution, high tariffs and subsidies, anti-competition measures, and widespread government intervention. In recent years, the government has substantially reduced its role in the economy, promoting private sectors investment competition, reduced import taxes and subsidies to local firms, eliminated the punitive non-resident shareholders tax, removed certain limits on hard currency repatriation, and reduced the secondary tax on corporate dividends which makes South Africa a prime location for off shoring.