South Africa At A Glance

Location

South Africa is located at the tip of the African continent, with a 2,798 kilometres coastline on the Atlantic and Indian Oceans. The country lies between 22 and 35 degrees south and subdivided into four major geographic regions; a coastal belt and three plateaus. Countries neighbouring South Africa are Botswana, Lesotho, Mozambique, Swaziland, Zimbabwe and Namibia. It is the world’s 25th largest country in size.

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Government and Politics

South Africa consists of three Capitals: Cape Town is the largest of three (Legislative), Pretoria/Tshwane (Executive), and Bloemfontein (Judicial). The country has bicameral parliament: the National Assembly (lower house) has 400 members while the Council of Provinces (NCOP/upper house) has 90 members. The Head of State and Government is Honouarble President Jacob Gedleyihlekisa Zuma and the Executive Deputy President Kgalema Motlante. The Executive/Cabinet is appointed by the President on a five-year term while the President is elected by the National Assembly for a five-year period. The judicial authority of the Republic is vested in the courts. The courts are independent and subject only to the Constitution and the law, which they must apply impartially and without fear, favour or prejudice. The courts are the:-

Constitutional Court;
Supreme Court of Appeal;
High Courts, including any high court of appeal that may be established by an Act of Parliament to hear appeals from High Courts;
Magistrates' Courts and;
Any other court established or recognised in terms of an Act of Parliament, including any court of a status similar to either the High Courts or the Magistrates' Courts.

Provincial and Local Governments

South Africa has nine provinces, each with its own legislature, premier and executive council - and distinctive landscape, population, economy and climate. They are:

Eastern Cape - 168 966 square kilometres
Free State - 129 825 square kilometres
Gauteng - 16 548 square kilometres
KwaZulu-Natal - 94 361 square kilometres
Limpopo - 125 755 square kilometres
Mpumalanga - 76 495 square kilometres
Northern Cape - 372 889 square kilometres
North West - 106 512 square kilometres
Western Cape - 129 462 square kilometres

Before 1994, South Africa had four provinces: the Transvaal and Orange Free State, previously Boer republics, and Natal and the Cape, once British colonies. Scattered about were also the grand apartheid "homelands", spurious states to which black South Africans were forced to have citizenship. Under South Africa's new democratic constitution the four provinces were broken up into the current nine, and the "homelands" blinked out of existence. The Cape became the Western Cape, Northern Cape, Eastern Cape and the western half of North West, while the Transvaal became Limpopo, Mpumalanga, Gauteng and the eastern half of North West. Natal was renamed KwaZulu-Natal, incorporating the "homeland" of KwaZulu, and the Orange Free State became simply the Free State.

South Africa's Economy Profile

South Africa has achieved a level of macro-economic stability not seen in the country for many years. Over the past several years, government policy focused - successfully on macroeconomic stability - getting inflation, debt, and currency volatility under control. Such advances create opportunities for real increases in expenditure on social services, and reduce the costs and risks for all investors, laying the foundation for increased investment and growth. By 2007, the economy was stronger than at any time over the past 10 years. The South African government has achieved significant successes in ensuring macro-economic stability, via the implementation of macro-economic policies directed at promoting domestic competitiveness, growth and employment.

The South African economy, prior the global economic meltdown, has been growing substantially; additional jobs have been created, and the pace of the economic expansion has been strengthened by robust investment and domestic expenditure. South Africa's macro-economic performance over the past 10 years has been characterised by a remarkable improvement in stability, resulting in a considerably improved economic growth rate. The national government deficit decreased from -4.8 percent of GDP in 1994, to -0.6 percent in 2008, meaning that over time, the South African government was moving away from spending more than its revenue. The national government debt decreased from 50.4 percent of GDP in 1995, to 23.8 percent in 2008, resulting in a reduction in government's liability over the years.

With the world financial crisis wreaking havoc in major markets South Africa’s economic resilience succumbed to economic burnout early in 2008. After several years of sustained growth South Africa’s economy fell into recession with GDP contracting by 1.8 percent in 2009. The economic slowdown had started already towards the end of 2007 with the weakening of domestic demand and was exacerbated when the global crisis led to a sharp fall in exports. Nevertheless, South Africa appears to have turned the corner as the growth engine starts up again. Growth is expected to recover gradually to 2.4 percent in 2010, helped by the recovery of global demand and boosted by the successful hosting of the FIFA World Cup, and to accelerate further in 2011 to 3.3 percent. Output in manufacturing and mining declined significantly in 2009 as a result of lower exports, while agricultural sector contracted because of adverse climatic conditions. The only sector that showed sustained growth was construction, boosted by a public investment programme and obviously the FIFA World Cup.

Business Environment

According to the World Bank Report ‘Investment Climate Assessment’ South Africa's business environment compares favourably with its peer group of upper- to middle-income economies globally. For instance, on the overall Ease of Doing Business indicator, South Africa surpassed many successful emergent market economies of Argentina, Brazil, Chile, and China, and not distant behind Malaysia and Thailand. The South African policy authorities seem to have clutched the maxim that a conducive business environment is a crucial ingredient to the creation of vibrant local economies across South Africa. The country boasts most modern and extensive infrastructure comparable to that of developed countries. South Africa has well-developed financial, legal, communications, energy, and transport sectors; and a stock exchange that ranks among the ten largest in the world. The country pride itself of a modern infrastructure supporting an efficient distribution of goods to major urban centres throughout the region. Telecommunications are the best developed on the continent, with mobile phone use (46m in 2009) far outnumbering fixed lines (4.426m in 2008). There were around 5 million Internet users in 2008.

Transnet, a state-owned enterprise is South Africa's main transport operator and the holding company for Spoornet (rail transport), Autonet (road transport), Petronet (liquid petroleum), Portnet (port authority) and Fast Forwards (container shipments). Ports and shipping handle around 96 percent of the country’s exports, and are a transit hub for trade between the Americas, Europe and Asia, as well as for Africa’s East and West Coasts. Durban is Africa’s largest container port while the Port of Richard’s Bay is the world’s largest bulk coal terminal. Other major ports in South Africa include East London, Port Elizabeth, Saldanha, Mossel Bay, and Ngqura. There is an excellent road network with more than 75 000 kilometres of surfaced roads. The country has an extensive passenger and freight railway network, much of it state-owned, which connects to other networks in the Sub-Saharan region.

South Africa has ten (10) different Airports, International Airports being Cape Town, King Shaka and OR Tambo. Seven (7) other domestic airports are Bloemfontein, East London, George, Kimberly, Pilansberg, Port Elizabeth and Upington. There are abundant flights connecting three major cities (Johannesburg, Durban and Cape Town) with leisure/industrial towns of Port Elizabeth, East London, George, Hoedspruit, Bloemfontein, Kimberley, Nelspruit, Pietermaritzburg, Mthatha, Polokwane, Richards Bay, Upington, Nelspruit/Kruger, Margate, Phalaborwa and Mmabatho.

There are a large number of banks in South Africa, the largest of which include ABSA Bank, Standard Bank of South Africa (SBSA), Nedcor Bank, First National Bank of Southern Africa, and BOE Investment Bank. Johannesburg, Durban and Cape Town are home to many international bank branches, including Barclays, ABN AMRO, Banque Paribas, Bayerische Vereinsbank and ING Barings.

Taxation

In line with international trends, the South African tax system has changed from a source-based to a residence-based system. This means that South African residents are taxed on their worldwide income. Non-South African residents will be taxed on income from South African sources in accordance with the taxation agreements with the different countries.

For more information please log on to www.sars.gov.za

Financial Infrastructure

South Africa is one of the world's favourite emerging markets, offering investors sophisticated financial infrastructures and exceptional investment opportunities. The South African Reserve Bank (SARB) oversees the banking services industry in South Africa. The non-banking financial services industry is governed by the Financial Service Board (FSB). South Africa has the following principle financial service markets:

JSE Securities Exchange South Africa (JSE);
South African Futures Exchange (Safex);
Bond Exchange of South Africa (BESA); and
Alternative Exchange (Altx)

The Johannesburg Stock Exchange, founded in 1870, is the largest stock exchange in Africa and corporations operating in South Africa are well served by merchant banks, brokerage firms and a wide range of sophisticated financial service specialists. South Africa’s banking system is regularly ranked in the Top 10 in terms of competitiveness. The JSE is governed and licensed externally by the Stock Exchange Control Act of 1985. The Safex and BESA markets are governed by the Financial Marketers Control Act of 1989. The markets are self-regulated internally.

Competition and Regulatory Policy

South African authorities embarked on a major overhaul of Competition Policy, which led to the formulation of a new policy, the Competition Act, No. 89 of 1998, which seeks to achieve the following objectives:

To promote the efficiency, adaptability and development of the economy;
To provide consumers with competitive prices and product choices;
To promote employment and advance the social and economic welfare of South Africans;
To expand opportunities for South African participation in world markets and recognise the role of foreign competition in the Republic;
To ensure that small and medium-sized enterprises have an equitable opportunity to participate in the economy; and
To promote a greater spread of ownership, in particular to increase the ownership stakes of historically disadvantaged persons (HDIs).

In meeting these objectives, it is focused on restricting anti-competitive practices, eliminating abuse of dominant positions and strengthening merger control. Three institutions were created in terms of the Act to achieve the above objectives:

The Competition Commission, which is independent but whose decisions may be appealed to the Competition Tribunal and the Competition Appeal Court;
The Competition Tribunal, which has jurisdiction throughout South Africa and is independent from the competition institutions; and
The Competition Appeal Court, which has status similar to that of a High Court and jurisdiction throughout South Africa.
For more information on the Competition Commission please visit: www.compcom.co.za
For more information on the Competition Tribunal, please visit: www.comptrib.co.za
For more information on the Competition Appeal Court, please visit: www.compcom.co.za/about-us/aboutus_competition_appeal_court.aspx

Skills

South Africa possesses a large resource base of skilled, semi-skilled and unskilled labour. The South African government has introduced wide-ranging legislation to promote training and skills development and fast-track the building of world-class skills and competences. A strong network of universities and other tertiary education institutions is home to a host of leading international academics and researchers, with the majority of research and development in South Africa, undertaken at the country's universities.

Natural Resource

South Africa has large deposits of mineral resources such as gold, chromium, antimony, coal, iron ore, manganese, nickel, phosphates, tin, uranium, gem diamonds, platinum, copper, vanadium, salt and natural gas. It is a major industrial player and world leader in the production and export of minerals. With an abundance of raw materials, an increasing labour and capital efficiency and cutting edge-technology development, South Africa has been ranked as highly cost competitive by the Economic Intelligence Unit.

The country produces 14 percent of the world's gold, and has 41 percent of the world's known reserves. It is estimated that 21 000 tonnes of undeveloped resources - about one fifth of the world's unmined gold - still remains. These ores are increasingly difficult to exploit due to the great depths at which they are situated and their fairly low-grade quality produce. Over the past few years, South African mining houses have transformed into large, focused mining companies that include Anglo Platinum, Anglogold, De Beers, Implats and Iscor. The country is also the leading producers of base metals and coal, accounting for a significant proportion of both world production and reserves. The country's diamond industry is the third largest by value, and the sixth largest by volume in the world, with Russia and Botswana leading in both categories.

South Africa's Rainbow Nation is an allegory used to describe the incredible diversity of its people, from the original Bushmen inhabitants of the land to the people who migrated and settled here over the years. There is hardly a nation on Earth that is not in some way represented in this diverse country. South Africa is ethnically diverse and boasts 11 official languages, English most commonly spoken. About 78 percent of the South African population is of black African ancestry, divided among a variety of ethnic groups speaking different Bantu languages, nine of which have official status. South Africa also recognises several unofficial languages, including Fanagalo, Khoe, Lobedu, Nama, Northern Ndebele, Phuthi, San and South African Sign Language.

Culture and Language

Climate

Most of South Africa enjoys a mild, sunny climate with warm to hot days in summer and dry sunny winters. The country enjoys summer rainfall and an average of 8,5 hours of daily sunshine.

Religion

Christians account for 79 percent of the population. This consist of Zion Christian, Roman Catholic, Methodist, Dutch Reformed, Anglican and members of other Christian churches which accounts for another 36 percent of the population. Muslims accounts for 1.5 percent of the population, Hindus about 1.3 percent, and Judaism at 0.2 percent. Almost 15 percent of the population has no religious affiliation.