South Africa - International Franchise Association

Return to table of contents
Chapter 6: Investment Climate
• Openness to Foreign Investment
• Conversion and Transfer Policies
• Expropriation and Compensation
• Dispute Settlement
• Performance Requirements and Incentives
• Right to Private Ownership and Establishment
• Protection of Property Rights
• Transparency of Regulatory System
• Efficient Capital Markets and Portfolio Investment
• Competition from State Owned Enterprises
• Political Violence
• Corruption
• Bilateral Investment Agreements
• OPIC and Other Investment Insurance Programs
• Labor
• Foreign-Trade Zones/Free Ports
• Foreign Direct Investment Statistics
• Web Resources
Openness to Foreign Investment Return to top
The government of South Africa is open to green field foreign investment as a means to
drive economic growth, improve international competitiveness, and obtain access to
foreign markets for its exports. Merger and acquisition activity is more sensitive and
requires more advance work. Virtually all business sectors are open to foreign
investment. Certain sectors require government approval for foreign participation,
including energy, mining, banking, insurance, and defense. Excepting those sectors, no
government approval is required to invest, and there are few restrictions on the form or
extent of foreign investment. The Department of Trade and Industry's (DTI) Trade and
Investment South Africa (TISA) division provides assistance to foreign investors. The
DTI concentrates on sectors in which research has indicated that the foreign country has
a comparative advantage. TISA offers information on sectors and industries,
consultation on the regulatory environment, facilitation for investment missions, links to
joint venture partners, information on incentive packages, assistance with work permits,
and logistical support for relocation. DTI publishes the "Investor's Handbook" on its
website: http://www.dti.gov.za/publications/publications.htm.
While the South African government supports investment in principle, investors and
other observers are concerned that there is insufficient commitment to support foreign
investors. Some investors express a belief that the national level government lacks a
sense of urgency when it comes to providing support for investment deals. Several
investors report trouble gaining access to senior decision makers to provide support for
the investment. Additionally, South Africa has begun scrutinizing merger and acquisition
related foreign direct investment more closely for its impact on jobs and local industry.