Investing in South Roadmap 2020 1 INVESTOR ROADMAP Foreword 1 Contents

1. Foreword 1

2. Why Invest in South Africa? 2 Foreword

3. Fast Facts on South Africa 9 economic indicators Socio-economic and demographic indicators It is with great pride that InvestSA, a division of the Department of Trade and Political and legal environment Industry (the dti), and Deloitte Africa bring you the updated and revised version Arts, culture and sports of South Africa’s Investor Roadmap 2020. Residing and working in SA South Africa has a number of characteristics that make it a compelling Education investment destination on the African continent. 4. Economic Overview of South Africa 16 The Investor Roadmap provides both foreign and domestic investors with a National economic overview broad overview of the social, regulatory and economic environment in which Provincial economic overview they can expect to operate, highlighting the key features and investment 5. Sector Overviews & Opportunities 23 incentives that we believe make doing business in South Africa an attractive Green economy proposition. Services It is hoped that this publication will serve as the single most comprehensive Resource-based economy and authoritative source of information for investors, exporters and businesses Manufacturing arriving at our shores. Advanced manufacturing For more information and advisory support, please contact us. 6. Doing Business in South Africa 37

Starting a business • Registration process • Business vehicles

Cost of doing business Mr Yunus Hoosen • Telecommunications Head • Electricity InvestSA • Property • Water • Transport • Fuel

Labour costs and skills availability

overview of Special Economic Zones

Taxation

Regulatory requirements and legislation • Corporate • Labour • Finance • Intellectual property • Environment Disclaimer • Telecommunications Unless otherwise stated, the information in this Investor Roadmap is based on • Mining conditions that existed in March 2019. • Transformation The authors accept no responsibility for any errors this guide may contain, Land acquisition process whether caused by negligence or otherwise, or for any loss, however caused, environmental impact assessment sustained by any person that relies on the information herein. Incentive programmes While all attempts have been made to provide up-to-date statistics and other 7. Key Contacts 76 details, this Investor Roadmap is not exhaustive and readers are advised to 8. Addendum 81 consult with their advisors and/or the relevant agency.

2 1 2 SOUTH AFRICA INVESTOR ROADMAP Why invest in South Africa? 2

Why Invest in South Africa? 10 Reasons to Invest in South Africa Attractive and Connected Emerging Market

1 Quality infrastructure and efficient logistics With well-established and continued investment in infrastructure, South Africa is positioned as a key global hub and an attractive gateway into the rest of the continent. Port of urban Largest presence of multinationals in Africa 2 South Africa is one of the most diversified and industrialised economies in in Africa South Africa is the investment destination of choice of a sizeable number of global corporates, who enjoy the Africa with the most affluent consumer market in Africa.* benefits of doing business in the country. More than 180 Fortune Global 500 companies are present in South Africa. Its well-established infrastructure and strategic location, positions South Africa as a key global hub and an attractive gateway into the rest of the continent. 96 3 Manufacturing hub of households South Africa has a well-developed, diversified manufacturing base that has shown its potential to compete Most sophisticated financial services have globally, and serves as a manufacturing hub to supply the rest of the continent for a number of consumer product companies. services sector in Africa 4 Lucrative emerging market South Africa’s growing middle class and most affluent consumer base in Africa presents attractive returns on Largest installed electricity investment. generation capacity in Africa 5 Favourable market access to global markets The African Continental Free Trade Area (AfCFTA) will boost intra-Africa trade and create a market of over 1bn people with a combined GDP of over US$2trn. South Africa has several trade agreements that provide an export Largest coal terminal 31 platform into global markets. (Richards Bay) in Africa 82% internet 6 Innovation and tech hub smartphone users The Global Innovation Index ranks South Africa number one in innovation in Africa. South Africa’s intellectual rd penetration property rights protection is regarded as the second best in Africa. South Africa is also fast becoming a technology hub in Africa and has a growing ecosystem in the tech sector ranging from technical expertise to finance support 3 180 most connected for entrepreneurs. of population covered 500 shipping network 7 Abundant natural resources 86% by 4G/LTE network companies are South Africa is abundantly endowed with precious metals. It is the world’s leading producer of platinum group in Africa present in metals, the sixth-largest producer of gold, has world-renowned underground mining expertise and more than 100 outh Africa listed mining companies with operations in the country. Most efficient 8 Africa’s leading financial hub Top 3 international airports South Africa has a sophisticated banking sector with a major footprint in Africa. It is also a financial hub in Africa, in Africa , Cape Town air transport 3 with the Johannesburg Stock Exchange (JSE) the largest stock exchange by market capitalisation in the continent. and Durban service in Africa overall Young trainable labour force infrastructure 9 in Africa *when considering economies with populations above 5 million. South Africa has a number of world-class universities and technical colleges, producing a skilled, talented, and Sources: IMF, 2018; WEF, 2018; Skytrax, 2018; World Bank, 2018; AfrAsia Bank, 2018; StatsSA, 2018; UN, 2018; World Internet Stats 2019; ICASA, 2019 capable workforce. It offers a diversified skillset, a large pool of trainable labour, and government support for training and skills development. 10 Excellent quality of life South Africa is renowned for its quality of life, offering both high quality city experiences and more tranquil and breath-taking landscapes.

2 3 2 SOUTH AFRICA INVESTOR ROADMAP Why invest in South Africa? 2

Preferred Investment Destination in Africa Affordable Production Destination with Sizeable Talent Pool

Sample of Fortune Global 500 companies present in South Africa

Average cost per sqm prime office space, 2018

$274 South Africa is Africa’s

preferred investment

destination for multinational $170 $165 companies. $130 $89 Thanks to its highly sophisticated business environment, world-class $11 $10 $10 $9 nancial services sector and excellent transport links, South Africa is regarded as the leading springboard into the rest of the continent.

More than 180 Fortune Global 500 Employment costs as share of total business cost, 2016 companies have invested in South Africa, 35% the largest concentration in Africa.

The country offers attractive opportunities 22% for investors seeking new markets, $130 14% or strategic assets. 12%

In 2018, President embarked on an ambitious investment drive to secure US$100bn in Malaysia Turkey South Africa Brazil investments by 2023.

In 2018, South Africa witnessed a more than vefold increase in Number of graduates 2014-17 FDI inows, accounting for % change close to 18% of FDI FDI inflows, 2017 vs 2018 inows into Africa. 185 373 191 524 203 076 210 931 14% US$7.1 bn 15% 59 125 61 580 55 574 58 090 FDI inflows to South Africa 45 480 47 143 20% increased more $130 42 343 42 917 42 107 44 434 11% than between 2017 US$1.3 bn 37 076 36 654 and 2018 x5 53 863 56 364 57 772 2017 2018 50 380 11%

2014 2015 2016 2017 Sources: Reuters, 2018; UNCTAD, 2019  Science, Engineering and Technology  other Humanities  Education  Business/Management

Sources: Colliers International, 2018; Rode, 2018; CBRE, 2018; World Bank, 2018; DHET, 2018

4 5 2 SOUTH AFRICA INVESTOR ROADMAP Why invest in South Africa? 2

Key Highlights and Quick Facts A Snapshot of South Africa’s Key Economic Hubs

Connected to the world Young and capable population

South Africa is well-connected to the rest Close to 60 million people call South Africa home, making it of the world. Most major international the 5th most populous country in Africa. Commercial hub of the country with largest presence of MNCs in Africa destinations across all continents are South Africa has a highly urbanised and young population. accessible from South Africa via direct R1 594bn (34% of SA’s GDP) The country’s universities are among the best on the flights on a daily basis. continent. – Finance, real estate & business services: 24% World-class private education South Africa is Africa’s economic powerhouse and In addition to its universities, South Africa has 50 Technical – Manufacturing: 15% most important consumer market. It is home to four of the South Africa has number of world-class, and Vocational Education and Training (TVET) colleges – Trade, catering & accommodation: 14% progressive private education providers that focus on technical and vocational skills development. 10 wealthiest cities in Africa, accounting for more than Johannesburg and Pretoria from pre-primary, primary to secondary and Currently there are 700 000 TVET students studying at 267 US$500bn in personal wealth. tertiary levels. Some of the world’s most campuses across the country.

renowned business schools run programmes The country is home to Africa’s largest luxury market, • 38m South Africans are of working age in the country. valued at US$2.2bn or 37% of continent’s total luxury market. Home to Africa’s largest port and • 56% of the population is below 30 years a key manufacturing region Outstanding medical facilities • 2 in 3 South Africans live in urban areas • : R746bn South Africa has a well-established network (16% of SA’s GDP) • 4 of Top 5 African universities are in South Africa of medical facilities, offering world-class • medical treatments not only to the domestic • 70% of the workforce have at least secondary – Manufacturing: 18% market, but also to the region. In 1967, the – Finance, real estate & education first ever heart transplant was performed at business services: 17% the Groote Schuur hospital in Cape Town, • 95% of the adult population is literate – Trade, catering & accommodation: 15% reflecting South Africa’s pioneering role in the • Durban medical field. Africa’s best universities Exceptional value • While providing an exceptional lifestyle with Strong services, agricultural and • University of Witwatersrand manufacturing sectors worldclass restaurants, shopping and leisure activities, South African cities are among the • • R633bn 2 most affordable places to work and live in. (14% of SA’s GDP) • University of KwaZulu-Natal • Unbeatable climate – Finance, real estate & business 1 ohannesburg U2bn services: 25% With up to 300 hours of sunshine per month 2 ape Town U155bn Progressive democracy – Trade, catering & 3 Cairo US$140bn and its mild and sunny winters, South Africa accommodation: 17% Strong automotive cluster 4 Lagos US$108bn offers an unbeatable climate. The country’s Since its first democratic election in 1994, the country has – Manufacturing: 15% developed a strong track record of democracy. 5 urban U55bn climate is perfect for outdoor enthusiasts. Cape Town • R359bn (8% of SA’s GDP) 6 Nairobi US$54bn Unmatched natural beauty South Africa’s constitution has been hailed as one of the • – Trade, catering & accommodation: 20% 7 Luanda US$49bn most progressive constitutions in the world. From pristine beaches, lush forests to open – Finance, real estate & business services: 19% 8 Pretoria U48bn plains and rolling hills, South Africa’s diverse The country’s vibrant and active civil society and media – Manufacturing: 13% 9 Casablanca US$42bn geography offers unmatched recreational ensure accountability and transparency in government. Port Elizabeth 10 Accra US$38bn options. Its Big Five game reserves, including • 5th strongest investor protection in Africa the world famous Kruger National Park, are an nd ideal destination for nature lovers. • 2 most independent judiciary in Africa

• 3rd freest media in Africa

• 4th highest Democracy Index (EIU) ranking in Africa

Sources: DHET, 2018; World Bank, 2018; Mo Ibrahim Index, 2018; EIU, 2018; Times Higher Education, 2018; Reporters Without Borders, 2018 Sources: StatsSA, 2019; AfrAsia Bank, 2018

6 7 3 SOUTH AFRICA INVESTOR ROADMAP Fast Facts on South Africa 3

Fast Facts on South Africa

Economic indicators Measure Fast facts Key highlights Gross domestic 2020f: R5.62trn (US$403.0bn)

• South Africa is the second largest economy in Africa. product (GDP) 2019f: R5.24trn (US$385.5bn) 2018: R4.91trn (US$376.8bn) • As Africa’s anchor economy, South Africa became a 2017: R4.65trn (US$349.3bn) member of the BRICS grouping in 2010. 2016: R4.35trn (US$295.8bn) • South Africa’s prudent monetary policy has kept 2015: R4.05trn (US$317.7bn) consumer prices well within its target range of 3%-6%. GDP growth 2020f: 1.5% • Compared to other major African economies, South 2019f: 0.6% Africa has a relatively low commercial bank lending rate. 2018: 0.8% 2017: 1.3% • Over the last three years, the was the 2016: 0.6% best performer among major compared to the 2015: 1.3% US dollar, gaining more than 6% against the US dollar. 2000 to 2018: 2.8% p.a. (average) • The South African rand is freely convertible. Consumer price 2018: 4.8% (average) • South Africa’s foreign exchange policy has been inflation 2010 to 2018: 5.3% (average) progressively relaxed over recent years, with only minor Interest rates Policy rate (repo rate): delays in the conversion and transfer of funds. • 2018: 6.59% (average) • In 2017, South Africa was the largest exporter in Africa • 23 Jan. 2019: 6.75% – exporting almost twice as much as Nigeria, Africa’s Exchange rate 2018 average: US$1.00 = R13.25 second largest exporter. Merchandise Exports in 2017: US$88.3bn • In 2017, South Africa was the largest importer in Africa trade Top export destinations: – importing almost one-third more than Egypt, Africa’s • China: US$8.7bn second largest importer. • US: US$6.6bn • Germany: US$5.8bn • Japan: US$4.2bn • India: US$4.1bn Imports in 2017: US$83.0bn Top import sources: • China: US$15.2bn • Germany US$9.6bn • US: US$5.5bn • India: US$3.9bn • Saudi Arabia: US$3.8bn

Sources: IMF, 2018; UNCTAD, 2018; StatsSA, 2018a; SARB, 2018 & 2019; Business Insider, 2018

8 9 3 SOUTH AFRICA INVESTOR ROADMAP Fast Facts on South Africa 3

Socio-economic and demographic indicators Measure Fast facts Political and legal environment Measure Fast facts

Key highlights Population • 57.7m population Key highlights Government • Parliamentary democracy • 37.5m working-age population • South Africa is by far the most affluent economy in Africa • South Africa has been hailed as the most stable Legal system • Mix of Roman-Dutch law (primarily • 65% under the age of 35 when considering economies with populations above democracy in Africa. civil), common law and statute 5 million. • 6% over the age of 65 • South Africa has the most independent and transparent (primarily economic affairs) • Annual population growth: 1.6% • South Africa is the fifth most populous country in Africa. judicial processes in Africa, guaranteeing investors a fair • Constitution protects basic Highly urbanised Share of population living in urban and reliable business environment. freedoms and secures rights • While South Africa has a young population, its age population areas: and dignities (including property dependency ratio is among the lowest in Africa. • South Africa has the best regulatory environment for • 2018: 66.4% rights and protection of minorities businesses in Africa, making it a favourable investment • About one-quarter of South Africans live in either • 2020f: 67.4% based on ethnicity, gender, sexual destination. Johannesburg, Cape Town, Durban or Ekurhuleni. These • 2025f: 69.8% preference, etc.) urban hubs are well connected and present attractive Middle class • Motorisation rate: 176 vehicles • The South African Reserve Bank is well-managed and Fiscal policy • Balances development needs consumer markets. indicators per 1 000 people (2017) independent, ensuring predictability and consistency in with fiscal sustainability and • South Africa is Africa’s largest market for automobiles • 57% of the population have monetary policy. intergenerational equity and has the largest fleet of cars on the continent. access to the internet (2017) th • The Johannesburg Stock Exchange (JSE) is the 19 Monetary policy • Inflation targeting regime • 67% of adult population have an st • A number of government initiatives, such as the Jobs largest in the world by market capitalisation. On 1 March • Target range of 3% to 6% for account with a financial institution Fund, are geared towards employment creation. 2019 the JSE’s market capitalisation was R15.9trn. the year-on-year increase in the • 95% of population has access to headline CPI • South Africa faces challenges of inequality; however improved water source (2018) its progressive social spending system has helped to Capital controls • Regulation of foreign inflows is Labour market Unemployment rate: mitigate the impact of inequality. limited • 2017: 27.5% • Foreign outflows are permitted Age distribution, 2018 • Q3 2018: 27.5% • Some limits on permanent residents 80+ • Q4 2018: 27.1%  Male and citizens apply 70-74 • Q2 2019: 29.0%  Female Financial sector • Highly developed bond and equity 60-64 GDP per capita Current prices PPP market 50-54 1998: US$3 159 $7 204 • Banks regulated under ‘twin peaks’ 2008: US$5 802 $11 739 40-44 model, with central bank overseeing 2018: US$6 560 $13 775 30-34 both macro- and micro-prudential

20-24 Gini coefficient • 2006: 0.72 policy • 2015: 0.68 • Signatory to Basel III accords 10-14 • 0-4 Trade WTO member since 1995 2000 0 2000 agreements • Bilateral agreements with most Thousands major trading partners • Preferential access to US and EU Population distribution, 2018 Population (million), 2016-23f market through AGOA and EPA  , 25% 59.3 60.2 61.2 62.1 • Regional markets via SADC Free 55.6 56.5 57.4 58.3  KwaZulu-Natal, 20% Trade Area  , 11% • Transcontinental free trade area  , 11% South Africa has the most admirable Investment • International investors protected  , 10% Constitution in the history of the world. agreements under South African court system  , 8% Cass R. Sustain, Harvard law scholar  North West, 7% 2016 2017 2018 2019 2020 2021f 2022f 2023f Arbitration • The International Arbitration Act 15  , 5% of 2017 positions SA as a primary  , 2% seat for arbitration

Source: IMF, 2018; World Bank, 2018d; StatsSA, 2018b; OICA, 2018

10 11 3 SOUTH AFRICA INVESTOR ROADMAP Fast Facts on South Africa 3

Arts, culture and sports Quality of life Key highlights Residing and working in South Africa

South Africa is a great place to work, play and live. Its diverse climate and • South Africa is a vibrant multi-cultural society with geography offers a wide range of leisure activities from swimming, golfing, 11 official languages including: English, , cycling, mountaineering and more all year round. In general, South Africans are isiNdebele, isiXhosa, isiZulu, Sepedi, Sesotho, a very sports-enthusiastic nation, and avid followers of local and international Setswana, SiSwati, Tshivenda and Xitsonga. sporting events. • Johannesburg and Pretoria ranked amongst the top In addition to outdoor activities, its cultural diversity and cosmopolitan cities 23% of the most affordable cities (133 cities ranked in makes South Africa an exciting place to work and live. five continents).

South Africa’s rich cultural heritage manifests itself in the country’s creative • South Africa provides a wide choice of quality industry that has produced world class artists, musicians, writers and actors. accommodation, both to rent or buy, with property ranking 11th in the HSBC’s Expat Explorer Survey 2018.

Select arts, culture and sports personalities • There are excellent private schools including access to alternative teaching philosophies such as Montessori Sport and Waldorf. There are also international schools in the major cities which follow the American, British, French or German curriculum or the International Baccalaureate.

• 8% of South African universities rank in the top 16% of universities in the world.

Bryan Habana Chad le Clos Gary Player Caster Semenya Wayde van Niekerk • South Africa has well-trained medical staff with world (rugby player) (swimmer) (golfer) (runner) (runner) class private hospitals and clinics.

• South Africa ranks in the top 20 out of 149 countries Film/TV Literature in the WEF’s 2018 Global Gender Gap report, which ranks countries on progress towards gender parity.

• South Africa has been declared one of the 18 megadiverse destinations in the world. The country is home to the famous Big Five (rhino, elephant, lion, leopard and buffalo).

Gavin Hood Trevor Noah Charlize Theron John Maxwell Zakes Mda • 66 sites in South Africa have Blue Flag status for (producer/director) (comedian) (actress) Coetzee outstanding environmental management of coastlines and coastal waters for tourism and development. Music Fashion • A day at SA’s beaches costs an average of almost half of what is costs in Norway, rated the world’s most expensive beach.

• South Africa is home to 10 UNESCO World Heritage Sites.

Black Coffee Yvonne Chaka Chaka Ladysmith Black Trevor Stuurman David Tlale

Mambazo Sources: Conservation International, 2018; Wildlife and Environment Society of South Africa, 2018; TravelBird, 2017; Economist Intelligence Unit, 2018b; HSBC, 2018; The Times Higher Education World University Rankings, 2019; World Economic Forum, 2019; UNESCO, 2019

12 13 3 SOUTH AFRICA INVESTOR ROADMAP Fast Facts on South Africa 3

Education South Africa’s 5 largest universities by students enrolled, 2017 Key highlights

Committed to universal access University No. of students University of South Africa (Unisa) 200 546 The South African government is committed to providing quality education to every child in the country and is Tshwane University of Technology 45 990 working towards achieving universal access to education. North West University 45 052 In order to achieve this goal, the government launched no- fees schools in the poorest districts of all nine provinces. 39 709 In addition, the government is committed to providing free University of Johannesburg 38 800 tertiary education for students from poor and working class households. South Africa’s 5 largest universities by graduates, 2017 Primary and secondary education in numbers University No. of graduates • 25 762 schools University of South Africa (Unisa) 44 842 • 23 796 public schools • 1 966 independent schools North West University 16 004 • 12.9 million learners Tshwane University of Technology 14 754 • 12.5 million learners in public schools • 0.4 million learners in independent schools University of Pretoria 13 273 • 433 320 educators University of Johannesburg 13 004 • 399 156 educators in public schools • 34 164 educators in independent schools • 29.8 learners per educator Enrollment rates, 2010-17 • 31.3 learners per educator in public schools

• 11.8 learners per educator in independent schools. 98.7 88.7 98.8 90.1 98.8 90.5 98.8 90.3 99 90.7 98.8 90.2 98.9 89.6 99 90.4

Tertiary education in numbers

•

26 public universities % of age group

• 731 601 students* enrolled 2010 2011 2012 2013 2014 2015 2016 2017 • The largest share of students are enrolled in Humanities  Compulsory education (7-15 years old)  Secondary (14-18 years old) • 210 931 graduates • Science, Engineering and Technology accounts for the Students and graduates enrolled by field, 2017 largest share of graduates

• Unisa is the largest open distance learning institution in 31% 28% 30% 29% Africa 21% 23% 22% • Unisa is the longest standing dedicated distance 16% education university in the world.

Education Business Science, Other Management Engineering & Humanities Technology  Students enrolled by field  Graduates by field

* Full-time equivalent students Source: Higher Education Data Analyzer, 2018

14 15 4 SOUTH AFRICA INVESTOR ROADMAP Economic Overview of South Africa 4

Economic Overview of South Africa

National economic overview FDI inflows, 2017 vs 2018 Sectoral contribution of national GDP, 2018 Key highlights US$7.1bn  Agriculture, forestry and fishing, 2% • The services sector is by far the largest contributor to the  Mining and quarrying, 8% South African economy, accounting for close to 70% of  Manufacturing, 13% value add.  electricity, gas and water, 4% US$1.3bn • The largest sub-sector of the economy is finance, real  Construction, 4%  wholesale, retail, motor trade and estate and business services, accounting for one-fifth of 2017 2018 value add. accomodation, 15%  Transport, storage and • The fastest growing sectors over the last 10 years were FDI inflows by sector, 2017 communication, 10% agriculture, forestry and fisheries; construction; and  Finance, real estate and business general government services. Sector Share of FDI services, 20% • The services sector is the largest contributor to national Finance, insurance, real estate and 44.6%  General government services, 18% employment. business services  Personal services, 6%

• The three largest employment creators between 2013 Mining and quarrying 21.2% and 2018 were finance; construction; and community Manufacturing 15.9% National employment by sector, Oct-Dec 2018 and social services.  Agriculture, 5% Transport, storage and communication 10.2%  Mining, 2% • In 2018, South Africa witnessed a rapid increase in FDI Wholesale and retail trade, catering and 6.5% inflows, accounting for close to 18% of FDI inflows into  Manufacturing, 11% accommodation Africa. The strong increase in investment inflows was  Utilities, 1% driven by investments in mining, petroleum refining, food Community, social and personal services 1.4%  Construction, 9%  Trade, 20% processing, ICT, and renewable energy. Construction 0.1%  Transport, 6% Agriculture, forestry, hunting and fishing 0.1%  Finance, 16% Electricity, gas and water 0.1%  Community and social services, 22%  Private households, 8% FDI inflows by origin, 2017

Country Share of FDI 10-year average growth of top 3 sectors, 2008-17 UK 27.0% Netherlands 18.0% Agriculture, forestry and fishing 3.7% Belgium 14.8% Construction 3.3% US 6.7% General government services 2.7% Germany 4.9% China 4.7% Japan 3.8% Australia 3.6% Luxemburg 2.7% Mauritius 1.1% Rest of world 12.7%

Sources: StatsSA, 2018 & 2019; UNCTAD, 2019

16 17 4 SOUTH AFRICA INVESTOR ROADMAP Economic Overview of South Africa 4

Provincial economic overview Provincial contribution to GDP, 2017 As we expand our Key highlights  Gauteng, 34%  KwaZulu-Natal, 16% presence in Southern • Gauteng (34% of national GDP), KwaZulu-Natal (16%) • Gauteng and KwaZulu-Natal (KZN) have strong  western Cape, 14% and the Western Cape (14%) are the three largest manufacturing industries. In Gauteng, metal products, Africa, Hisense remains  eastern Cape, 8% regional economies in terms of contribution to the food and beverages, chemicals, mining-related committed to providing  Mpumalanga, 8% national economy. manufacturing and the automobile sector are leading solutions that will enable  Limpopo, 7% sub-sectors of the province’s manufacturing sector. In • The economies of all provinces are well diversified,  North West, 6% growth and sustain KZN the automobile sector, pulp and paper products, without showing an overdependence on a single industry.  Free State, 5% economic development. rubber and plastics, chemicals and petro-chemicals,  Northern Cape, 2% • North West, Northern Cape, Mpumalanga and Limpopo food and beverages, as well as textiles and clothing are Hisense Middle East-Africa have strong mining clusters. key sub-sectors. Holdings

• Gauteng and Western Cape are home to well developed • In all provinces the tertiary sector recorded the strongest and mature financial services, real estate and business average growth between 2010 and 2017. service sectors.

Sectoral GDP composition by province, 2017 Provincial employment by sector, Q4 2018

6% 9% 9% 9% 9% 8% 9% 8% 12% 13% 12% 12% 17% 17% 17% 21% 19% 23% 4% 7% 8% 19% 20% 18% 22% 5% 8% 6% 4% 23% 5% 12% 28% 32% 24% 27% 7% 13% 13% 17% 15% 25% 7% 16% 13% 8% 19% 6% 24% 14% 10% 22% 4% 19% 5% 12% 15% 11% 6% 5% 11% 10% 13% 12% 3% 6% 6% 11% 7% 3% 15% 5% 9% 12% 3% 10% 5% 7% 24% 21% 4% 8% 18% 14% 3% 15% 3% 15% 5% 19% 4% 20% 20% 17% 4% 17% 14% 3% 20% 20% 3% 3% 13% 4% 8% 9% 8% 4% 10% 4% 5% 4% 9% –1% –1% 7% 3% 5% 9% 6% –1% 3% 11% 3% 12% 4% 22% 34% –1% 8% 6% 29% 9% 3% 8% 18% 24% 13% 9% –1% 15% 13% 7% 15% 11% 9% 13% 6% 13% 3% 12% 2% 12% 8% 3% 8% 7% 8% 9% 4% 5% 4% 6% 5% 6% 2% 3% 1% 3% 3% 1%– –1% WC EC NC FS KZN NW GP MP LP WC EC NC FS KZN NW GP MP LP

 Agriculture, forestry and fishing  Mining and quarrying  Manufacturing  Electricity, gas and water  Agriculture  Mining  Manufacturing  Utilities  Construction  Trade  Transport  Construction  Trade, catering and accommodation  Transport, storage and communication  Finance  Community and social services  Private households  Finance, real estate and business services  Personal services  Gerneral government services Source: StatsSA, 2018 & 2019

18 19 4 SOUTH AFRICA INVESTOR ROADMAP Economic Overview of South Africa 4

Provincial economic overview (cont.) Northern Cape Most important manganese mining region in the world

 Agriculture, forestry and fishing, 8%  Mining and quarrying, 22% R96bn  Manufacturing, 3% Agriculture, forestry Mining and Manufacturing Trade, catering and Finance, real Limpopo  Trade, catering and and fishing quarrying accommodation estate and business accommodation, 12% services  Finance, real estate and business services, 13%  other, 42% Gauteng Commercial hub of the North West* Mpumalanga country with the largest Free State Major producer of potatoes, presence of MNCs in Africa Gauteng* grains and vegetables  Agriculture, forestry and  Agriculture, forestry and fishing, 1% fishing, 5% R1 594bn**  Mining and quarrying, 3%  Mining and quarrying, 11%  Manufacturing, 15% R235bn  Manufacturing, 11%  Trade, catering and Free State  Trade, catering and accommodation, 14% KwaZulu-Natal* accommodation, 14%  Finance, real estate and  Finance, real estate and business services, 24% business services, 16%  other, 44% Northern Cape  other, 42%

KwaZulu-Natal Key manufacturing North West Most important platinum region and home to mining region in the world Africa’s largest port  Agriculture, forestry and  Agriculture, forestry and Eastern Cape fishing, 3% fishing, 4%  Mining and quarrying, 34% R746bn  Mining and quarrying, 2% R301bn  Manufacturing, 5%  Manufacturing, 18%  Trade, catering and  Trade, catering and accommodation, 12% accommodation, 15% Western Cape  Finance, real estate and  Finance, real estate and business services, 13% business services, 17%  other, 33%  other, 44%

Western Cape Strong services, agricultural Eastern Cape Strong automotive clusters Mpumalanga Key coal mining and forestry Limpopo Key producer of tropical and manufacturing sectors region fruits and second most  Agriculture, forestry and important PGM producer in  Agriculture, forestry and fishing, 2%  Agriculture, forestry and the country fishing, 4%  Mining and quarrying, 0% fishing, 3%  Mining and quarrying, 0%  Manufacturing, 13%  Mining and quarrying, 24%  Agriculture, forestry and R633bn  Manufacturing, 15% R359bn  Trade, catering and R349bn  Manufacturing, 13% R340bn fishing, 3%  Trade, catering and accommodation, 20%  Trade, catering and  Mining and quarrying, 29% accommodation, 17%  Finance, real estate and accommodation, 15%  Manufacturing, 3%  Finance, real estate and business services, 19%  Finance, real estate and  Trade, catering and business services, 25%  other, 46% business services, 12% accommodation, 15%  other, 38%  other, 34%  Finance, real estate and

* Icon indicates largest contributing province of respective sectors business services, 15% ** Provincial GDP  other, 36% Source: StatsSA, 2019

20 21 5 SOUTH AFRICA INVESTOR ROADMAP Sector Overviews & Opportunities 5

Sector Overviews & Opportunities South Africa’s diverse economy offers an array of opportunities for investment. While mining and mineral beneficiation remains an important sector for export earnings and growth, business is increasingly geared towards services and manufacturing industries.

Five sector clusters have been identified for investment, in order to increase the country’s industrial base in critical sectors of production and value-added manufacturing, to diversify South Africa’s exports, and to contribute to job creation in the economy.

Waste Economy

Clean Energy, Energy & Resource Water and Efficiency, and Clean Transport Sanitation

Green Economy

Electronics, White Goods and Fuel Cells Economy Aerospace and Defence Industries Advanced Global Business Services Services Manufacturing Chemicals and Sector Advanced Materials Priorities Pharmaceuticals Film, TV and and Medical Devices Documentaries

Manufacturing Leather, Footwear, Resource-based Metals Fabrication Clothing and Forestry, Economy Textiles Pulp, Paper Agro-Processing Cosmetics Automotive, Yellow and Furniture Metals and Heavy Mining & Mineral Aquaculture Vehicles Beneficiation Rail

22 23 5 SOUTH AFRICA INVESTOR ROADMAP Sector Overviews & Opportunities 5

Green Economy

Clean Energy, Energy & Resource Waste Economy Water and Sanitation Efficiency and Green Transport

Thanks to its climatic conditions South Africa has one In 2016, South Africa generated 111 million tonnes of As South Africa is a water-scarce country and is ranked of the highest potentials for solar and wind energy. The waste, of which approximately 75% was landfilled and as the 30th driest country in the world, there is a high Government is keen to leverage this great renewable only 25% reused or recycled. General waste was the most demand for innovative solutions for water management. It energy potential to reduce the country’s current over- recycled type of waste with close to 40% being recycled, is projected that water demand will outstrip supply by 17% reliance on fossil fuels for electricity generation and to set while less than 1% of hazardous waste was recycled in by 2030. the country on a carbon-light growth path. 2017. The 2017-18 drought conditions in the Western Cape have Utility-scale renewable projects are driven by the South African companies, such as waste-to-protein highlighted the need for more efficient water usage and Renewable Energy Independent Power Production company AgriProtein, have developed innovative and drought management to reduce per capita consumption. Procurement Programme (REIPPPP), which has attracted sustainable solutions for waste treatment, that address According to the Department of Water and Sanitation, investments of close to R202bn since its inception in 2011 some of the country’s most pressing environmental water losses amount to 37% of water consumption. Given and are supported by the Government. challenges. scarcity of supply, water loss prevention is crucial for South Rooftop solar PV and energy efficiency technology are New and changing legislation and regulations will unlock Africa. among the key drivers for energy services in South Africa. a number of key waste streams, notably organics. These The commercial and industrial sector presents major changes aim to simplify rules and procedures for alternative opportunities for rooftop solar and energy efficiency waste treatment technologies and activities. Opportunities technology due to their relatively high electricity costs, • Supply and manufacturing of advanced water large use of electricity and favourable size of premises. technologies Opportunities • Supply and manufacturing of water-efficient devices • Development of solutions for green waste, abattoir Opportunities waste, the organic fraction of solid waste • Supply of smart water metering systems • Roll-out of renewable energy technologies • Processing/recycling of e-waste • Provision of technologies and services for water reuse in • Adoption of energy efficiency technologies the industrial sector • Thermal treatment technologies for dirty mixed plastics, • Solar energy technologies and components refuse derived fuels and thermoform PET • Supply of alternative water supply technology manufacturing (solar panels, solar water geysers, • Waste related infrastructure development, expansion and • Water efficiency technology for the agricultural industry. timers, etc.) maintenance • Wind turbines and components manufacturing • Pyrolysis/gasification; anaerobic digestion • Pyrolysis/gasification; anaerobic digestion • Recycling (plastics, paper, glass, e-waste, etc. • Energy storage.

24 25 5 SOUTH AFRICA INVESTOR ROADMAP Sector Overviews & Opportunities 5

Services

Ocean Economy Global Business Services Film, TV and Documentaries

South Africa is committed to leverage its opportune South Africa has a mature and globally competitive market With excellent film infrastructure, world-class studios and location and extensive coast line to grow its Ocean for Global Business Services which is supported by world- hard-working crews, South Africa has established itself Economy. The Government’s strategic support programme class business infrastructure. Operating costs are up to as a credible and competitive film and TV production called Operation Phakisa, has set a target to grow the 50-60% lower than in England and Australia, with key destination. Ocean Economy’s GDP contribution to R177bn by 2033, supporting incentives reducing these to similar cost ranges A range of award-winning movies and TV series have been equivalent to a 350% increase in its total value-add in as India. filmed and/or produced in the country. Optimal climatic 2016. Growing at 22% annually and faster than global industry conditions and a choice of highly diverse locations add to Recent gas condensate discoveries off the coast of peers, the sector continues to attract international the country’s attractiveness for filmmakers. South Africa are set to boost the country’s role in the investments in industry verticals such as technology and South Africa’s competitive overhead costs, highly capable global hydrocarbon industry. Its strategic location allows communications, financial services, legal and healthcare, talent pool, comparable internet speeds and growing South Africa to serve all major oil fields in West and East creating quality jobs. number of domestic distribution platforms position the Africa. Five of the country’s major ports provide excellent There is a move towards delivery of next-generation country well for opportunities in the global US$270bn oil rig and drillship repair and maintenance services at contact centre and digital services, with a core strength animations industry. competitive rates. being a high quality multichannel customer experience, Local boat and small shipbuilders are highly sophisticated supplemented by deep analytics. and globally competitive, supplying crafts to a wide range Opportunities of clients across the world. • Development of feature films and documentaries (with Opportunities these being the largest segments of the local film • Establishment of call centres industry) Opportunities • Back-office processing facilities • Although animation is the smallest segment in the • Repair and maintenance of ships and drilling rigs, industry (around 3%), the proliferation of new technology supported by extensive infrastructure and deep supply • Provision of shared corporate services and skills can unlock significant growth chains • Enterprise solutions such as fleet and asset • Consultancy and training services provision for business • Investment in next-generation ship and boat-building management services and skills development programmes to support emerging technology services • Legal process outsourcing filmmakers and fast-track transformation in the industry • Bunkering, re-supply and medical support services • Evolution of the industry from voice-driven towards omni- • Opportunities across the value chain, including film • Provision of storage and logistics services channel delivery of services concept development, film product packaging and distribution, private equity financing, pre- and post- • Port operations consulting services • Analytics solutions services enabled by South Africa’s skills capability, including root cause analysis, predictive production management companies and marketing • Provision of maritime training services analytics, knowledge process outsourcing and digital services • Opportunities for private equity investment in local and investment platforms. • Post production and visual effects studios to enable pan-African project development end-to-end production in South Africa

• Oil and gas exploration and support opportunities. • Investing in new specialised studio space

• Skills development and training across the industry.

26 27 5 SOUTH AFRICA INVESTOR ROADMAP Sector Overviews & Opportunities 5

Resource-based Economy

Agro-processing Aquaculture Mining and Mineral Beneficiation Forestry, Pulp, Paper and Furniture

South Africa’s commercial agricultural sector is well- South Africa’s aquaculture sector is relatively small, The mining and mineral beneficiation sector plays a pivotal South Africa’s forestry industry is concentrated in the developed and globally competitive. Thanks to diverse contributing about 0.8% to the country’s fish production, part in South Africa’s economy. The sector contributes following provinces: Eastern Cape, KwaZulu-Natal, climatic and geological conditions, South Africa is well and accounting for less than 0.2% of the national GDP. more than 7% to the local economy and provides inputs Limpopo, Mpumalanga and the Western Cape. Pine suited for the cultivation of a wide range of crops and However, given its growth potential, aquaculture has been into various manufacturing sectors including metal (49.6%), eucalyptus (43%) and wattle (7%) are the most products including grains, sugarcane, fruits, vegetables, earmarked as a priority sector by the government and is a fabrication, automotive and jewellery manufacturing. commonly cultivated tree species on South African nuts, beef, poultry, mutton, wool, fish and seafood. target sector of Operation Phakisa. plantations. South Africa’s mineral reserves are among the most Located in the , South Africa Thanks to its natural resources, extensive coastline and valuable in the world. The country has the world’s largest South Africa has a well-established forestry sector with enjoys counter-seasonality to the Northern Hemisphere, good water quality, South Africa is well equipped for reserves of platinum group metals (PGMs) and manganese, a fully-integrated value chain including pulp, paper positioning it well to supply lucrative consumer markets in aquaculture development. and some of the largest gold, diamonds, chromite ore and and furniture manufacturing. In 2018, wood-related Europe and North America with its agricultural products. vanadium deposits. manufacturing contributed about US$10bn to the local South Africa is one of the largest producers and exporters economy. Pulp is a key product of the country’s forestry A sophisticated and competitive agro-processing industry, of abalone and is famous for its farmed premium abalone South Africa’s mining capabilities and experience make it industry. South African pulp manufacturers are highly with a fully-integrated value chain, has been built on South (Haliotis midae). The country produces about 1 700 tonnes a world leader in, for example, deep-level mining and the innovative and globally competitive. Africa’s diverse agricultural sector, accounting for 23% of abalone per year. Hong Kong is estimated to account premier source of mining-related skills in Africa. of the country’s manufacturing sector and making it the for 90% of South Africa’s annual abalone exports. Annual About 80% of South African plantations are certified under largest sub-sector of manufacturing. abalone exports to China (Mainland and Hong Kong) are the Forest Stewardship Council (FSC) system, providing estimated to reach US$135m in 2020. Opportunities the industry with sustainable raw material.

• Development of new resources (coal, manganese, PGM, Opportunities vanadium, etc) Opportunities Opportunities • Fruit and vegetable canning • Coal-bed methane • Sub-tropical and tropical fruit juice processing • Farming of freshwater and salt water species • Re-afforestation and new afforestation • Coal-to-liquid • Oil seed production, edible oil processing, oilcake • Supply of aquaculture equipment and technology • Timber construction – use of timber in construction • Carbon capture and storage • Processing of soya-based products • Supply of skills development programmes for • Manufacturing of Engineered Wood and Orientated • Grain sorghum production, malt industry development • Coal ash beneficiation (cementitious input material aquaculture Strength Board (OSB) • Processing of organic, vegan/vegetarian products, production) • Supply of veterinarian services • Bio-refinery and transformative technologies dehydrated foods • Coal ash for acid mine drainage neutralisation • Walnut farming and processing • Supply of feed for aquaculture • Technical training (chemical engineers, technicians and • Supply of technologies aimed at enhancing artisans) • Expansion of dairy, bakery, confectionery production • Local feed production competitiveness • Meat processing, including ostrich meat • Supply of wood processing equipment • Supply of water purification and filtration technology • Downstream manufacturing (foundries and mini-mills) • Indigenous plant growing on a commercial scale • Spat breeding • Supply of pulp and paper manufacturing equipment • Extracting high-value additives, nutraceuticals • Nuclear fuel fabrication • R&D for packaging design/development • Non-edible oil processing • Processing and canning of fish and seafood • Establishment of smelters and downstream production • Manufacturing of school and office furniture. • Commercial planting of indigenous flowers • Supply of logistics services. • Production of titanium dioxide pigments • Production of crops for feedstock into biofuels • Development of linkages to the global energy storage production value chain • Wool production, and processing and manufacturing of • Value chain development for catalysts and fuel cell wool-based textiles manufacturing • Artemisinin and respective ingredients for anti-malaria medicaments • Development of ferrochrome production capacity • Flax production. • Jewellery manufacturing.

28 29 5 SOUTH AFRICA INVESTOR ROADMAP Sector Overviews & Opportunities 5

Manufacturing

Automotive, Yellow Metals and Leather, Footwear, Clothing and Textiles Rail Heavy Vehicles

The South African Clothing, Textile, Footwear and Leather South Africa is home to Africa’s most advanced automotive South Africa’s railway network, the largest on the continent, (CTFL) manufacturing industry is well developed and industry. Seven major OEMs with operations in the country is the domain of state-owned and ranges from the production of synthetic and natural inputs produce more than 50% of all vehicles produced in the Passenger Rail Agency of South Africa (PRASA). Over to final clothing and shoes. Africa. In 2018, over 550 000 vehicles were registered in the last five years, about 220 million tonnes of freight were Approximately 4 500 formal companies of various sizes the country, more than anywhere else on the continent. transported by rail per year, accounting for approximately are involved in the CTFL manufacturing sector. The local With approximately 370 000 passenger vehicles sold per 25% of overall freight movements in South Africa. manufacturing industry is mainly concentrated within two year, South Africa accounts for more than 40% of Africa’s Over the past six years, Transnet’s capital investments coastal regions, KwaZulu-Natal and Western Cape, as well passenger vehicle market. averaged R30bn per year. In the next 30 years, Transnet as in Gauteng. The Eastern Cape is an emerging hub in the In 2017-18, the major vehicle manufacturers recorded plans to invest R167bn into rail infrastructure and R283bn sector, thanks to its world leading mohair production. more than US$1bn in capital expenditure. Investments in in rolling stock infrastructure. In addition, PRASA intends to Household spending on clothing and footwear is expected capacity expansion will increase the demand for inputs procure 1 200 new trains consisting of up to to increase by approximately 25% to R125bn in the next including parts and components. 7 224 rolling stock over a 20-year period, providing major three years. stimulus to the sector. The South African Automotive Masterplan (SAAM) 2035, provides a clear vision and direction for South Africa’s automotive industry. The well-developed SAAM contributes Opportunities Opportunities to the attractiveness and competitiveness of local industry • Spinning, weaving and finishing of textiles by offering incentives and support to OEMs and suppliers. • Railway parts and components

• Knitted and crocheted fabrics and articles • Advanced materials and composites

• Manufacturing of wearing apparel Opportunities • Smart signalling and operations automation

• Dressing and dying of fur • Engines, radiators, filters • Bulk cars and dedicated rolling fleets

• Leather skins and hides beneficiation • Air conditioning/climate control systems • Refurbishment and maintenance services

• Leather seat cover manufacturing for the automotive • Alarms and tracking devices • Security equipment industry • Axles and transmission shafts • Route design and network planning services • Manufacturing of protective clothing for hazardous • Body parts and panels • Automatic/smart fare collection systems industrial environments (e.g. mining and chemicals industry) • Catalytic converters, silencers, exhaust systems and • Rolling stock depot design services components • Manufacturing of school uniforms • Train station re-design and upgrade services. • Seats and related parts, seatbelts, leather covers • Manufacturing of uniforms for military and law enforcement • Suspension and shock absorbers, springs and other related parts • Manufacturing of work-wear. • Steering wheels, columns and boxes

• Ignitions, starting equipment, gauges and instrument parts

• Lighting equipment

• Wiring harnesses, instrument panels, vehicle interiors, electronic drive components and parts.

30 31 5 SOUTH AFRICA INVESTOR ROADMAP Sector Overviews & Opportunities 5

Manufacturing (cont.) Advanced Manufacturing

Cosmetics Metals Fabrication Pharmaceuticals and Medical Devices Chemicals and Advanced Materials

In 2018, the sector recorded close to US$3.2bn in revenue South Africa’s metals fabrication sector is the most South Africa’s pharmaceutical and medical device sectors South Africa is home to Africa’s most advanced and making it Africa’s largest market for cosmetics and advanced and diverse metals fabrication sector in Africa. are the largest and most advanced in sub-Saharan Africa. largest chemicals sector, valued at about US$25bn. It is personal care products. Local household spending on The industry has major spill-over effects as top steel Pharmaceutical and medical device sales both have more estimated to be four times and thirteen times larger than personal care products is expected to grow by 25% over consuming industries including mining, construction, than doubled in the last 10 years and are expected to reach the chemicals markets of Nigeria and Egypt, respectively. the next five years. automotive, cables and structural steel contribute about R48bn and R19bn, respectively in 2019. The country’s chemicals industry is highly mature 15% to the country’s economy. South Africa has strong research and development (R&D) The country has advanced manufacturing capabilities, and diverse, spanning fuel and plastics fabrication to capabilities, and companies have in particular invested Local content requirements of various sectors, and strong including biotechnology manufacturing facilities. In pharmaceuticals, and supplies a wide range of industries. in R&D capabilities related to African hair and skin care demand in the automotive and infrastructure sector are addition, South Africa has strong R&D capabilities in the The sector has a fully-integrated value chain that includes products. Local expertise present opportunities for expected to drive the demand for metals fabrication going medical industry. the production of raw materials, intermediate products manufacturers to supply the global multi-billion dollar forward. and final chemical products. Given South Africa’s leading South Africa is the only Southern African Development African hair and skin care market. expertise in coal-to-liquid technology, its coal deposits Metal producers can draw from a sizeable domestic pool Community (SADC) member country that meets the present key inputs for the chemicals industry. South Africans have become more inclined to consuming of raw material reserves including iron ore and manganese. World Health Organization’s Good Manufacturing Practice organic skin and hair products, with close to one-quarter South Africa is the largest producer of manganese in standards. This positions South Africa as a gateway South Africa has developed advanced capabilities for claiming that natural, organic or environmentally-friendly the world and holds more than 70% of global identified to the Southern African market for manufacturers of the production of emerging materials including advanced considerations influence their purchasing decisions. The manganese reserves. pharmaceutical products. carbon materials and biodegradable materials. country’s high bio-diversity and unique floral kingdom offer It is forecasted that pharmaceutical sales will increase great opportunities to producers of organic products. by about 40% in the next five years. This is partly driven Opportunities Opportunities by the increase in lifestyle-related diseases including • Manufacturing and supply of railway tracks, slipways, hypertension, obesity and diabetes. The demand for • Manufacturing of: Opportunities locomotives and components generic drugs has risen rapidly in recent years, due to • organic, mineral or chemical fertilisers and nitrogen • Fragrance-free and high quality fragrance products for policy-led preferences and the domestic antiretroviral (ARV) compounds • Manufacturing and supply of structural steel distinct niche segments treatment programme. • polymers including polyethylene used in packaging, • Manufacturing and supply of pumps and valves for the bags and injection moulding applications • Personal care products for the male market Opportunities water distribution sector • painting and coating (including for automotive industry) • Manufacturing and supply of medicinal drugs for • Development and production of ethnic skin and hair • organic surface active agents • Manufacturing and supply of sheet metal and stainless diseases such as HIV/AIDS, malaria, tuberculosis, products • biodegradable materials steel for automotive industry diabetes and other lifestyle diseases • bio-composites • Supply of quality affordable beauty products • Development and manufacturing of active • Scrap metal recycling. • prepared binders for foundry moulds or cores pharmaceutical ingredients • Manufacturing of cosmetic products, packaging and • proteins and peptones distribution across retail stores • Development and manufacturing of generics • polypropylene and polyvinyl chloride beneficiation • Supply of tele-medical applications • Production of ingredients that comply with international • composite materials, including bio-composites market requirements in the production of organic or • Supply of niche pharmaceuticals such as alternative • titanium oxide pigments natural cosmetics products healing methods • speciality and fine chemicals • Manufacturing of biological-based drugs and bio- • primary polyacetals/polyethers • Production of multifunctional products with a focus upon therapeutics • nitrites and nitrates wellness • Manufacturing of medical consumables • carbon fibres • engineering plastics - polyamides • Safety testing of cosmetic products produced locally. • Development and supply of innovative medical technology • Fluorspar beneficiation for production of fluorochemicals • Servicing and maintenance of medical devices • Silica sand beneficiation for production of fibre glass. • Biotechnology and nanotechnology • Manufacturing and processing of cannabis oil.

32 33 5 SOUTH AFRICA INVESTOR ROADMAP Sector Overviews & Opportunities 5

Advanced Manufacturing (cont.)

Electronics, White Goods and Fuel Cells Aerospace and Defence Industries

South Africa has a diverse electronics sector that South Africa is home to sub-Saharan Africa’s most ranges from electrical machinery, household appliances, advanced and largest defence sector, with a number of telecommunication equipment to consumer electronics. globally-competitive military equipment and aerospace The sector manufactures more than R90bn worth of manufacturers. Annual revenues of the aerospace and electrotechnical equipment per year. defence industry amount to about US$2.3bn.

South Africa has advanced electronics manufacturing South Africa is also among the world’s leading capabilities that comply with international ISO standards. manufacturers of armoured vehicles. In 2017, it exported The country’s firms offer an integrated and well-established armoured vehicles valued at about US$100m. electronics value chain that includes design, engineering, South African defence equipment manufacturers have manufacturing, testing, implementation and maintenance. developed world-class capabilities in armed unmanned Having pioneered the technology, South African companies aerial vehicles (UAVs) development and manufacturing, a are world leaders in smart and pre-paid electricity meter rapidly growing multi-billion dollar segment of the defence technology, positioning the country well in this multi-billion industry. This makes South Africa a member of a small dollar segment. group of countries with these capabilities.

South Africa accounts for more than 90% of global platinum group metals (PGMs) reserves, which are a key Opportunities input in the manufacturing of emerging fuel cell technology. • Ground support equipment

• Passenger transport vehicles

Opportunities • Cargo de-grouping and logistics

• Contract manufacturing of electronics • Air traffic control systems

• Manufacturing of: • Instrument landing systems

• household appliances • Aircraft technician training systems

• electrical machinery • Drone components, systems and training

• consumer electronics • Engine management systems

• security equipment • Precision tooling

• telecommunications equipment • Maintenance, repair and overhaul (MRO) certification

• metering equipment • Flight training systems.

• inputs including electric cables.

34 35 6 SOUTH AFRICA INVESTOR ROADMAP Doing Business in South Africa 6

Doing Business in South Africa

How to invest in South Africa: key steps

Opportunity Go Investment Investment identification ahead preparation execution

1 C D A A C Location identification E 2 C C HR C 3 T A Resourcing D O D requirements 4 D HR S IT C IT D R A D A Compliance C and legal affairs C ISA

InvestS Investor testimonials

36 37 6 SOUTH AFRICA INVESTOR ROADMAP Doing Business in South Africa 6

Starting a Business

Registration process Business vehicles

Companies and individuals can start a business in South Africa through an There are a number of different business vehicles or entities that one can use easy inexpensive registration process. The online registration facility allows for to do business in South Africa, ranging from companies incorporated under the registration of a company from anywhere in the world. Companies Act 71 of 2008 to partnerships, trusts, sole proprietors and external companies or branches of foreign companies. South Africa has focused on reducing red tape for starting a business and has formed a partnership between the Companies and Intellectual Property Commission (CIPC) and the local private sector banks, which allows bank clients Sole Partnership Profit Company Non-Profit Business Trust Branch of to register a business and open a bank account in 24 hours. Proprietorship Companies Foreign Company

Establishment/ No registration No registration Notice of Notice of Trust deed to Register as Four key steps for registering a company Formation required required incorporation incorporation be lodged with an external Requirements and and Master of the company with Memorandum Memorandum High Court CIPC 1 Online through: of Incorporation of Incorporation • Local banks - First National Bank, ABSA, , Nedbank; or needs to be filed needs to be filed Reserve • CIPC (www.cipc.co.za) with the CIPC with the CIPC the company name Purpose Small profit- Joint venture Aims to earn Public benefit Trustees carry South African CIPC Self Service Centres and self service terminals: making business structure for profit through its or other social out business office or division owned and trade, business operations or cultural for benefit of of a foreign • Pretoria – Sancardia Shopping Centre, 1st floor, 541 Madiba Street, Arcadia operated by or profession objectives nominated company • Johannesburg – 17 Simmonds St, Marshalltown individual beneficiaries • Cape Town – Norton Rose House, Thibault Square, Cape Town Naming Not specified Not specified Private Must end with Not specified Not specified Convention companies end “NPC” 2 with “(Pty) Ltd” Public Provide details about: companies end Register the • Shareholder(s); with “Limited” company • Director(s); and Legal Nature No separate No separate Separate legal Separate legal Not separate Not separate • Company details legal personality legal personality entity entity legal entity legal entity

Members One Two or more One or more Three or more No limit on Extension of partners directors directors the number of foreign office 3 trustees Key documents: Liability No limited Liability is jointly Limited liability Limited liability Limited liability Foreign company Open a bank • Director’s proof of identity liability or shelter and severally liable account • South African company registration documents from risk shared between partnership • Operating business address Advantages Easy start- Limited external Bears its own Tax exempt Better tax Easy start-up up and direct regulation liability or risk for status can be planning can be and no branch 4 control its actions obtained achieved profit tax Disadvantages Unlimited There is no Subject to Fund-raising can High headline tax Foreign company Register for • Online registration with the South African exposure to perpetual many legal be a challenge rate of 45% liable for risks in liabilities and succession requirements South Africa income tax Revenue Service (SARS) lawsuits

38 39 6 SOUTH AFRICA INVESTOR ROADMAP Doing Business in South Africa 6

Telecommunications Please refer to p. 85 for indicative South Africa has one of the most advanced telecommunications industries in the costs per operator. Cost of Doing Business continent, with high mobile penetration (South Africa ranks 9th in the world for mobile subscriptions per 100 people), growing internet penetration, and growing infrastructure network. The Independent Communications Authority of South Reducing the cost of doing business: a Africa (ICASA) regulates telecommunications to ensure affordable services that national priority are high quality. South Africa in partnership with the World Bank, has ICT price basket, 2008-17 a national reform programme targeted at improving 45 competitiveness of operating a business in the country and 40 to create an enabling environment for investment. 35 30 The country’s economic policies recognise that key 25 to creating an expanded and inclusive economy that 20 generates significant growth and employment, is reducing 15 Price (US$) the cost of doing business. 10 5 Government has prioritised some of the key costs 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 that impact on the competitiveness of the business environment, namely, input costs, particularly those prices  South Africa  Brazil  Malaysia  Turkey that are administered by the state or state-owned entities, as well as regulations that constrain business activity. There has been a sustained decrease in telecommunication costs in South Africa as access and use of telecommunications have increased. This decrease is best demonstrated by the ICT price basket, which includes the price of fixed Targeting best practice telephone, mobile and fixed broadband where South African telecommunication South Africa is targeting to be amongst the top 50 costs have almost halved since 2008 and continue on a downward trend. countries in the world on the World Bank’s Ease of Doing Business ranking by 2022.

What follows is an outline of South Africa’s key business Electricity input costs over time or in relation to peer economies, Please refer to p. 82 for indicative which highlight that the country is not only on a path South Africa has five simple procedures to connect electricity, which reduces costs per region. of continuous improvement, but compares favourably the cost of getting electricity. These procedures have improved over time, with a with some peer economies. The cost elements reviewed 13% improvement between 2015 and 2018 in global best practice for electricity include: connection procedure, ease of connection, cost, reliability of supply and transparency of tariff index. • Telecommunications • Electricity The country was ranked 20th in the world for installed solar energy in 2016 • Property and there is a strategy to increase the contribution of renewable energy to the • Water national installed energy mix, which is also expected to have an impact on cost • Transport and sustainability of the energy resource. • Fuel. Average electricity cost, 2018

18 More detailed indicative costs of these inputs are outlined 16 in Addenda A-J. 14 12 10 8 6

US cents/k W h 4 2 0 South Africa Brazil Malaysia Turkey

Sources: ITU, 2018; World Bank Doing Business, 2018

40 41 6 SOUTH AFRICA INVESTOR ROADMAP Doing Business in South Africa 6

Property Transport Please refer to p. 82 for indicative Although on average South African property costs are more than 30% of gross The South African government recognises the importance of the country’s costs. income, these costs have been declining since 2015. The largest decline in costs transport sector to global competitiveness, investment attractiveness and has been in the industrial property sector. economic growth. According to the World Bank’s Logistics Performance Index, which measures dimensions of trade, including timeliness, ease of arranging The emergence of fast-evolving online property portals are expected to further shipments and customs performance – all which impact on efficiency and thus decrease operating property costs by streamlining processes and making cost – South Africa has been amongst the top 17% of countries in the world transactions more efficient. between 2012 and 2018. Property operating costs as a percentage of gross income, 2016-18 3.6 40% 3.5 35% 3.4 30% 3.3 25% 3.2 3.1

20% Score 15% 3.0 10% 2.9 5% 2.8 0% 2.7 All Property Retail Office Industrial South Africa Malaysia Brazil Turkey

 2016  2017  2018 Average Logistics Performance Index, 2012-18

Water Fuel Please refer to p. 84 for indicative Please refer to p. 84 for indicative South Africa ranks second, when compared to peer economies, on the reliability The South African fuel price is adjusted monthly based on a number of factors costs. costs per region. of water supply. To promote water use efficiency water tariffs are charged on a largely influenced by the international oil price and the rand/US-dollar exchange sliding scale per kilolitre of water used. rate. The basic oil price is calculated based on the costs of transporting fuel products to South Africa as well as local levies and a retail margin. Thus the South Africa is an arid country and drought conditions have resulted in South African fuel price follows the trend of the international oil price. increases in water costs in some cities. However, there has been a concerted effort to encourage businesses to be more water resilient through managing Average fuel prices, 2014-18

consumption, re-using water and finding alternative ways of harvesting water R3 000 through desalination and ground water optimisation. R2 500

Government has a programme of diversifying municipal water supply in order to R2 000 manage supply and cost. R1 500 Water tariffs vary across the country per municipality.

equivalent R1 000

Water consumption tariff per month: major cities in comparative countries R500

ZAR per barrel/or barrel barrel ZAR per barrel/or R0 6 2014 2015 2016 2017 2018 5 3 4  Petrol Unleaded 95  Petrol Unleaded 93 3  Diesel 500 PPM  Diesel 50 PPM  Brent Crude 2 US$/m 1 0 3 3 3 15m 50m 100m Consumption tarriff per month in US$/m3

 Johannesburg  Istanbul  Kuala Lumpur  Rio de Janeiro

Sources: SAPOA; IBNET Sources: World Bank Logistics Performance Index, 2018; Statista, 2019; Automobile Association of South Africa

42 43 6 SOUTH AFRICA INVESTOR ROADMAP Doing Business in South Africa 6

Labour Costs and Skills Availability

Labour force and employment overview Employment by sector, Q4 2018 Skills pipeline Labour relations

As of December 2018, 38.1 million South Africans were of  Community and social South Africa’s universities produce more than 200 000 Employment equity working age (15-64 years). The country’s labour force had services, 22% graduates per year. The largest share of students graduate The Employment Equity Act requires designated employers marginally increased to 22.7 million during the last quarter  Trade, 20% in Science, Engineering and Technology, followed by (defined as an employer with at least 50 employees, or of 2018. According to StatsSA, 16.5 million South Africans  Finance, 16% Business and Management Sciences. minimum annual turnover set by the Department of Labour) worked at the end of 2018. Community and social services,  Manufacturing, 11% Between 2014 and 2017, the number of graduates in the to compile and implement an Employment Equity Plan trade as well as finance are the largest contributors to  Construction, 9% various fields grew between 11% and 20%. aimed at promoting equal opportunities and affirmative national employment accounting for more than half of total  Private households, 8% action to eliminate discrimination in the workplace. The employment.  Transport, 5% Graduates by field, 2017 Act is intended to redress the employment disadvantages  Agriculture, 5% In Q4 2018, unemployment declined marginally to 27.1%. of black people, women and those with disabilities. A  Mining, 2%  Science, Engineering In order to address the country’s unemployment challenge, designated employer is required to implement affirmative  Utilities, 1% and Technology, 29% the government in partnership with the private sector has action measures for designated groups in order to achieve  Business/Management, embarked on a number of initiatives and programmes that employment equity. Employment costs as share of total business 28% focus on employment creation. expenditure by industry, Q2 2018  other Humanities, 22%  education, 21% Trade unions Community services 32% Cost of remuneration Trade unions play an important role in South Africa’s labour Real estate and other business services 32% relations. There are three major union federations in South The South African government has introduced a minimum Mining 19% Africa, whose affiliates represent a broad spectrum of wage of R20 an hour or R3 500 per month, effective Construction 18% industry: 1 January 2019. Transport and communication 17% • Congress of South African Trade Unions (Cosatu) South Africa has a relatively low employment cost as a • Federation of Trade Unions of South Africa (Fedusa), and All industries 14% Number of graduates, 2014-17 2014-17 share of total business expenditure compared to its peers. % change • National Council of Trade Unions (Nactu). Utilities 12% Especially in trade and manufacturing, the employment 185 373 191 524 203 076 210 931 14% costs are low. Manufacturing 11% These labour federations form the labour constituency at 15% Trade 8% 59 125 61 580 the National Economic Development and Labour Council 58 090 55 574 (Nedlac), together with members representing the state and A detailed breakdown of remuneration costs is provided 45 480 47 143 20% business interests. Employment costs as share of total business costs, 2016 42 343 42 917 on p. 92 35% 42 107 44 434 11% 37 076 36 654 Business organisations

50 380 53 863 56 364 57 772 11% South Africa also has a number of employers’ 22% organisations. Business Unity South Africa (BUSA) 2014 2015 2016 2017 represents the collective interests of business in South 14% Africa and forms part of the Nedlac forum. 12%  Science, Engineering and Technology  other Humanities There are several foreign Chambers of Commerce and The country offers a large pool of  Education Industry in South Africa that offer business support to  Business/Management foreigners or expats. These chambers are resourceful resources with a distinctive strength in Malaysia Turkey South Africa Brazil delivering superior customer experience. for expats and locals as they provide country investment information, initiate and support networking connections as EXL Service South Africa well as training sessions.

Labour disputes

Labour disputes are dealt with on several levels such as bargaining councils, the Commission for Conciliation, Mediation and Arbitration (CCMA), the Labour Court or by Source: StatsSA, 2018c Source: Higher Education Data Analyzer, 2018 private arbitration.

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Musina-Makhado (Limpopo)

• 7 262ha in size Special Economic Zones • Agro-processing, mineral beneficiation, and petro chemicals • Proximity to main land-based route Strategic industrialisation Limpopo Tubatse into SADC South Africa has a Special Economic Zones (SEZ) programme, which has allowed for the targeted OR Tambo (Gauteng) designation of certain locations that can act as drivers of Nkomazi • 7.5ha in size industrialisation, regional development and employment. North West Mpumalanga • Beneficiation of precious metals and The focus of the SEZs is to accelerate growth and promote Gauteng Science & Hi-tech Hub minerals, and perishable food industrial decentralisation through attracting foreign direct BojanalaGauteng • Multi-site development investment (FDI), promoting value-added exports, creating jobs, building industrial clusters and regional economic hubs. Maluti-a-Phofung (Free State)

The SEZ Act of 2014 provided a more coordinated • 1 039ha in size framework for developing, operating and managing Free State • Multi-modal logistics hub SEZs and significantly improved the competitiveness of KwaZulu-Natal • Multi-sector these locations by introducing substantial incentives for companies investing in these zones. These incentives Richards Bay include a 46% reduction in the standard corporate tax rates (KwaZulu-Natal) for qualifying companies in the SEZ. Upington • 383ha in size The SEZ programme replaced the Industrial Development • Manufacturing, storage of minerals Zones (IDZs) programme of 2000, which was more narrowly and logistics Northern Cape focused on designating sea and international ports to • N2 business corridor connecting attract export-oriented investments. All IDZs have been to Durban port, Maputo in incorporated into the SEZ programme and have been and areas of East converted into SEZs. As a result there are currently five fully Eastern Cape Africa operational SEZs across the country with an additional four that have been designated and are in the process of being Wild Coast: Dube Trade Port (KwaZulu- set up. The dti is exploring the designation of a further six Mthatha Natal) SEZs that have been proposed. • 303ha in size Western Cape • Auto, electronics, fashion garments Incentives offered by SEZs include: • Only facility in Africa that has an international airport, cargo terminal • Preferential 15% corporate tax rate warehousing, offices, retail, hotel • Value-added tax and customs duty suspension in and agriculture customs-controlled areas

• Employment incentive Atlantis Greentech (Western East London (Eastern Cape) Cape) • Building allowance • 462ha in size • 124.5ha in size • General manufacturing, aquaculture, • Preferential land rental and utility rates. • The has made agro-processing and auto three large greenfield sites available • Renewable energy and greentech Coega (Eastern Cape) hub • 9 003ha in size Saldanah (Western Cape) • General manufacturing, agro- • 356ha in size processing, aquaculture, business  Designated but non-operational SEZ • Oil and gas, marine repair, processing services and auto  Designated and operational SEZ engineering and logistics  Proposed SEZ

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Taxation in South Africa

The South African tax system is made up of direct and Direct taxation Withholding tax (WHT) deemed to be an in specie dividend paid by the resident indirect taxation. Direct taxes are taxes that are applicable (if a company), or a donation paid by the resident (if a Income tax The WHT rates on various types of payments are as to individuals, trusts, companies, deceased estates and person other than a company). Compulsory transfer follows (with the exception of WHT on sales of immovable insolvent estates. Indirect taxes are levied on transactions, Person/Entity Rate of tax pricing documentation and reporting rules apply. Qualifying property, the tax is a final tax for non-residents and the rate for example sales and imports. taxpayers must file country-by-country reports, a master Individuals 18% to 45% Individuals are subject to may be reduced under an applicable tax treaty): file and a local file with the SARS. Tax is administered by the South African Revenue Service personal income tax (PIT) at a marginal rate of tax between (SARS). Every person that, at any time, becomes liable for Payment Residents Non- 18% and 45%. These rates residents income tax in South Africa or that becomes liable to submit are based on a progressive Dividends 20% 20% Thin capitalisation an income tax return, is required to register with SARS tax table, which increases as Interest 0% 15% for income tax. A permanent legislative framework for taxable income increases. Thin capitalisation provisions that are part of the general Royalties 0% 15% transfer pricing rules limit the deduction of interest payable voluntary disclosure that applies to all tax types exists. Standard 28% Special rules apply to gold Amounts paid to entertainers 0% 15% corporate tax mining companies and long- and sportspersons by South African companies on debt provided by certain The following legislation is administered by SARS: term insurance companies. Proceeds from sale of non-resident connected persons. South Africa’s thin 0% 7.5% to 15% • Income Tax Act Qualifying 15% South Africa has five immovable property capitalisation rules also apply to local branches of foreign companies in a operational SEZs and four Management or consulting fees 0% 0% companies. • Customs and Excise Act SEZ IDZs that will be converted into SEZs. South Africa has concluded tax treaties with a number of • Value-Added Tax Act countries, and signed the OECD multilateral instrument South African 28% Applies in respect of years of Controlled foreign companies (CFCs) on 7 June 2017. The maximum WHT rates on dividends, • Tax Administration Act branches of assessment commencing on foreign company or after 1 April 2012. interest and royalties under the relevant treaty. A proportional amount of the net income (including • Employment Tax Incentives Act capital gains) earned by a CFC is included in the income Trusts 45% A special trust is a trust • Estate Duty Act created solely for the benefit of a South African resident shareholder. A CFC is any of a mentally ill or physically Transfer pricing foreign company where South African residents directly • Transfer Duty Act disabled person, or a South Africa follows the Organization for Economic or indirectly hold more than 50% of the total participation testamentary trust for minor rights; or more than 50% of the voting rights in the • Securities Transfers Tax Administration Act. children. Special trusts are Cooperation and Development (OECD) guidelines on subject to income tax at a transfer pricing and uses the arm’s length standard/ company; or (with effect from any year of assessment marginal tax rate of between principle to test transactions between connected persons commencing on or after 1 January 2018) any foreign 18% and 45%, similar to company whose financial results are reflected in the natural persons. in an international (cross-border) transaction. Allowable methods include the following: consolidated financial statements (as contemplated in IFRS Qualifying small 0% to 28% Qualifying small business 10) of any company that is a resident. businesses companies pay tax at a • The comparable uncontrolled price method graduated rate of between 0% The proportionate income of the CFC will be included in the to 28%. • The resale price method income of the resident, where the resident has participation Qualifying micro 0% to 3% The turnover-based • The cost plus method or voting rights of 10% or more. The income of the CFC is businesses presumptive tax may be to be determined as if the South African Income Tax Act (turnover tax) elected by a taxpayer with an • The profit split method and annual turnover of less than applied to such entity. Exclusions from the attribution of R1m. • The transactional net margin method. income under the CFC rules apply under certain specified conditions, including where the foreign taxes paid by the For years of assessment commencing on or after CFC amount to at least 75% of the South African tax that 1 October 2016, it is obligatory for taxpayers with qualifying would be payable if the CFC were a South African resident. transactions to prepare transfer pricing policies and documentation. Where a transaction between a resident and a non-resident (or a non-resident and a Permanent Hybrid equity instruments, hybrid debt Establishment (PE) of another non-resident in South Africa, instruments and third-party backed shares or a resident and a PE of a resident outside SA) is not carried out on an arm’s length basis and results in a tax The Income Tax Act contains sections dealing with hybrid benefit, the taxable income of the person receiving the tax debt instruments, hybrid equity instruments and third-party benefit must be calculated as if the transaction had been backed shares. These sections are anti-avoidance sections entered into on arm’s length terms. If a resident received and are aimed at ensuring instruments are correctly the tax benefit, an amount equal to the adjustment is classified as debt or equity for tax purposes.

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Interest deduction limitation provisions Indirect taxation of R0.21 per gram of the sugar content exceeding 4 grams per 100 millilitres of specified imported and locally Provisions in the Income Tax Act restrict the deductibility Value-added tax (VAT) manufactured products. of interest on acquisition and reorganisation indebtedness. VAT is largely directed at the domestic consumption of In addition, there are provisions regulating the deductibility goods and services and at goods and services imported of interest in respect of a debt owed to a person that is not into South Africa. Other taxes subject to tax in South Africa, where the funds are obtained directly or indirectly from a person who is in a controlling The tax is designed to be paid mainly by the ultimate • Estate duty – Estate duty is payable on the dutiable relationship (holding at least 50% of equity shares or voting consumer or purchaser in South Africa. Since 1993, VAT amount of a deceased’s estate. rights) in relation to the debtor. was levied at the standard rate of 14%. On 1 April 2018, • Donations tax – Donations tax is payable on the value of the standard rate increased to 15%. any property that is disposed of by way of donation by a resident. The following suppliers are exempt from VAT: General anti-avoidance rule • Transfer duty – Transfer duty is applicable to real estate • Financial services transactions. The Income Tax Act contains a general anti-avoidance • Securities transfer tax (STT) – STT is levied at a rate rule (GAAR) that sets forth the circumstances under which • Educational services of 0.25% on every transfer of securities issued by a an arrangement constitutes an “impermissible avoidance • Letting of residential accommodation company incorporated, established or formed in South arrangement” for tax purposes, and the consequences that Africa and by foreign incorporated companies listed on a flow from this. • Local passenger road and rail transport. licensed exchange. The rate of 0% applies to certain supplies of goods and • Mineral and petroleum resources royalties – The rates services, including exports, certain basic foodstuffs, Payroll tax for the mineral and petroleum resource royalties, payable transfers of businesses as a going concern, international in line with the corporate provisional tax cycle, are A pay-as-you-earn (PAYE) system applies in South transport and certain services supplied to non-residents. 0.5%-5% for refined mineral resources and 0.5%-7% for Africa, at the prescribed tax rates for individuals. A 25% unrefined mineral resources. rate applies for temporary employees in “non-standard • Carbon tax – A carbon tax was introduced and became Customs and excise duties employment.” Employers are liable to pay a monthly 1% effective as at 1 June 2019. Carbon tax is payable per skills development levy (SDL) on the total remuneration Customs duties are levied on imported goods, with the entity for carbon dioxide equivalent greenhouse gas paid, where the employer’s annual payroll exceeds aim of raising revenue and protecting the local market, emissions from fuel combustion, process and fugitive R500 000. Payments to reimburse employees, pension and usually are calculated as a percentage of the value emissions that exceed a particular threshold in a tax payments and payments to independent contractors and of the goods (as set out in the schedules to the Customs year. The base cost is R120 per tonne of Carbon Dioxide learners under contract are not subject to the SDL. and Excise Act). However, meat, fish, tea, certain textiles equivalent (tCO2e), although with allowances the and petroleum products attract rates of duty calculated effective tax rate is between R6 and R48. either as a percentage of the value or as cents per unit Social security (for example, per kilogram or metre). The customs value Both employers and employees are obliged to pay a is based on a FOB (free-on-board) value. Preferential or monthly 1% contribution to South Africa’s unemployment free-rates of customs duties are applicable where trade insurance fund (UIF). The contribution is based on a agreements exist (see the list of trade agreements on maximum (i.e. capped) monthly gross remuneration p. 90-91), subject to particular rules of origin. per employee (currently, R14 872). The employee’s 1% Excise duties and levies are imposed mostly on high- contribution is made by the employer through a deduction volume daily consumable products (e.g. petroleum, from the employee’s salary. Certain remuneration and alcohol and tobacco products), as well as certain non- certain employees are excluded from the UIF contribution essential or luxury items (e.g. electronic equipment and requirements. cosmetics). Excise duties are levied on both imported and locally manufactured goods. These duties and levies are self-assessed through periodic excise returns filed with and, depending on the product, paid to SARS on either a monthly or a quarterly basis. On 1 April 2018, a new Sugary Beverages Levy (SBL) came into effect, calculated at a rate

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Regulatory Requirements

Corporate regulations Labour regulations • Sectoral determinations and bargaining council agreements that regulate basic conditions of employment Transparency and accountability key Progressive labour legislation in a specific industry, and South Africa is a highly regulated society, however the South Africa’s labour legislation provides a framework for • Legislation. corporate regulation regime is aimed at promoting equity, codes of good practice, settling disputes and ensuring transparency, corporate efficiency and regulatory certainty. fairness in the workplace. The National Department of Labour is the custodian of all Some of the laws are generic to all businesses, such the labour related laws. The employment relationship between employer and as the competition law and other laws may apply to a employee is governed by: As of 1 January 2019, South Africa’s national minimum corporation’s specific sector, like the banking or mining wage came into effect. The legislation stipulates a minimum • The common law industries. national rate of R20 per hour, or R3 500 per month, The main legislation that affects corporations is the • The employment contract or letter of appointment depending on the number of hours worked. Companies Act which requires companies to adhere • Employment policies and procedures to a number of measures to ensure transparency and accountability. The Companies Act together with • Collective agreements concluded with trade unions or consumer related legislation is administered by the dti. organised labour The Competition Act is administered by the Department of Economic Development.

Companies Act Consumer Protection Act Labour Relations Act Occupational Health and Safety Act

The Companies Act provides for the incorporation, The Consumer Protection Act promotes a fair, The Labour Relations Act aims to promote fair labour The Occupational Health and Safety Act requires registration, organisation and management of accessible and sustainable marketplace for consumer practice, and realise and regulate the fundamental employers to create and maintain as far as is companies. products and services and establishes national norms rights of workers as enshrined in the Constitution. reasonably practical a work environment that is safe and standards relating to consumer protection and to and poses no risk to the health and safety of its This includes the efficient rescue of financially http://www.labour.gov.za/DocumentCenter/Pages/Regulations.aspx promote responsible consumer behaviour. workers. distressed companies, the appropriate legal redress for investors and third parties with respect to http://www.thencc.gov.za/sites/default/files/consumer%20 http://www.labour.gov.za/DocumentCenter/Pages/Regulations.aspx companies, as well as providing a framework for protection%20act%20final%20april%202009.pdf financial record keeping and reporting. Basic Conditions of Employment Act

http://www.justice.gov.za/legislation/acts/2008-071amended.pdf The Basic Conditions of Employment Act gives effect to the constitutional right of fair labour practices by Skills Development Act Competition Act establishing and enforcing basic minimum conditions The Skills Development Act aims to develop the skills The Competition Act promotes a more efficient and of employment, and regulating the variation of such of the South African workforce through providing effective economy and establishes the Competition conditions. King IV Report a framework for developing national, sectoral and Commission responsible for the investigation, control The King Report on Governance for South Africa http://www.labour.gov.za/DocumentCenter/Pages/Regulations.aspx workplace skills development strategies. and evaluation of restrictive practices, abuse of provides a list of best practice corporate governance dominant position, and mergers. http://www.labour.gov.za/DocumentCenter/Pages/Regulations.aspx principles and promotes transparency in application of good corporate governance practices. It also establishes a Competition Appeal Court and Companies Tribunal for effective redress. Employment Equity Act https://cdn.ymaws.com/www.iodsa.co.za/resource/ collection/684B68A7-B768-465C-8214-E3A007F15A5A/IoDSA_King_ http://www.compcom.co.za/wp-content/uploads/2014/09/pocket-act- The Employment Equity Act promotes equal IV_Report_-_WebVersion.pdf august-20141.pdf opportunity and fair treatment in employment through the elimination of unfair discrimination.

http://www.labour.gov.za/DocumentCenter/Pages/Regulations.aspx

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Finance regulations Intellectual property Sophisticated financial markets with world class regulation Intellectual property law in line with international standards

The South African banking system is well developed and effectively regulated, South Africa recognises the potential intellectual property has for stimulating comprising a central bank, a few large, financially strong banks and investment economic growth and development and thus has a well developed system institutions, and a number of smaller banks. The South African Reserve Bank for protecting and managing intellectual property rights. The South African (SARB) is responsible for bank regulation and supervision in South Africa and is law on intellectual property distinguishes between four main areas – patents, the primary regulator. trademarks, designs and copyright. The dti is the key department responsible for regulating intellectual property legislation and much of this is administered South Africa’s financial services sector boasts dozens of domestic and foreign through its agency, the Companies and Intellectual Property Commission (CIPC). institutions providing a full range of services including commercial, retail and merchant banking, mortgage lending, insurance and investment. South African is also a signatory to a number of international treaties and conventions: The country’s banking sector compares favourably with those of industrialised countries. Many foreign banks and investment institutions have set up • Paris Convention for the Protection of Industrial Property operations in South Africa over the past decade. • Berne Convention for the Protection of Literary and Artistic Works

• (WTO) Agreement on Trade-Related Aspects of Banks Act Prevention and Combatting of Corrupt Activities Act Intellectual Property Rights (TRIPS Agreement) The Banks Act provides for the regulation and The Prevention and Combatting of Corrupt Activities • The Community Trademark Convention supervision of the business of public companies taking Act provides for the strengthening of measures to deposits from the public. • The Patent Cooperation Treaty. prevent and combat corruption and corrupt activities. https://www.resbank.co.za/PrudentialAuthority/Deposit-takers/Banks/ Regulatory%20instruments/Pages/Banks-Act,-1990-(Act-No-94- https://www.saps.gov.za/dpci/downloads/prevention_combating_ corrupt_activities_act.pdf Copyright Act of-1990).aspx Patents Act The Copyright Act protects certain classes or The Patents Act provides for the registration and categories of works. and Exchanges Act granting of patents for inventions and for matters Financial Intelligence Centre Act connected therewith. https://www.gov.za/documents/copyright-act-16-apr-2015-0942 The Currency and Exchanges Act defines the law www.cipc.co.za/files/9513/9452/7965/Patent_Act.pdf The Act puts in place a framework for combating relating to legal tender, currency, exchanges and money laundering activities and the financing of banking. terrorist and related activities by establishing a Plant Breeders’ Rights Act The associated regulations also prescribe the Financial Intelligence Centre and a Money Laundering The Act provides for a system where under plant management of South African foreign currency Trade Marks Act Advisory Council. breeders’ rights relating to varieties of certain kinds of reserves, including accruals thereto and spending. The Trade Marks Act provides for the registration of https://www.fic.gov.za/Documents/FIC%20Act%20with%202017%20 plants may be granted and registered. amendments%20(1)%20(1).pdf https://www.gov.za/documents/currency-and-exchanges-act-8- trade marks, certification trade marks and collective https://www.daff.gov.za/daffweb3/Branches/Agricultural-Production- mar-1933-0000 trade marks, and provides for incidental matters. Health-Food-Safety/Genetic-Resources/Plant-Breeders-Rights/Act- www.cipc.co.za/files/2214/9682/7240/Trade_Marks.pdf and-Regulations

Prevention of Organised Crime Act Protection of Investment Act The Act introduces measures to combat organised The purpose of the Act is to protect investors and Counterfeit Goods Act Merchandise Marks Act crime (money laundering and racketeering), and investment in accordance with and subject to the The Counterfeit Goods Act introduces measures provides for the recovery of the proceeds of unlawful The Act governs the marking of merchandise and Constitution, in a manner which balances the rights aimed against the trade in counterfeit goods in order activity and the civil forfeiture of property that has packaging as well as the use of certain words and and obligations of investors and public interest. to further protect owners of trade marks, copyright and been used to commit an offence. emblems in business. https://www.thedti.gov.za/business_regulation/acts/Investment_ certain marks under the Merchandise Marks Act. https://www.gov.za/documents/prevention-organised-crime-act Act_22of2015.pdf https://www.gov.za/sites/default/files/gcis_document/201505/act-17- https://www.gov.za/sites/default/files/gcis_document/201409/a37-97. https://www.fic.gov.za/Documents/02.POCA.pdf 1941.pdf pdf

54 55 6 SOUTH AFRICA INVESTOR ROADMAP Doing Business in South Africa 6 Marine Living Resources Act

The objectives of the Act include the conservation of marine living resources and the preservation of marine biodiversity, the minimisation of marine pollution, the need to restructure the fishing industry to address historical imbalances, and to achieve equity within all branches of the fishing industry.

Environmental regulations https://www.gov.za/sites/default/files/gcis_ Telecommunication regulations document/201409/36413gen434.pdf Environmental management – a constitutional Building a global information society mandate South Africa essentially began regulating Environmental legislation and policy in South Africa has been Environment Conservation Act telecommunications after the historic first democratic shaped by the Bill of Rights of the Constitution of South elections in 1994. There has since been many The Act regulates issues relating to, among others, Africa. Section 24 of the Constitution guarantees that every developments in ICT policy, law and regulation to align protected natural environments, limited development person has a right to an environment that is not harmful to South Africa’s requirements to international best practice. areas, regulations on noise, vibration and shock, and their health or well-being. This right is binding on the state various provisions relating to offences and penalties As the continually and rapidly expanding and converging and people, both juristic and natural. for environmental infringements. arenas of technology, media and telecoms continue to The management of the environment in South Africa is develop, it is essential that businesses understand and take https://www.gov.za/sites/default/files/gcis_document/201503/act-73- highly regulated with various authorisations required for 1989.pdf advantage of the changes in this arena for their commercial activities that are legally controlled. The country has various benefit. sectoral environmental laws, all governed by the National Principles of the King IV Report and ISO standards Environment Management Act. National Water Act governing information security and business continuity are On a global scale, South Africa is a party to the United The National Water Act provides for the protection, common practice for managing ICT legal compliance. Nations Framework Convention on Climate Change use, development conservation, management and (UNFCCC) and the Kyoto Protocol. The UNFCCC is an control of water. international environmental treaty that was opened for www.dwa.gov.za/Documents/Legislature/nw_act/NWA.pdf signature to stabilise greenhouse gas concentrations on the atmosphere and has brought about the introduction of Electronic Communications and Protection of Personal Information a carbon tax in the country. South Africa’s environmental Conservation of Agricultural Transactions Act (POPI) Act legislation is regarded as one of the most developed in the Resources Act world and is more comprehensive than that of many other The Act aims to promote fair labour practice and The Act relates to the processing of personal This Act applies to determining the purposes of land countries. realise and regulate the fundamental rights of workers information by an organisation and the general life use and land planning. This applies to whether it is as enshrined in the Constitution. cycle of information processed. more appropriate for a piece of land to be zoned for industrial development or agriculture. https://www.gov.za/documents/electronic-communications-and- http://www.justice.gov.za/inforeg/docs/InfoRegSA-POPIA- transactions-act act2013-004.pdf National Environmental Management Act https://www.gov.za/documents/conservation-agricultural-resources- act-1-apr-2015-0926 This is the overarching environmental statute that lays Regulation of Interception of Broadcasting Act the foundation for other environmental legislation in Communications and Communication- South Africa. The Act covers the following areas: air Hazardous Substances Act The Act develops broadcasting policy in the interest of Related Information Act (RICA) the public. quality, biodiversity, coastal management, protected The Hazardous Substances Act provides for the The main purpose of RICA is to regulate the areas and waste. regulation of substances which, by their nature or www.sabc.co.za/sabc/broadcasting-act interception of certain communications, monitor https://www.gov.za/documents/national-environmental-management- chemical composition, may cause injury or ill-health or certain signals and radio frequency spectrums and to act death of a person. provide certain communication-related information. https://www.gov.za/documents/hazardous-substances-act-16- www.justice.gov.za/legislation/acts/2002-070.pdf apr-2015-1120 National Radioactive Waste Disposal Institute Act National Heritage Resources Act Electronic Communications Act (ECA) The Act applies to all radioactive waste in South Africa that is to be disposed of in an authorised waste The Act introduces an integrated and interactive The Act promotes the convergence in the disposal facility. system for the management of South Africa’s national broadcasting, broadcasting signal distribution and heritage resources. telecommunications sectors. https://www.gov.za/documents/national-radioactive-waste-disposal- institute-act https://www.sahra.org.za/legislations/ https://www.gov.za/documents/electronic-communications-act

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Mining regulations Transformation Notes:

World renowned mining sector Creating an equitable society • The term “black” refers to African, Indians and person of mixed race. The policy also promotes the empowerment The country has an abundance of mineral resources Key to South Africa’s agenda for accelerating growth of designated groups, which include women, youth, (precious metals and minerals, energy minerals, non- and reducing poverty is reducing inequality to ensure people living with disabilities and rural communities. ferrous metals and minerals, ferrous minerals and industrial that growth benefits all South Africans. Thus key to the minerals), accounting for a significant proportion of world transformation of the economy is promoting greater • Compliance with the Broad-Based Black Economic production and reserves. economic inclusion. There are a number of policies Empowerment Act, No 52 of 2003 (B-BBEE Act) is not aimed at driving transformation and equity participation. compulsory. South Africa’s strengths include an extremely high level of Legislation that is focused on transformation includes the technical and production expertise, and comprehensive • BEE points are awarded for spending with compliant Broad-Based Black Economic Empowerment (B-BBEE) research and development activities. The mining industry, entities and your clients will want the value-add of being policies which are aimed at incentivising entities to ensure and its related industries, is critical to South Africa’s able to claim spending on your business as B-BBEE economic equity amongst different race groups. socio-economic development as it contributes significantly spending. to economic activity, job creation and foreign exchange • South African Government entities procurement earnings. practices are regulated by legislation to ensure an open Regulation in the mining sector is aimed at regulating the and transparent process. minerals and mining sector to promote economic growth, employment, transformation and sustainable development. Broad-Based Black Economic Small Business Amendment Act Empowerment Act The Act puts in place a framework for supporting small Broad-Based Black Economic Empowerment is and medium enterprise development. the South African Government’s policy aimed at Mineral and Petroleum Resources https://www.thedti.gov.za/business_regulation/acts/small_business_ accelerating economic transformation. The Act is Development Amendment Act amendment_act.pdf directed at empowering “black” people and designated The Mineral and Petroleum Resources Development groups redressing the inequalities caused by . Amendment Act makes provision for equitable access www.dti.gov.za/economic_empowerment/bee.jsp The Restitution of Land Rights Act to and sustainable development of the nation’s mineral and petroleum resources. The Act provides for regulations aimed at supporting people who had lost their land as a result of racially https://www.gov.za/documents/mineral-and-petroleum-resources- Preferential Procurement Policy discriminatory practices such as forced removals. development-amendment-act Framework Act There are also other land reform policies aimed at The Act is aimed at using government’s procurement uplifting rural communities and promoting access of Mining Charter capacity to promote local content in order to transform black people to productive land. the structure of the South African economy and The Mining Charter aims to ensure the redress of www.justice.gov.za/lcc/docs/1994-022.pdf promote growth. historical socio-economic inequalities, as well as broad-based economic empowerment and meaningful www.treasury.gov.za/divisions/ocpo/sc/PPPFA participation of Historically Disadvantaged Persons in the mining and minerals industry.

https://www.gov.za/documents/mining-charter-2018-27- sep-2018-0000

Mine Health and Safety Act

The Act provides for protection of the health and safety of employees and other persons at mines.

https://www.gov.za/documents/mine-health-and-safety-act

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Land Acquisition Process

Sophisticated and efficient land registration Five key steps for acquiring land Key steps for transferring property process

The Bill of Rights in the Constitution protects property Offer to purchase or declaration of interest 1 The conveyancer conducts a title search rights. The Constitution protects a person’s real rights to to land owner(s) and negotiations 1 and checks encumbrances on the property property ownership, lease, mortgage, lien or servitude. No cost involved The state has a duty to take reasonable legislative Determine any restrictions/interdicts/ measures to promote access to land on an equitable basis 2 and no individual may be arbitrarily deprived of property. servitudes on land Obtain a rates clearance certificate In line with this the Communal Land Tenure legislation 2 Average cost: R201 provides for conversion into ownership of land rights in communal land to communities that own or occupy such Formal offer to purchase and agreement if land, and for the transfer of ownership to communities 3 Obtain a plumbing certificate accepted 3 and community members of land acquired by the state to Cost: R600 enable equitable land access.

Local municipality rates and taxes Obtain an entomologist’s certificate 4 4 Non-resident property ownership clearance certificate Cost: R600 South Africa has no restrictions on foreign ownership of property, however, there are procedures and requirements Obtain an electrical compliance certificate which must be complied with in certain transfers of Deed of transfer to new owners, 5 5 Cost: R1 250 ownership. For example, a non-South African entity registration and payment seeking to purchase land in South Africa has to register The conveyancer prepares and collects all a legal entity in South Africa and appoint a South African The Chief Surveyor General maintains online information the required documentation resident public officer. Non-residents that purchase on property boundaries, ownership and value. This can be 6 property in South Africa with the intention of residing for accessed on: No cost involved longer periods require a residence permit. • https://csg.esri-southafrica.com/spatialdataviewer/ The land registration process gives registered owners Obtain a transfer duty receipt security of title. The latest land audit is further available on: 7 http://www.ruraldevelopment.gov.za/publications/land- Cost dependant on property value audit-report/file/6126 Parties sign all the documentation at the 8 conveyancer’s office Cost dependent on conveyancer

The conveyancer lodges the deed 9 Cost dependent on conveyancer

 Procedure present in all locations in the country  Procedure completed simultaneously in all locations in the country  Procedure present in certain locations only

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Environmental Impact Assessment

The purpose of the Environmental Impact Assessment (EIA) is to evaluate environmental consequences of a proposed Determine whether your production activity or project and analyse alternatives. The EIA is an activity is in the list of activities that integral part of the planning and decision-making process require an Environmental Authorisation and is focused on effective environmental management. 1 before commencement (refer to https:// The business community in South Africa www.environment.gov.za/sites/ In lines with the National Environmental Management Act default/files/gazetted_notices/nema_ is well structured and organised through the EIA process: listingnotice_33306rg9314gon546.pdf). various industry and topical structures • Requires an applicant to subject a listed activity to either which ensure that the voice of business the Basic Assessment or Scoping and EIA process, Appoint an Environmental Assessment is active in the legislative and policy depending on the nature of the listed activity 2 Practitioner. programme. • Requires an applicant to review the activity he/she intends to undertake and to consider the environmental Sappi Limited impacts and to consider alternatives and mitigation The Environmental Assessment Practitioner measures that will reduce those environmental impacts must evaluate which application process should be followed, i.e.: • Provides the public with a meaningful opportunity to 3 • a simple Basic Assessment understand and comment on the proposed activity • a more complex Scoping and EIA, or • Provides the government decision-makers with important • request an exemption. information to assist them in deciding whether the proposed activity should be approved, and

• Provides a legal right for interested and affected parties • After a Basic Assessment, the Competent to participate in the process. Authority will request more information/ authorise/reject or order the applicant to subject the activity to Scoping and EIA. • An EIA applicant may also be requested for more information/ be rejected or 4 authorised. • Decisions of the Competent Authority can be appealed. • Authorisation can be amended/withdrawn/ suspended in the event of changes in the activity.

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Feasibility, Research & Development Incentives

Description Qualifying Criteria Benefit Custodian

Incentive Programmes Capital Projects Feasibility Programme (CPFP)

CPFP is to facilitate bankable • A minimum local content of 50% Reimbursement of feasibility study the dti South Africa’s economic policy is focused on trying to encourage additional feasibility studies in manufacturing for total goods and 70% for total costs of: www.thedti.gov.za investment in order to generate growth and development. Key to this strategy is and capital goods sectors that are professional services. • 50% for projects outside Africa; the provision of a range of demand and supply-side measures to both lower the likely to lead to high-impact capital • Projects can be situated anywhere • 50% for projects in SA with total projects which will stimulate value- in the world (excluding South Africa). assets of R30m or more; costs of doing business and to offer compelling investment opportunities. adding economic activity in South • 70% for projects in SA with Africa. assets less than R30m; The incentive landscape in South Africa consists of a network of sector • 55% for projects in the rest of specific and cross-cutting incentives that fall into three main types of funding Africa; instruments – cash grants, tax allowances and preferential funding rates. • The grant is capped at R8m.

Incentives that are available are either coordinated by a national, provincial or Science & Technology R&D Incentive - Section 11D of the Income Tax Act No. 58 of 1962 local government department, a development finance institution, or agency of The objective of the incentive • Discovering non-obvious scientific A 150% tax deduction is allowed Department of the state. is to encourage South African or technical knowledge on qualifying expenditure. Science and companies to invest in scientific • Creating or developing an invention, Technology or technological research and functional design, a computer www.dst.gov.za Cash Grants Tax Incentives Development Finance development activities in South program and knowledge Africa. • Making significant improvement Targeted cash grants paid to Tax deductions for specified activities Financing for start-up and existing to a invention, functional design, approved projects on completion or investments that reduce corporate businesses. computer programme or knowledge • Creating or developing a of certain approved milestones or or employer taxes. • Most of the Development Finance multisource pharmaceutical product projects. • Conducting clinical trials. • The tax incentives may be: Institutions (DFIs) are either sector • Cash grants may be for: • Tax credits focused or are targeted at a Media Development and Diversity Agency Research Funding (MDDA) • Feasibility, Research & • Tax rebates. particular segment of the business The MDDA offers support through All Sole Proprietorships, Close Funding is dependant on whether Media Development Development Incentives market and offer: grant funding for small commercial Corporations or Private Companies, the project is in line with the & Diversity Agency • Manufacturing Incentives • Loans media and research projects. who wish to undertake research into mandate of the MDDA and what www.mdda.org.za Funding is granted for the following: the South African media sector or who resources are available. It is • Competitiveness Enhancement • Debt • Conducting and funding research want to undertake feasibility studies in also preferred that the media Incentives • Mezzanine finance. • Assisting with capacity building the media sector. organisations/communities match • Enterprise Development and the funding or any support in kind. • Technical assistance. Incentives. Seed Fund Programme

The Seed Fund Programme assists • Technology readiness level between Grant funding of up to R650 000 Technology higher educational institutions 3 to 7 per application. Innovation Agency and small, medium and micro • SMMEs need to have a valid www.tia.org.za enterprises (SMME) to advance tax clearance certificate for the their research outputs and ideas company or individual applying in to develop prototypes, proof of their own capacity. concepts and business cases.

Support Programme for Industrial Innovation (SPII) - Product Process Development (PPD) Scheme

The incentive provides financial Small, very small and micro- Maximum of R2m grant. the dti assistance for the development enterprises and individuals in the form www.thedti.gov.za of commercially viable, innovative of a non-repayable grant. products and/or processes and facilitates commercialisation of such technologies.

Support Programme for Industrial Innovation (SPII) - Matching Scheme

The incentive provides financial Provides financial assistance to all Maximum grant of R5m. the dti assistance for the development enterprises and individuals in the form www.thedti.gov.za of commercially viable, innovative of a non-repayable grant. products and/or processes and facilitates commercialisation of such technologies.

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Description Qualifying Criteria Benefit Custodian Manufacturing Incentives

Technology and Human Resources for Industry Programme (THRIP) Description Qualifying Criteria Benefit Custodian

THRIP supports research and All companies undertaking science, 50:50 cost-sharing grant, to a the dti Agro-processing Support Scheme (APSS) technology development and the engineering and technology (SET) maximum of R8m per annum, www.thedti.gov.za development of appropriately- research, in collaboration with across any number of projects. The objective of the APSS is to • Minimum investment of R1m • A 20%-30% grant for approved the dti skilled people. THRIP facilitates educational institutions, and with the stimulate investment in agro- • B-BBEE level of 1-4 investment costs. Maximum www.thedti.gov.za collaboration of the best of SA’s aim of addressing the participating processing enterprises. APSS is • Demonstrate that at least 50% grant per entity is R20m. researchers, academics and firms’ technology needs. largely targeted at the following key of raw materials will be sourced industry players. sub-sectors: from SA suppliers of which 30% • Food and beverage value must be black South African Infrastructure Incentives addition and processing suppliers (including black winemakers) • Commencement date of the Description Qualifying Criteria Benefit Custodian • Furniture manufacturing project or activities applied • Fibre processing for must take place within The Agri-Parks Programme • Feed production 90 calendar days after the • Fertiliser production. application has been approved An economic hub that integrates Agri-parks must be farmer Hubs in 44 district municipalities Department of Rural • Retain and create additional jobs a network of various agricultural controlled. offering agro-production, Development and • Pay minimum wage. activities across the value chain and processing, logistics, marketing, Land Reform rural development services in order training and extension services. www. Automotive Investment Scheme (AIS) to improve the competitiveness of ruraldevelopment. the agricultural sector and promote gov.za To encourage investment in the Light motor vehicle assemblers • 20% cash grant of the value the dti rural development. light motor vehicle industry sector and automotive component of the investment in approved www.thedti.gov.za by manufacturers of specified light manufacturers associated in motor productive assets Critical Infrastructure Programme (CIP) motor vehicles and automotive vehicle assemblers’ supply chain. • An additional 5% or 10% for components with the aim of projects found to be strategic. CIP aims to leverage investment Defined fixed investment, or Cost-sharing grant of between 10% the dti encouraging the localisation of by supporting infrastructure that is the expansion or sustaining, and 50% of the total qualifying www.thedti.gov.za components and increasing plant deemed to be critical – lowering the refurbishment of the existing fixed infrastructural development costs, production volumes. cost of doing business. investment. limited at R50m per project. Black Industrialist Scheme (BIS) Special Economic Zones (SEZ) The BIS aims to accelerate and • More than 50% shareholding • 30% to 50% cash grant of the the dti To promote targeted investment to Qualifying projects located in SEZs. • Preferential 15% Corporate Tax the dti increase the participation of and management control, be project’s qualifying invest costs www.thedti.gov.za facilitate economic growth and job rate www.thedti.gov.za black industrialists in the national directly involved in the day-to- • Maximum R50m. creation. • VAT and Customs Duty economy, particularly in selected day running of the operation and suspension in customs- manufacturing sectors and value must have requisite expertise in controlled areas chains. the sector. • Employment incentive • B-BBEE level 1-4 • Building allowance, and • Minimum investment of R30m. • Preferential land rental and utility rates. Clothing and Textiles Competitiveness Programme (CTCP)

Social Housing Regulatory Authority (SHRA) Restructuring Capital Grant The CTCP makes targeted grants Clothing manufacturers, textiles Production Incentive consists of Industrial to grow and develop the clothing, manufacturers, Cut, Make and an Upgrade Grant Facility to focus Development The aim is to contribute towards • Be located in a Restructuring Standard grant is R125 615 per Social Housing textiles, footwear, leather and Trim (CMT) operators, footwear on competitiveness improvement; Corporation (IDC) spatial, social and economic Zone in terms of the Social unit. Regulatory Authority leather goods manufacturing manufacturers, leather goods and an Interest Subsidy for working www.ctcp.co.za restructuring of South African cities Housing Policy Guidelines and www.shra.org.za sectors. It is divided into the manufacturers and leather capital requirements resulting by contributing to the capital cost Act of 2008 Competitiveness Improvement processors. from past and future upgrading of social housing projects that • Meet social housing policy Programme (CTCIP) and the interventions. The grant is limited provide affordable rental housing to objectives Production Incentive (PI). to a benefit ceiling, which is the poor. • Be supported by the provincial calculated as 7.5% of a company’s and local . manufacturing value addition. The CTCIP provides cluster support. Technology Innovation Agency (TIA) - Technology Stations Investment and Training Allowance - Section 12I of the Income Tax Act (S12I) Technology Innovation Stations Small and medium-sized The access to engineering and Technology provide access to world-class enterprises. technology development services Innovation Agency To promote industrial upgrading Medium to large manufacturers • 35% to 100% additional the dti engineering services and expertise to small and medium enterprises. www.tia.org.za and new investment in large-scale with investment in modern energy tax allowance of qualifying www.thedti.gov.za from various universities and manufacturing. efficient technology from R30m. investment costs in machinery industries for technology based and equipment (maximum SMEs in various sectors ranging R550m to R900m for qualifying from agro-processing, chemicals, and preferred status projects clothing and textiles, automotive respectively) and tooling. • Training allowance: maximum R36 000 per person and R20m to R30m for qualifying and preferred status projects respectively.

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Description Qualifying Criteria Benefit Custodian Competitiveness Enhancement Incentives

Medium and Heavy Commercial Vehicles Automotive Investment Scheme (MHCV-AIS) Description Qualifying Criteria Benefit Custodian

The MHCV-AIS a sub-component The grant is available for complete • 20% of the value of qualifying the dti Aquaculture Development and Enhancement Programme (ADEP) of the Automotive Investment knock down manufacturer of investment in productive www.thedti.gov.za Scheme (AIS), is an incentive trucks and buses and associated assets by medium and heavy Investment in the aquaculture SA entities involved in fish 20%-45% grant for investment in the dti designed to grow and develop components. commercial vehicle manufactures sector. hatcheries and fish farms land, and buildings, machinery and www.thedti.gov.za plant production volumes, sustain • 25% of the value of qualifying (primary aquaculture), processing equipment, and work boats and employment and/or strengthen investment in productive assets and preserving of aquaculture bulk infrastructure capped at R40m the automotive value chain for the by component manufactures and fish (secondary aquaculture), per application. medium and heavy commercial tooling companies for MHCVs. service activities to operators of vehicle sector. hatcheries and fish farms (ancillary aquaculture). People-carrier Automotive Investment Scheme (P-AIS) Comprehensive Agricultural Support Programme (CASP) To encourage growth of the people- Semi Knock Down (SKD) and • 25% grant of the value of the dti carrier sector through investment in Complete Knock Down (CKD) investment for CKD assemblers. www.thedti.gov.za The programme is aimed at • Must be a South African citizen Grant funding is project specific. Department of new and replacement models and vehicle assemblers of people • 20% grant of the value of expanding the provision of • Must be a black South African Agriculture, Forestry components. carriers. investment for CKD assemblers agricultural support services applicant and Fisheries • A top-up grant of 5% or 10% of and promoting and facilitating • Must be 18 years or older www.daff.gov.za the value of the investment made agricultural development by • Proof of tenure for strategic projects. targeting subsistence, smallholding • Access to services (water, and black commercial farmers electricity etc.) Section 12S of the Income Tax Act from a previously disadvantaged • Status of Farm Governance background. Systems Deduction in respect of buildings in • Must meet the definition of Capital allowance of 10% for any South African • Managerial and technical skills. Special Economic Zones. “qualifying company” as building, per annum. Revenue Service defined in section 12R(1), www.sars.gov.za DAC Mzansi Golden Economy (MGE) Grants notwithstanding 12R(4). • New and unused building, owned The purpose of the MGE is to make • Cultural events that contribute to • Maximum of R2m per grant Department of Arts by the taxpayer. strategic investments to optimise local economic development, job beneficiary for cultural events and Culture • Income derived from trade within the economic benefit of the Arts in creation and the development of • Maximum of R1m per grant www.dac.gov.za the SEZs. South Africa. audiences beneficiary for: • Touring ventures and market • Touring ventures and market Sector Specific Assistance Scheme (SSAS) access work access work • Public Art Programme (PAP). • Public Art Programme. Develop new export markets, Approved export councils, A matching grant of 80% of the the dti broaden the specific industry registered industry associations cost to support the development www.thedti.gov.za Employment Tax Incentive export base, increase participation and joint actions groups. and growth of exports. of B-BBEE and SMME companies The ETI is an incentive aimed at The employer is eligible to claim the Employers will be able to claim a South African in the export process. encouraging employers to hire ETI if the employer: maximum incentive of R1 000 per Revenue Service young work seekers by reducing • Is registered for Employees’ Tax qualifying employee depending on www.sars.gov.za the costs of hiring young people. (PAYE), or must be eligible to the salary of the employee for a register for PAYE 24-month period. • Is employing 18-34 year olds earning R6 000 or less • Is not in the national, provincial or local sphere of government • Is not disqualified by the Minister of Finance due to the displacement of an employee or by not meeting the conditions as may be prescribed by the Minister by regulation.

Energy Efficiency Deduction - Section 12L of the Income Tax

The purpose of the tax allowance • Establish a baseline, and Energy efficiencies are categorised South African incentive is to promote the • SANAS data must be along the following basis: Revenue Service efficient use of energy as a means measurable, traceable and • 45c/kWh retrospective www.sars.gov.za to safeguard the security of verifiable. • 95c/kWh from 1 March 2015 supply. This will also help combat • The deduction is dependent on greenhouse gas emissions. This an “energy efficiency savings is also the first-ever “Megawatt- certificate” issued from the based” tax allowance incentive South Africa National Energy globally and is regarded as an Development Institute (SANEDI). incentive.

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Description Qualifying Criteria Benefit Custodian Description Qualifying Criteria Benefit Custodian

Export Marketing and Investment Assistance Green Tourism Incentive Programme (GTIP)

The objective of the EMIA scheme • South African manufactures and • Individual Exhibition the dti GTIP is an energy efficiency Private sector tourism enterprises. • 90% of the cost for a new Department of is to develop export markets exporters Participation: exhibition fees up www.thedti.gov.za incentive initiative, whose objective energy-efficiency audit or the full Tourism for South African products and • South African export trading to a maximum of R50 000, travel is to encourage private sector cost for reviewing an existing www.tourism.gov.za services and to recruit new foreign houses representing at least and exhibition allowances tourism enterprises to move energy-efficiency audit direct investment into the country. three SMMEs or businesses • Primary Market Research & towards cleaner and renewable • Grant funding to qualifying small owned by Historical Foreign Direct Investment: energy sources. and micro enterprises on a Disadvantaged Individuals (HDIs) exporters will be compensated sliding scale from 30% to 90% - • South African commission for costs incurred recruiting new capped at R1m. agents representing at least three FDI into South Africa through SMMEs/HDI-owned businesses personal contact by visiting Jobs Fund • South African export councils, potential investors in foreign To co-finance projects that are Projects by public, private and Co-financing of projects by public, The Jobs Fund industry associations and countries and travel allowances employment intensive and find non-governmental organisations private and non-governmental www.jobsfund.org. joint action groups (JAGs) • Individual Inward Missions: innovative solutions to employment that will significantly contribute to organisations that will significantly za representing at least five South assistance is provided to South creation within the following job creation. contribute to job creation: matching African entities. African entities organising an categories: grant of between R10m and inward buying investor, to make • Enterprise development R100m. contact with them to conclude • Infrastructure development an exporters order or to attract • Institutional capacity building FDI; registration of a patent in a • Support for work seekers. foreign market; a 50% grant of the additional costs capped at Additional support categories may R100 000 per annum and travel be prioritised in different application allowances. windows. Foreign Film and Television Production and Post-Production Incentive Section 12H of the Income Tax Act To encourage and attract large- Foreign-owned qualifying Rebate of 20% of the QSAPE to the dti Additional deduction in respect of Employer is party to a registered Additional training allowance for South African budget films and television productions with Qualifying South qualifying productions and an www.thedti.gov.za learnership agreements. learnership agreement. qualifying learnerships of R40 000 Revenue Service productions and post-production African Production Expenditure additional 2.5%-5% for post- per learner. www.sars.gov.za work that will contribute towards (QSAPE) of R12m and above. production conducted in South employment creation, enhance Africa. Section 12O of the Income Tax Act South Africa’s international profile, and increase the country’s creative Tax exemption in respect of films. Filmmakers. Exemption from normal tax for South African and technical skills base. receipts and accruals in respect Revenue Service of income derived from the www.sars.gov.za Global Business Services Incentive exploitation rights of a film.

Aims to create employment in • Local and foreign investors that The grant benefit is over five years the dti South Africa through servicing are providing IT-enabled services for job creation and maintained as www.thedti.gov.za offshore activities. to an offshore market, through a follows: captive or outsourced business • Non-complex jobs - up to environment, thus creating jobs R142 000 in South Africa • Complex jobs - up to R215 000 • Create at least 30 jobs within • Highly complex jobs - R290 000. three years of which at least 60% must be for the youth (18-34 year olds).

Global Cleantech Innovation Programme (GCIP)

The GCIP is aimed at promoting SMMEs that pursue innovations in • Training Technology clean technology innovation clean technologies. • Mentoring Innovation Agency and supporting entrepreneurs in • Access to capital www.tia.org.za growing their SMMEs and start- • Showcasing ups into viable, investment-ready • Cash rewards. businesses.

Green Fund

The Green Fund is a catalyst in The fund considers opportunities Financial support: Green Fund the transition towards a green within funding windows as and • Grants (recoverable and non- www.sagreenfund. economy, as such it seeks to when they open for applications recoverable) org.za unlock barriers and bridge gaps, and the windows are dependant on • Loans (concessional rates and wherever they exist along the the key focus at that time. terms) innovation value chain. • Equity.

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Description Qualifying Criteria Benefit Custodian Description Qualifying Criteria Benefit Custodian

South African Film and Television Production and Co-Production Incentive Co-operative Incentive Scheme (CIS)

To support the local film industry Productions must have a minimum The rebate is calculated as 35% the dti The objective of the CIS is • Emerging co-operatives with a 100% grant for registered primary Department of and to contribute towards of Qualifying South African of QSAPE. QSAPE is provided for www.thedti.gov.za to improve the viability and majority black ownership co-operatives (a primary co- Small Business employment opportunities in South Production Expenditure (QSAPE) of productions hiring at least 30% competitiveness of co-operative • Adhere to co-operative principles operative consists of five or more Development Africa. R2.5m for all qualifying production of black SA citizens as heads of enterprises by lowering their cost • Owned by HDIs members). www.dsbd.gov.za formats and a minimum of departments and procuring at of doing business through an • CIS is biased towards women, R500 000 for documentaries. least 30% of QSAPE from 51% SA incentive that supports B-BBEE. youth and people with black-owned entities which have disabilities. been operating for at least a period of one year; with a cap of R50m per Enterprise Incubation Programme (EIP) project. The programme is market driven South African registered and • R5m-R10m 90% contribution Department of Technology Innovation Cluster Programme (TICPS) and prepares early stage entities to tax compliant entities with vast from DSBD Small Business supply to local markets. experience in the development • Feasibility studies will be capped Development TICPS aims to fund technology Public research institutions, • Funding of technology Technology and mentoring of early stage at R1.5m (100% contribution www.dsbd.gov.za development by facilitating an entrepreneurs, companies, developments in a programmatic Innovation Agency enterprises, and co-operatives from DSBD). enabling environment for the suppliers and manufacturers in a framework www.tia.org.za with the potential to supply goods advancement of technology particular industry. • Identification and support of key and services to firms in the local innovation and commercialisation interventions within the value economy on a sustainable basis. by adopting a value chain approach chain and catalysing collaborations • Facilitation of the creation and Informal and Micro Enterprise Support Programme amongst value chain players. expansion of the local production The scheme seeks to uplift informal The scheme prioritises women, 50:50 cost-sharing grant to a Department of capacity businesses and to address the youth and people with disabilities maximum of R5m, to be disbursed Small Business • Enhancement of collaboration developmental void at the lower who own businesses based as per agreed milestones. Development and networking base of SMMEs development. in townships, rural areas and www.dsbd.gov.za • Enablement of incubation depressed areas in towns and services cities. • Leveraging of funds from local and foreign sources. Innovation and Partnership Programme (IPP)

The South African Emerging Black Filmmakers Incentive The programme aims to foster • Small businesses with track • Feasibility studies: maximum of Department of partnerships with stakeholders for record in operating sector R3m per project Small Business To nurture and capacitate emerging • South African black-owned • A rebate of 50% on the QSAPE the dti developing small businesses. The • Must be at least 51% black • Partnerships: 50:50 cost-sharing Development black filmmakers to take up big qualifying productions and • The costs for the purchase www.thedti.gov.za small businesses must become owned grant capped at R15m. www.dsbd.gov.za productions and contribute towards documentaries with a total of key production equipment competitive suppliers within the • Demonstrate an existing market employment opportunities. production budget of R500 000 may qualify once-off under value chains of private and public to be serviced. and above this incentive programme to a sectors. • At least 80% of principal maximum cost-sharing incentive photography must be filmed in of R2m. National Gazelles Programme South Africa • A minimum of 75% of the total The aim of the programme is • Turnover R1m • Customised business Small Enterprise production budget (TPE) must be to identify and support SMEs • 2 years in business mentorship, support and Development QSAPE with growth potential through a • Employ at least 2 people. coaching Agency • Both the Director and Producer comprehensive range of business • Participation in international www.seda.org.za must be a black South African growth-oriented programmes, trade and business visits citizen who are also credited for activities and partnerships. • Access to a broad library of their role in the production Through its combination of financial online tools and business • The top writer and producer and non-financial support, the resources credits must include South programme aims to assist members • Procurement opportunities from African citizens and either to grow faster and more profitably state-owned enterprises and exclusive or shared collaboration than they would normally do. other companies credits. • Facilitated access to funding for growth and expansion. Enterprise Development Incentives Start-up Enterprise Development Programme (SEDP)

Description Qualifying Criteria Benefit Custodian Provide support to start-up Small businesses located in • Minimum amount that an Department of enterprises based in townships or townships or rural areas, which applicant can apply for is Small Business Black Business Supplier Development Programme (BBSDP) rural areas. are 100% owned by South R50 000 Development BBSDP is a cost-sharing grant • 51% black majority shareholding Maximum of R1m: the dti African women/youth/people with • 100% grant limited at R200 000 www.dsbd.gov.za offered to black-owned small • R250 000 to R35m turnover per • R800 000 for tools, machinery www.thedti.gov.za disabilities, and that have the per beneficiary. enterprises to assist them to year and equipment on a 50:50 cost- potential or capacity to supply improve their competitiveness and • One year in operation and trading sharing basis goods and services to public and sustainability to become part of the as a business. • R200 000 for business private sector entities. mainstream economy and create development and training employment. interventions on a 80:20 cost- sharing basis.

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Description Qualifying Criteria Benefit Custodian Sector Education and Training Authorities

Strategic Partnership Programme (SPP) The Sector Education and Training Authorities (SETAs) are educational organisations that have been created with an The Strategic Partnership Entity with turnover of at least Maximum grant of R15m. the dti Programme (SPP) aims to R100m supporting: www.thedti.gov.za aim to make sure the National Skills Development Strategy encourage large sector enterprise • Small enterprises in is being used as effectively as it can to improve skills of (strategic partner) support for manufacturing, agro-processing, people in their sector. Employers pay 1% of their wage bill nurturing and developing SMEs mineral beneficiation to a particular SETA and are able to recoup this in grants to ensure that within three years, • At least 51% black owned. SMEs are self-sustainable by for expenditure on skills development and training. providing locally manufactured goods and/or services. The grants are as follows:

• Mandatory: Mandatory grants are paid out to companies that fulfil the minimum requirements Development Finance • Discretionary: Discretionary grants are paid out at the Institution Mandate discretion of SETA management for skills development Business Partners Business Partners provides customised financial solutions, sectoral knowledge, mentorship, projects linked to scarce and critical skills. business premises and other value added services for formal SMEs in South Africa and selected African countries, namely Kenya, Malawi, , Rwanda, and Zambia. Institution Sector Development Bank of Southern The purpose of the DBSA is to accelerate sustainable socio-economic development by funding Africa (DBSA) physical, social and economic infrastructure in . The bank plays multiple roles AGRISETA Agriculture of financier, adviser, partner, implementer and integrator to mobilise finance and expertise for development projects. BANKSETA Banking

Gauteng Enterprise Propeller (GEP) GEP was established to address the market failures through support to co-operatives and CETA Construction informal businesses with the intention of advancing economic justice and exclusivity. CHIETA Chemical Industries Industrial Development Corporation The IDC is a self-financing, state-owned national DFI that provides financing to entrepreneurs and CATHSETA Culture Arts, Tourism, Hospitality and (IDC) businesses engaged in competitive industries. Sports Ithala Development Finance Ithala’s objectives are to provide financial and services support to the people of KwaZulu-Natal in ESETA Energy and Water Corporation Limited order to promote the development of the province’s human resources and its social, economic, financial and physical infrastructure. ETDPSETA Education Training and Development Practices Land Development Bank of South The Land Bank is a specialist agricultural bank guided by a mandate to provide financial services Africa to the commercial farming sector and to agribusiness and to make available new, appropriately FPMSETA Fibre, Processing & Manufacturing designed financial products that would facilitate access to finance by new entrants to agriculture from historically disadvantaged backgrounds. FOODBEV Food and Beverage Manufacturing

Micro Agriculture Finance Scheme MAFISA was developed as a micro and retail agricultural financial scheme for economically active FASSET SETA Financial and Accounting Services of South Africa (MAFISA) poor people. MAFISA allows access to financial services through selected institutions on an affordable and sustainable basis. It assists with loans to target groups, individuals, farmers and HWSETA Health and Welfare other groups as well as savings and banking facilities at approved financial institutions. INSETA Insurance

National Empowerment Fund (NEF) The NEF promotes and facilitates BEE and transformation. Its mandate and mission is to be a LGSETA Local Government catalyst of B-BBEE through asset management, fund management and strategic projects. MERSETA Media, Advertising, Information and National Youth Development The NYDA’s mandate is to advance youth development through guidance and support to Communication Technologies Agency (NYDA) initiatives across sectors of society and spheres of government and to embark on initiatives that seek to advance the economic development of young people. The NYDA also coordinates the MICTSETA Manufacturing, Engineering and Related implementation of the Integrated Youth Development Plan and Strategy for the country. Services

Small Enterprise Finance Agency SEFA provides financial services to SMEs and co-operatives through direct and wholesale MQSETA Mining Qualifications Authority (SEFA) lending across different sectors. PSETA Public Service Technology Innovation Agency (TIA) The TIA is a national public entity that serves as the key institutional intervention to bridge the innovation chasm between research and development from higher education institutions, science SASSETA Safety and Security councils, public entities, and the private sector, and commercialisation. SERVICES SETA Services

TETA Transport

W&RSETA Wholesale and Retail

74 75 7 SOUTH AFRICA INVESTOR ROADMAP Key Contacts 7

Key Contacts

Business Information Industrial Development Eastern Cape Development North West Development Department of International Chambers of Commerce & Services Corporation (IDC) Corporation (ECDC) Corporation Relations and Cooperation (DIRCO) Industry P O Box 784055, , 2146 P O Box 11197, Southernwood, Mafikeng Head Office Private Bag X152, Pretoria, 0001 The Department of Trade and Tel: +27 11 269 3000 East London, Eastern Cape, 5213 P O Box 3011, Mmabatho, 2735 Tel: +27 12 351 1000 Afrikaanse Handelsinstituut (AHI) Industry (the dti) Fax: +27 11 269 3116 Tel: +27 43 704 5600 Tel: +27 18 381 3663/4/5 Fax: +27 12 329 1000 P O Box 3510, Menlo Park, 0102 77 Meintjies Street, Sunnyside, Call Centre: 0860 693 888 Fax: +27 43 704 5700 Fax: +27 18 381 2041 Email: [email protected] Tel: +27 12 348 5440 Pretoria, Gauteng, 0002 Email: [email protected] Email: [email protected] Email: [email protected] www.dirco.gov.za Fax: +27 12 348 8771 Tel (National): 0861 843 384 www.idc.co.za www.ecdc.co.za www.nwdc.co.za www.ahi.co.za International: +27 12 394 9550 International Trade Administration Email: [email protected] Black Business Council Free State Development Tshwane Economic Development Commission of South Africa (ITAC) Business Unity South Africa (BUSA) www.thedti.gov.za Zungu on Main, 386 Main Road, Corporation (FDC) Agency (TEDA) Private Bag X753, Pretoria, 0001 P O Box 652807, Benmore, 2010 Bryanston, 2191 P O Box 989, Bloemfontein, 9301 5 Floor, Anker Building, Tel: +27 12 394 3688/3728 Tel: +27 11 784 8000/1/2/3 The National Empowerment Tel : +27 11 463 2439 Tel: +27 51 4000 800/810 1279 Mike Crawford Road, Fax: +27 12 394 0520 Fax: +27 11 784 8004/086 609 8248 Fund (NEF) Fax : +27 11 726 4705 Fax: +27 51 447 0929 Centurion CBD Import and Export Control www.busa.org.za PO Box 31, Melrose Arch, Email: info@blackbusinesscouncil. www.fdc.co.za Tel: +27 12 358 6552 Call Centre: 0861 112 369 Melrose North, 2076 africa Email: [email protected] Email: [email protected] Foundation for African Business Call Centre: 0861 843 633/0861 Gauteng Growth and Development www.teda.org.za www.itac.org.za and Consumer Services (FABCOS) Tel: +27 11 305 8000 Business Leadership Agency (GGDA) ICT Globe Micro Telco E-Ncubator, Email: [email protected] P O Box 7006, Johannesburg, 2000 124 Main Street, Marshalltown, Trade and Investment KwaZulu- The Commissioner of South African Building 10, Oxford Office Park, 3 Funding: [email protected] Tel: +27 11 356 4650 Johannesburg, 2107 Natal (TIKZN) Revenue Services (SARS) Bauhenia Road, Highveld Techno General Enquiries: www.nefcorp.co.za Fax: +27 11 726 4705 Tel: +27 11 085 2400 P O Box 4245, Durban, 4000 Private Bag X923, Pretoria, 0001 Park, Centurion (temporarily located) Email: businessleadership@ www.ggda.co.za Tel: +27 31 368 9600 Tel: +27 12 422 4000 P O Box 8785, Johannesburg, 2000 Development Bank of Southern businessleadership.org.za Fax: +27 31 368 5888 Call Centre: 0800 007 277 Tel: +27 11 079 7580 Africa (DBSA) www.businessleadership.org.za Invest Cape Town Email: [email protected] Fax: +27 10 208 5005 Emergency contact: +27 73 526 1492/ P O Box 1234, Halfway House, 1685 Corner Hertzog Blvd & Heerengracht, www.tikzn.co.za www.sars.gov.za +27 61 475 1941 Tel: +27 11 313 3911 Investment Promotion Foreshore, Cape Town, 8001 www.fabcos.co.za Reception: +27 11 313 3500/3297 Agencies Tel: +27 21 417 4043 Trade and Investment Limpopo The South African Reserve Bank Email: [email protected] Email: [email protected] P O Box 3490, Polokwane, 0700 (SARB) (Exchange Control and National African Federation of www.dbsa.org InvestSA www.investcapetown.com Tel: +27 15 295 5171 Securities) Chambers of Commerce (NAFCOC) Private Bag X84, Pretoria, 0001 Fax: +27 15 295 5197 P O Box 427, Pretoria, 0001 P O Box 784880, Sandton, 807 5063 Small Enterprise Development Tel: +27 861 843 384 Mpumalanga Economic Growth www.til.co.za Tel: +27 12 313 3911/0861 12 7272 Tel: +27 11 807 5063 Agency (Seda) Email: [email protected] Agency (MEGA) Fax: +27 12 313 3197/3929 Fax: +27 11 807 9816 Box 56714, Arcadia, 0007 www.investsa.gov.za PO Box 5838, Mbombela, 1200 Wesgro www.resbank.co.za Email: [email protected] Call Centre: 0860 103 703 Tel: +27 13 755 6328 P O Box 1678, Cape Town, 8000 www.nafcoc.org.za Tel: +27 12 441 1000 City of Johannesburg Fax: +27 13 755 1756 Tel: +27 21 487 8600 Companies and Intellectual Fax: +27 12 441 2064 P O Box 1049, Johannesburg, 2000 Email: [email protected] Fax: +27 21 487 8700/5 Property Commission (CIPC) South African Chamber of Email: [email protected] Tel: +27 861 843 384 www.mega.gov.za Email: [email protected] P O Box 429, Pretoria, 0001 Commerce and Industry (SACCI) www.seda.org.za Fax: +27 11 339 5704 www.wesgro.co.za Call Centre: 086 100 2472 P O Box 213, Saxonwold, 2132 Email: [email protected] Northern Cape Department of International Tel: +27 12 394 9973 Tel: +27 11 446 3800 Small Enterprise Finance www.joburg.org.za Economic Affairs & Tourism Other Government Fax Number: 086 517 7224 Fax: +27 11 446 3804 Agency (SEFA) Private Bag X5054, Kimberley, 8300 Departments www.cipc.co.za www.sacci.org.za Eco Fusion 5, Building D, Durban Investment Promotion Tel: +27 53 839 4000 1004 Teak Close, Witch Hazel Avenue, Agency (DIPA) Fax: +27 53 832 9464 Department of Home Affairs The National Consumer Highveld, Centurion, 0157 P O Box 1203, Durban, 4000 Email: [email protected] of South Africa Commission (NCC) Tel: +27 12 748 9600 Tel: +27 31 336 2540 www.northern-cape.gov.za/dedat/ Private Bag X114, Pretoria, 0001 Call Centre: +27 12 428 7000 Call Centre: 0800 000 663 Fax: +27 31 336 2511 Tel: 0800 60 11 90 (Toll free hotline)/ Email: [email protected] Email: [email protected] www.dipa.co.za +27 12 406 2500 (Local) www.thencc.gov.za www.sefa.org.za www.dha.gov.za

76 77 7 SOUTH AFRICA INVESTOR ROADMAP Key Contacts 7

Foreign Bank Bank of Cyprus Group Export Finance - KfW Ipex-Bank The Mauritius Commercial Bank Locally controlled Banks Foreign controlled Banks Representatives in South Tel: +27 11 784 3940 GmbH Limited Africa www.bankofcyprus.com Tel: +27 11 507 2511 Tel: +27 11 880 8472 Absa Bank Albaraka Bank Limited www.kfw-ipex-bank.de www.mcb.mu/en Tel: +27 11 350 4000 Tel: +27 31 366 9000 AfrAsia Bank Limited Commerzbank AG Johannesburg www.absa.co.za www.albaraka.co.za Tel: +27 11 268 5780 Tel: +27 11 486 0724/1642 Millennium BCP The Rep. Off. for Southern and www.afrasiabank.com www.commerzbank.com Tel: +27 11 622 0857/0859 Eastern Africa of The Export-Import African Bank Limited Habib Overseas Bank Limited https://ind.millenniumbcp.pt/ Bank of China Tel: +27 11 256 9000 Tel: +27 11 834 7441 African Banking Corporation of Credit Suisse AG Tel: +27 11 783 0767 www.africanbank.co.za www.habiboverseas.co.za Limited (trading as Tel: +27 11 012 7777 Mizuho Bank Limited english.eximbank.gov.cn/en BancABC Botswana) www.credit-suisse.com Tel: +27 11 881 5410 Bidvest Bank Limited HBZ Bank Limited Tel: +27 11 722 5300 https://www.mizuhobank.com The Royal Bank of Scotland Plc Tel: +27 11 407 3000 Tel: +27 31 267 4400 www.bancabc.com Ecobank Tel: +27 11 685 2000 www.bidvestbank.co.za www.hbzbank.co.za Tel: +27 11 783 6197 National Bank of Egypt www.rbs.com Banco Angolano de Investimentos www.ecobank.com Tel: +27 11 268 0500/1 Capitec Bank Limited Mercantile Bank Limited Tel: +27 11 881 5651 https://nbe.com.eg/ Unicredit Bank AG Tel: +27 21 809 5900 Tel: +27 11 302 0300 www.bancobai.ao Export-Import Bank of India Tel: +27 11 380 8090S www.capitecbank.co.za www.mercantile.co.za Tel: +27 11 442 8010 NATIXIS Southern Africa www.unicreditgroup.eu Banco BPI, SA www.eximbankindia.in Representative Office FirstRand Bank Limited The South African Bank of Athens Tel: +27 11 622 4376/86 Tel: +27 21 418 0306 Union Bank of Nigeria Plc Tel: +27 11 282 8000 Limited www.bancobpi.pt Fairbairn Private Bank (Isle of Man) www.natixis.com Tel: +27 11 883 3313 www.firstrand.co.za Tel: +27 11 634 4300 Limited www.unionbankng.com www.bankofathens.co.za Banco Espirito Santo e Comercial Tel: +27 11 295 8194 Royal Bank of Canada Grindrod Bank Limited de Lisboa www.nedbank.co.za (Suisse) SA Vnesheconombank Tel: +27 31 333 6600 Mutual Banks Tel: +27 11 616 5382 Tel: +27 11 784 4317 Tel: +27 11 783 3425 www.grindrodbank.co.za www.bes.pt First Bank of Nigeria www.rbcroyalbank.com www.veb.ru/ Finbond Mutual Bank Tel: +27 11 784 9922/9925 Investec Bank Limited Tel: +27 12 460 7288 Banco Internacional de Credito www.firstbanknigeria.com Société Générale Representative Wells Fargo Bank, National Tel: +27 11 286 7000 www.finbondmutualbank.co.za Tel: +27 11 616 1726 Office for Southern Africa Association www.investec.com www.bancobic.ao First City Monument Bank Plc Tel: +27 11 778 4381 Tel: +27 11 214 2940 GBS Mutual Bank Tel: +27 11 881 5520 www.socgen.com www.wellsfargo.com Nedbank Limited Tel: +27 46 622 7109 Banco Santander Totta S.A. www.fcmb.com Tel: +27 11 294 4444 www.gbsbank.co.za Tel: +27 11 616 3156 Sumitomo Mitsui Banking Zenith Bank Plc www.nedbank.co.za www.santandertotta.pt Hellenic Bank Public Company Corporation Tel: +27 11 783 5826/7 Limited Tel: +27 11 219 5300 www.zenithbank.com Sasfin Bank Limited Bank Leumi Le-Israel BM Tel: +27 11 783 0155 www.smbcgroup.com Tel: +27 11 809 7500 Tel: +27 11 336 0558 www.hellenicbank.com www.sasfin.com https://english.leumi.co.il/ The Bank of New York Mellon Industrial and Commercial Bank of Tel: +27 11 217 7160 The Standard Bank of South Africa Bank of America, National China African Representative Office www.bnymellon.com Limited Association Tel: +27 21 200 8005 Tel: +27 11 636 9111 Tel: +27 11 305 5153 www.icbc.com.cn The Bank of Tokyo-Mitsubishi www.standardbank.co.za www.bankofamerica.com UFJ, Ltd Tel: +27 11 706 5690 UBANK Limited www.bk.mufg.jp/global Tel: +27 11 518 5000 www.ubank.co.za

78 79 8 SOUTH AFRICA INVESTOR ROADMAP Addendum 8

Addendum

A. Property Registration Costs Per Metropolitan

B. Costs of Electricity Connection Per Metropolitan

C. water Connection Costs Per Metropolitan

D. 2018 Fuel Prices – Petrol Prices

E. 2018 Fuel Prices – Diesel Prices

F. Telecommunication Costs

G. Property Costs - Office Buildings

H. Industry Property Price - Rental

I. Property Prices - Industrial Stands

J. Rail and Port Costs

K. Key Construction Permit Processes

L. Getting a Permanent Electricity Connection

M. Trading Across Borders

N. overview of Trade Agreements

O. National Remuneration Data

Acronyms & Abbreviations

References

80 81 8 SOUTH AFRICA INVESTOR ROADMAP Addendum 8

A. Property Registration Costs Per Metropolitan

The conveyancer Obtain a rates Obtain a plumbing Obtain an Obtain an electrical The conveyancer Obtain a transfer duty Parties sign all the The conveyancer conducts a title clearance certificate certificate entomologist’s compliance certificate prepares and collects receipt documentation at the lodges the deed search and checks certificate all the required conveyancer’s office encumbrances on the documentation property

Metropolitan Cost Days Cost Days Cost Days Cost Days Cost Days Cost Days Cost Days Cost Days Cost Days

Buffalo City R0.00 0.5 R191.00 10 R0.00 0 R600.00 7 R1 250.00 7 R0.00 10 R247 561.00 2 R36 581.00 1 R1 275.00 9

Cape Town R0.00 0.5 R75.00 14 R600.00 7 R600.00 7 R1 250.00 7 R0.00 10 R247 561.00 2 R36 581.00 1 R1 275.00 14

Ekhuruleni R0.00 0.5 R237.00 21 R0.00 0 R0.00 0 R1 250.00 7 R0.00 10 R247 561.00 2 R36 581.00 1 R1 275.00 11

Durban R0.00 0.5 R189.00 33 R0.00 0 R600.00 7 R1 250.00 7 R0.00 10 R247 561.00 2 R36 581.00 1 R1 275.00 14

Johannesburg R0.00 0.5 R248.00 11 R0.00 0 R0.00 0 R1 250.00 7 R0.00 10 R247 561.00 2 R36 581.00 1 R1 275.00 11

Mangaung R0.00 0.5 R363.00 12 R0.00 0 R0.00 0 R1 250.00 7 R0.00 10 R247 561.00 2 R36 581.00 1 R1 275.00 9

Msunduzi R0.00 0.5 R315.00 48 R0.00 0 R600.00 7 R1 250.00 7 R0.00 10 R247 561.00 2 R36 581.00 1 R1 275.00 9

Nelson Mandela Bay R0.00 0.5 R132.00 7 R0.00 0 R600.00 7 R1 250.00 7 R0.00 10 R247 561.00 2 R36 581.00 1 R1 275.00 9

Tswhane (Pretoria) R0.00 0.5 R59.00 15 R0.00 0 R0.00 0 R1 250.00 7 R0.00 10 R247 561.00 2 R36 581.00 1 R1 275.00 9

Source: World Bank, 2018a & World Bank, 2018b

B. Costs of Electricity Connection Per Metropolitan

Submit an application for Await external Await utility Await completion of Open customer account, sign Obtain certificate of compliance Electricity tariff costs - municipal websites electricity connection to the site inspection by inspection of meter external connection supply contract with distribution for the internal wiring and distribution utility and obtain distribution utility box / circuit breaker works by distribution utility and submit proof pf submit to distribution utility to connection fee estimate utility payment of security deposit obtain final connection

Metropolitan Cost Days Cost Days Cost Days Cost Days Cost Days Cost Days

Buffalo City R229 268.00 30 R0.00 1 N/A N/A R0.00 45 R6 416.00 1 R0.00 1 https://www.buffalocity.gov.za/Residents/Tarrifs

Cape Town R450 125.00 25 R0.00 12 N/A N/A R0.00 60 N/A N/A R0.00 6 https://www.capetown.gov.za/Work%20and%20business/ Commercial-utility-services

Ekhuruleni R218 629.00 25 R0.00 1 R0.00 14 R0.00 60 R40 216.00 2 R0.00 3 https://www.ekurhuleni.gov.za/residents/tariffs/ tariffs-2019-20.html

Durban R164 275.00 29 N/A N/A R0.00 7 R0.00 60 R44 677.00 1 R0.00 4 http://www.durban.gov.za/City_Services/electricity/Tariffs/ Pages/default.aspx

Johannesburg R124 635.00 60 N/A N/A R0.00 3 R0.00 42 N/A N/A R0.00 1 https://www.citypower.co.za/customers/Pages/Tariff-Info. aspx

Mangaung R343 312.00 50 N/A N/A N/A N/A R0.00 45 R9 581.00 1 R0.00 11 http://www.centlec.co.za/Pages/Documents/Tariffs

Msunduzi R302 421.00 30 R0.00 1 R0.00 7 R0.00 105 R20 567.00 1 R0.00 1 http://www.msunduzi.gov.za/site/tarriffs/

Nelson Mandela Bay R388 095.00 68 R0.00 1 R0.00 8 R0.00 105 R6 740.00 9 R0.00 2 http://www.nelsonmandelabay.gov.za/Documents. aspx?catID=37&pageID=0

Tswhane (Pretoria) R0.00 30 R0.00 1 R0.00 9 R299 68 R7 759.00 1 R0.00 20.00 http://www.tshwane.gov.za/sites/Departments/Electricity/ 007.00 Pages/Electricity.aspx

Source: World Bank, 2018a & Word Bank, 2018b

82 83 8 SOUTH AFRICA INVESTOR ROADMAP Addendum 8

C.Water Connection Costs Per Metropolitan E. 2018 Fuel Prices – Diesel Prices

Receive inspections Apply for water and Receive inspections Water tariff costs - 500 PPM (R/litre) 50 PPM (R/litre) (foundations trenches, sewerage connections and obtain water and municipal websites drainage systems) sewerage connections Month Coastal Inland Month Coastal inland

Metropolitan Cost Days Cost Days Cost Days January 2018 R12.35 R12.74 January 2018 R12.38 R12.77

Buffalo City R0.00 1 R12 775.00 1 R0.00 14 www.buffalocity.gov.za/ February 2018 R12.17 R12.57 February 2018 R12.21 R12.59 Residents/Tarrifs March 2018 R11.70 R12.10 March 2018 R11.77 R12.15 Cape Town R0.00 1 R10 050.00 1 R0.00 14 www.capetown.gov.za/ Work%20and%20business/ April 2018 R12.26 R12.75 April 2018 R12.32 R12.80 Commercial-utility-services May 2018 R12.85 R13.34 May 2018 R12.90 R13.38 Ekhuruleni R0.00 1 R15 755.00 1 R0.00 21 https://www.ekurhuleni. gov.za/residents/tariffs/ June 2018 R13.77 R14.25 June 2018 R13.70 R14.19 tariffs-2019-20.html July 2018 R13.96 R14.44 July 2018 R14.01 R14.49 Durban R0.00 1 R21 040.00 1 R0.00 14 www.durban.gov.za/City_ Services/water_sanitation/ August 2018 R13.92 R14.40 August 2018 R13.97 R14.45 Bylaws_Tariffs/Tariffs/Pages/ Water_Tariffs_English.aspx September 2018 R13.92 R14.40 September 2018 R13.97 R14.45

Johannesburg R0.00 1 R15 019.00 1 R0.00 10 https://www. October 2018* R15.20 R15.69 October 2018 R15.16 R15.64 johannesburgwater.co.za/ resource-centre/ October 2018* R15.20 R15.64 October 2018 R15.20 R15.64

Mangaung R0.00 1 R21 235.00 1 R0.00 5 www.mangaung.co.za/ November 2018 R15.71 R16.20 November 2018 R15.63 R16.12 category/notices/ December 2018 R14.23 R14.72 December 2018 R14.18 R14.67 Msunduzi R0.00 1 R16 420.00 1 R0.00 18 www.msunduzi.gov.za/site/ tarriffs/ Source: Automobile Association of South Africa, 2019 * October represents an average of two figures. i.e. averaged inland 500 ppm to 15.67 and coastal 50 ppm to R15.18. Nelson Mandela Bay R0.00 1 R15 650.00 1 R0.00 18 www.nelsonmandelabay. gov.za/Documents. aspx?catID=37&pageID=0

Tshwane R0.00 1 R15 300.00 1 R0.00 30 www.tshwane.gov.za/ sites/Departments/ Financial-Services/ Financial-Documents/Pages/ Promulgated-Tariffs.aspx

Source: World Bank, 2018a & World Bank, 2018b F. Telecommunication Costs Fibre Internet Costs (Per Month) For Varying Voice Call Costs Internet Speeds D. 2018 Fuel Prices – Petrol Prices Vodacom MTN Cell C Internet Service 4Mbps 20Mbps 100Mbps Tariff Plan Anytime Per Pay Per R0.66c on 95 Unleaded (R/litre) 93 Unleaded (R/litre) Provider Second Second Prepaid Month Coastal Inland Month Coastal Inland Cybersmart R555.00 R905.00 R1 305.00 Length of a call January 2018 R13.93 R14.42 January 2018 R13.79 R14.20 Cybersmart (FTTB) R715.00 R1 105.00 R1 815.00 (minutes)

February 2018 R13.63 R14.12 February 2018 R13.49 R13.90 Vodacom R604.25 R806.01 R1 259.96 0.5 R0.62 R0.50 R0.33

March 2018 R13.27 R13.76 March 2018 R13.13 R13.54 MTN R598.00 R798.00 R1 108.00 1.0 R1.23 R0.99 R0.66

April 2018 R13.89 R14.48 April 2018 R13.72 R14.23 MTN (FTTB) R698.00 R1 108.00 R1 908.00 1.5 R1.85 R1.49 R0.99

May 2018 R14.38 R14.97 May 2018 R14.21 R14.72 Cell C R705.00 R907.00 R1 210.00 2.0 R2.46 R1.98 R1.32

June 2018 R15.20 R15.79 June 2018 R15.03 R15.54 R709.00 R809.00 R1 209.00 2.5 R3.08 R2.48 R1.65 July 2018 R15.43 R16.02 July 2018 R15.29 R15.80 3.0 R3.69 R2.97 R1.98

August 2018 R15.44 R16.03 August 2018 R15.30 R15.81 3.5 R4.31 R3.47 R2.31

September 2018 R15.49 R16.08 September 2018 R15.35 R15.86 4.0 R4.92 R3.96 R2.64

October 2018 R16.49 R17.08 October 2018 R16.49 R16.85 4.5 R5.54 R4.46 R2.97

November 2018 R16.49 R17.08 November 2018 R16.49 R16.85 5.0 R5.15 R4.95 R3.30

December 2018 R14.65 R15.24 December 2018 R14.65 R15.00 Source: ICASA, 2018 Source: Automobile Association of South Africa, 2019

84 85 8 SOUTH AFRICA INVESTOR ROADMAP Addendum 8

G. Property Costs – Office Buildings I. Property Prices – Industrial Stands

Market rental rates for office buildings, Q3 2018 Mean market values for serviced and level industrial stands, Q3 2018

Grade A+ mean Grade A mean Grade B mean Grade C mean Mean market values for serviced and level industrial stands (excl VAT)

Rands per rentable m2 per month, gross leases (excl VAT) Area size leased in m2

Bloemfontein R135.00 R117.50 R89.17 R74.92 1 000 2 000 5 000 10 000 Central Witwatersrand R1 002.00 R1 007.00 R938.00 R907.00 Cape Town R157.39 R135.91 R107.10 R84.08 West Rand R771.00 R769.00 R709.00 R676.00 Durban R154.60 R119.69 R108.78 R92.02 East Rand R984.00 R967.00 R889.00 R844.00 East London R126.29 R103.75 R84.49 R66.33 Far East Rand R574.00 R571.00 R564.00 R549.00 George R126.25 R110.00 R80.00 R63.33 Pretoria R788.00 R748.00 R742.00 R698.00 Johannesburg R181.32 R139.28 R110.68 R86.35 Nelspruit R800.00 R800.00 R800.00 R800.00

Nelspruit R165.00 R150.00 R125.00 R85.00 Durban R1 595.00 R1 577.00 R1 542.00 R1 468.00 Cape Peninsula R1 811.00 R1 773.00 R1 660.00 R1 590.00 Port Elizabeth R111.65 R97.50 R80.06 R68.04 Port Elizabeth R552.00 R536.00 .00 R491.00 Pietermaritzburg Core R140.00 R118.33 R98.33 R75.00 East London R656.00 R561.00 R453.00 R341.00 Polokwane R172.50 R138.63 R105.67 R77.50 George R436.00 R406.00 R370.00 R293.00 Pretoria R170.83 R138.87 R118.82 R95.92 Pietermaritzburg - R450.00 R467.00 R447.00

Richards Bay R90.00 R70.00 R60.00 R50.00 Source: Rode, 2018

Source: Rode, 2018

H. Industrial Property Price – Rental J. Rail and Port Costs

Mean prime industrial market rentals, Q3 2018 Transnet is the custodian of ports, rail and pipelines in South Africa

Rands per rentable m2 per month. gross leases (excl VAT) • Rail Charge Levy can be found on the Transnet Freight Rail website: Area size leased in m2 http://www.transnetfreightrail-tfr.net/Business/Pages/Charge_Levy.aspx

250 500 1 000 2 500 5 000 • Port Terminal cost information can be found on the Transnet Ports website: Central Witwatersrand R47.61 R45.37 R42.95 .61 R40.24 https://www.transnetportterminals.net/Customer/Tariffs/Forms/AllItems.aspx West Rand R44.47 R42.47 R40.06 R37.80 R35.68 East Rand R48.25 R47.63 R46.37 R45.18 R43.92 Far East Rand R35.93 R35.57 R33.14 R32.21 R30.27 Pretoria R47.76 R44.40 R40.50 R36.50 R33.84 Polokwane R51.25 R42.23 R36.10 R34.38 R30.00 Nelspruit R50.00 R44.38 R42.88 R41.25 - Durban R58.54 R57.48 R56.90 .10 R53.60 Ladysmith R20.00 R17.00 R12.00 R10.00 R8.00 Cape Peninsula R55.46 R53.14 R50.59 R46.98 R45.33 Port Elizabeth R41.58 R39.78 R35.76 R33.68 - East London R39.15 R34.91 R31.05 R28.35 R25.13 Bloemfontein R40.93 R38.48 R34.43 R30.50 R26.21 George R35.78 R32.72 R29.61 .56 R21.44 Pietermaritzburg - R48.75 R43.75 R41.67 R29.00

Source: Rode, 2018

86 87 8 SOUTH AFRICA INVESTOR ROADMAP Addendum 8

K. Key Construction Permit Processes M. Trading Across Borders

Stage No. of Agency Export permits issued in two working days procedures • Register with SARS as an exporter by completing Domestic transport Exporter Before Construction DA185 and DA185.4A2 forms  Obtain a geographical and topographic surveys of land plot  Licensed private firm • Forward forms to Customs office  Obtain preconstruction clearances  Relevant municipal department/s • Receive a Customs and Excise client code Border Compliance (Average  Obtain land use management approval  Municipal town planning department Local Port • Apply for an export permit with the International 94 hours, US$666)  Obtain approval of the building plans  Municipal building control department Trade Administration Commission of South Africa by completing an IE230 form  Notify about commencement of building work  Municipal building control department and provincial Department of Labour Documentary Compliance International • Export permit issued. During Construction (Average 75 hours, US$60) Customer

 Receive inspections (foundations trenches, drainage system)  Municipal building control department and provincial Department of Labour Import permits issued in three to five working days Apply for water and sewerage connections Municipal water and sanitation department   Importer Domestic transport • Register with SARS as an importer by completing  Receive inspections and obtain water and sewerage connections  Municipal water and sanitation department DA185 and DA185.4A1 forms

After Construction • Forward forms to Customs office Border Compliance (Average  Notify about completion of building work  Municipal building control department Local Port • Receive a Customs and Excise client code 65 hours, US$676)  Receive final inspection  Municipal building control and fire department • Apply for an import permit with the International Trade Administration Commission of South Africa by  Obtain occupancy certificate  Municipal building control department completing an IE230 form International Documentary Compliance  Private sector service  Government or utility service Supplier (Average 36 hours, US$73) • Import permit issued.  Individual procedure  Procedure is not required in all locations L. Getting a Permanent Electricity Connection

Depending on the nature of the import and export, additional Submit an application for electricity connection to distribution utility and obtain connection fee estimate 1 documents may need to be submitted to other government departments such as Environmental Affairs or Police 2 Await external site inspection by distribution utility Services.

3 Await utility’s inspection of meter box/circuit breaker

4 Await completion of external connection works by distribution utility

Open customer account, sign supply contract with distribution utility and submit proof of payment of 5 security deposit

Obtain certificate of compliance (COC) for the internal wiring and submit to distribution utility to obtain final 6 connection

 Procedure present in all locations  Distribution utility  Customer’s electrical engineer/consultant/contractor Source: World Bank, 2018a & World Bank, 2018b Source: World Bank, 2018a & World Bank, 2018b

88 89 8 SOUTH AFRICA INVESTOR ROADMAP Addendum 8

N. Overview of Trade Agreements Agreement Countries Objective Product

Agreement Countries Objective Product Trade, Investment and SACU and the US Makes provision for the None Development Cooperation parties to negotiate and sign South Africa, Botswana, Duty-free movement of goods All products Agreement (TIDCA) agreements relating to sanitary , Namibia and with a common external tariff Southern African Customs and phyto-sanitary measures Swaziland on goods entering any of the Union (SACU) (SPS), customs cooperation and countries from outside the technical barriers to trade (TBT). SACU. Trade and Investment South Africa and the US Provides a bilateral forum for the None Southern African Development Between 12 SADC Member Free trade for 92% of the Most products Framework Agreement (TIFA) two countries to address issues Community (SADC) FTA States product lines achieved in 2012. of interest, including AGOA, Further consolidation required TIDCA, trade and investment before looking at deeper promotion, non-tariff barriers, integration. SPS, infrastructure and others.

Trade, Development and South Africa and the The EU offered to liberalise Refer to EPA SACU-India PTA SACU and India Tariff reductions on selected To be determined Cooperation Agreement European Union (EU) 95% of its duties on South goods. (TDCA) African originating products by 2010. In turn, by 2012, South SADC-EAC-COMESA 26 countries Establishing the African To be determined Africa offered to liberalise 86% Tripartite FTA (TFTA) Economic Community (AEC), of its duties on EU originating which requires rationalisation products. of the continent's regional economic communities. European Free Trade SACU and the European Free Tariff reductions on selected Industrial goods (including fish Association (EFTA)-SACU Free Trade Association (EFTA) goods. and other marine products) and The African Continental Free The AfCFTA integrates 55 Create a single market for goods To be determined Trade Agreement (FTA) which includes Iceland, processed agricultural products. Trade Area (AfCFTA) countries and builds on the and services, and enhance Liechtenstein, Norway and Basic agricultural products are Tripartite Free Trade Area economic integration in the Switzerland covered by bilateral agreements (TFTA) with the Common African continent. with individual EFTA states. Market for East and Southern Africa (COMESA), the East Economic Partnership South Africa, Botswana, Harmonising the trading regime The agreement covers most African Community (EAC) Agreement between the SADC Namibia, Swaziland, Lesotho between SACU and the EU; to products. It will replace the and SADC and will result EPA States, of the one part, and Mozambique (referred to secure further market access in Trade Chapter of the TDCA. in new market access and the European Union and as the SADC EPA Group) and agriculture (beyond the SA- New market access accrued opportunities in West Africa its Member States, of the the EU EU Trade Development and better than the TDCA will be and North Africa which will other part Cooperation Agreement (TDCA) implemented after entry into be beneficial for the export of provisions) and claw back on force of the SADC-EU EPA. South African products. some policy space lost under the TDCA. SACUM-UK Economic SACU, Mozambique and The agreement will effectively Refer to EPA Partnership Agreement the UK roll-over and replicate the terms SACU-Southern Common SACU and Argentina, Brazil, Tariff reductions on selected About 1 000 product lines on of trade present in the existing Market (Mercosur) PTA Paraguay and Uruguay goods. each side of the border. SADC-EU EPA. It will allow for seamless, uninterrupted trade to /South Africa South Africa and Zimbabwe Preferential rates of duty, Selected goods, including lower continue between SACUM and bilateral trade agreement rebates and quotas on certain tariffs and quotas on textile the UK. The tariff arrangements goods traded between the two imports into South Africa. under the SADC-EU EPA have countries. been carried over to cover South Generalised System of Offered to South Africa as a Products from developing Specified industrial and Africa’s trade with the UK. Preferences (GSP) developing country by the countries qualify for preferential agricultural products. EU, Norway, Switzerland, market access. Russia, Turkey, the US, Canada and Japan

African Growth and Granted by the US to 39 Preferential access to the US Duty-free access to the US Opportunity Act (AGOA) sub-Saharan African (SSA) market through lower tariffs or no market under the combined countries tariffs on some products. AGOA/GSP programme stands at approximately 7 000 product tariff lines.

Source: the dti, 2019

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O. National Remuneration Data Acronyms & Abbreviations EAC east African Community

Remuneration data varies by profession and may vary by ECA electronic Communications Act ADEP Aquaculture Development and Enhancement location. ECDC eastern Cape Development Corporation Programme EFTA european Free Trade Association The below table is based on a remuneration survey for AEC African Economic Community a six-month period (May to November 2018), which EIA environmental Impact Assessment AfCFTA African Continental Free Trade Area considers the total cost to company salary packages in EIP enterprise Incubation Programme AGOA African Growth and Opportunity Act South Africa. The earning potential for similar job functions EIU economist Intelligence Unit may differ between provinces due to job and skill supply AHI Afrikaanse Handelsinstituut EMIA export Marketing and Investment Assistance and demand. For instance the earning potential for financial AIS Automotive Investment Scheme professionals is extremely competitive in Gauteng, relative EPA economic Partnership Agreement APSS Agro-Processing Support Scheme to KwaZulu-Natal and the Western Cape. As a result, salary ETI employee Tax Incentive ARV Antiretroviral offers in Gauteng may be, on average, 25% more. EU european Union B-BBEE Broad-Based Black Economic Empowerment National Lowest Annual Paid Salary National Highest Annual Paid Salary FABCOS Foundation for African Business and BBSDP Black Business Supplier Development Job Sector Category Consumer Services Intermediate Level Senior Level Skilled Intermediate Level Senior Level Skilled Programme Skilled Skilled FDA Free State Development Agency BEE Black Economic Empowerment Accounting R174 048 R218 916 R617 256 R653 220 FDC Free State Development Corporation BIS Black Industrialist Scheme FDI Foreign Direct Investment Admin Clerk R109 428 R116 568 R340 248 R435 168 BPS Business Process Services Fedusa Federation of Trade Unions of South Africa Architecture and Engineering R251 316 R287 064 R574 224 R849 912 BRICS Brazil, Russia, India, China and South Africa FMCG Fast Moving Consumer Goods Banking R166 152 R206 376 R616 248 R842 616 BUSA Business Unity South Africa FOB Free-On-Board Building and Construction R237 996 R303 000 R554 544 R939 168 CCMA Commission for Conciliation, Mediation and FSC Forest Stewardship Council Call Centre R144 684 No information R348 000 No information Arbitration FTA Free Trade Agreement Financial Advisory R308 004 R449 004 R630 072 R709 320 CFC Controlled Foreign Company FTTB Fibre to the Business CIP Critical Infrastructure Programme Financial Management R702 684 R803 472 R830 220 R948 024 GAAR General Anti-Avoidance Rule CIPC Companies and Intellectual Property Information Technology R332 004 R370 872 R700 452 R793 692 Commission GCIP Global Cleantech Innovation Programme Insurance R162 804 R167 148 R471 468 R599 580 CIS Co-operative Incentive Scheme GDP Gross Domestic Product Manufacturing and Assembly R182 400 R212 880 R380 292 R870 996 CKD Complete Knock Down GEP Gauteng Enterprise Propeller Marketing R161 412 R267 432 R635 004 R675 300 CMT Cut, Make and Trim GGDA Gauteng Growth Development Agency Medical and Health R164 400 R277 620 R481 044 R552 300 COC Certificate of Compliance GHG Greenhouse Gas Sales R143 436 R185 004 R517 020 R634 680 COMESA Common Market for Eastern and Southern GRP Glass-Reinforced Plastic

Stock Broking and Asset Management R338 328 R348 000 R487 752 R627 804 Africa GSP Generalised System of Preferences Cosatu Congress of South African Trade Unions GTIP Green Tourism Investment Programme Warehousing and Logistics R112 248 R117 600 R563 520 R624 576 CPI Consumer Price Index HDI Historically Disadvantaged Individual Source: CareerJunction, 2018 CPFP Capital Projects Feasibility Programme HIV/AIDS Human immunodeficiency virus and acquired CTCP Clothing and Textiles Competitiveness immune deficiency syndrome Programme HR Human resources CTFL Clothing, Textile, Footwear and Leather HSBC Hong Kong and Shanghai Banking DBSA Development Bank of Southern Africa Corporation DFI Development Finance Institution IBNET International Benchmarking Network DIPA Durban Investment Promotion Agency ICASA Independent Communications Authority of South Africa dti Department of Trade and Industry

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ICT Information and Communications Technology PAP Public Art Programme SHRA Social Housing Regulatory Authority US IDC Industrial Development Corporation PAYE Pay-As-You-Earn SKD Semi Knock Down VAT value Added Tax IDZ Industrial Development Zone PE Permanent Establishment SME Small and Medium-sized Enterprise WEF world Economic Forum IFRS International Financial Reporting Standards PET Polyethylene Terephthalate SMME Small, Medium and Micro-sized Enterprise Wesgro western Cape Investment and Trade IMF International Monetary Fund PI Production Incentive SPII Support Programme for Industrial Innovation Promotion Agency IndWMP Industry Waste Management Plan PGM Platinum Group Metals SPP Strategic Partnership Programme WHT withholding Tax InvestSA Invest South Africa PIT Personal Income Tax SPS Sanitary and Phyto-sanitary WTo world Trade Organization IPP Innovation and Partnership Programme PPD Product Process Development SSA Sub-Saharan Africa ISO International Organization for Standardization PRASA Passenger Rail Agency of South Africa SSAS Sector Specific Assistance Scheme IT Information Technology (PTY) LTD Proprietary Limited StatsSA ITAC International Trade Administration Commission PV Photovoltaic STP SEDA Technology Programme of South Africa QSAPE Qualifying South African Production STT Securities Transfer Tax JAG Joint Action Group Expenditure TBT Technical Barriers to Trade JSE Johannesburg Stock Exchange RDF Research Development Fund tCO2e Tonne of Carbon Dioxide Equivalent KZN KwaZulu-Natal REIPPPP Renewable Energy Independent Power TDCA Trade Development and Cooperation MAFISA Micro Agriculture Finance Scheme of South Production Procurement Programme Agreement Africa RICA Regulation of Interception of Communications TEDA Tshwane Economic Development Agency and Communication-Related Information Act MDDA Media Development and Diversity Agency TFTA Tripartite Free Trade Area R&D Research and Development Mecosur Southern Common Market THRIP Technology and Human Resources for MEGA Mpumalanga Economic Growth Agency SA South Africa Industry Programme MGE Mzansi Golden Economy SAAM South African Automotive Masterplan TIA Technology Innovation Agency MHCV-AIS Medium and Heavy Commercial Vehicles SACCI South African Chamber of Commerce and TICPS Technology Innovation Cluster Programme Industry Automotive Investment Scheme TIDCA Trade Investment and Development MNC Multinational Corporation SACU Southern African Customs Union Cooperation Agreement MRO Maintenance, repair and overhaul SACUM Southern African Customs Union and TIFA Trade and Investment Framework Agreement Mozambique Nactu National Council of Trade Unions TIKZN Trade and Invest KwaZulu-Natal SADC Southern African Development Community NAFCOC National African Federation of Chambers of TIL Trade and Invest Limpopo SANAS South African National Accreditation System Commerce TPE Total Production Budget Estimate SANEDI South African National Energy Development NCC National Consumer Commission TRIPS Trade-Related Aspects of Intellectual Property Institute Nedlac National Economic Development and Labour TV Television Council SAPOA South African Property Owners Association UAV Unmanned aerial vehicles NEF National Empowerment Fund SARB South African Reserve Bank UIF Unemployment Insurance Fund NPC Non-Profit Company SARS South African Revenue Service UK United Kingdom NYDA National Youth Development Agency SBL Sugary Beverages Levy UNCTAD Conference on Trade and SDL Skills Development Levy OECD organization for Economic Cooperation and Development Development SEDA Small Enterprise Development Agency UNESCO United Nations Educational, Scientific and OEM original Equipment Manufacturer SEFA Small Enterprise Finance Agency Cultural Organization OICA International Organization of Motor Vehicle SET Science Engineering and Technology UNFCCC United Nations Framework Convention on Manufacturers SETA Sector Education and Training Authority Climate Change OSB orientated Strength Board SEZ Special Economic Zone Unisa University of South Africa P-AIS People-carrier Automotive Investment Scheme

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