South Africa

The Republic of South Africa is located in the southernmost part of the African continent. South Africa has gone through a thorny path from a Dutch colony and a country notorious for apartheid to one of the most developed and economically rich countries in Africa.

General information

There are 11 official names in the Republic of South Africa (according to the number of recognized languages in the country). Some South Africans avoid using official names, preferring to call the country Azania. The state occupies an area of 1,219,912 km² (24th in the world). The population is about 59.39 million people (as of 2021). 

The ethnic composition of the population of South Africa is very complex. About 80% of the country's citizens — black Africans who belong to various ethnic groups (Zulu, Xhosa, Suto, etc.). The population of European origin is less than 10%. The third largest group of residents of South Africa — mulattoes and mestizos. A significant part of the population is of Asian origin.

The country has 11 official languages of the main ethnic groups (English, Afrikaans, Venda, Zulu, Xhosa, Southern Ndebele, Swati, Sesotho, Sepedi, Tswana and Tsonga). The most widely used are English, Afrikaans and Zulu.

The main religion of the state — Christianity, various directions of which are professed by 86% of the population. Traditional African cults, Islam, Hinduism are also widespread.

The official currency of the country is the South African rand.

Pretoria is officially considered the main capital of South Africa, since the country's government is located there. The other two branches of government are located in two other cities: Parliament in Cape Town, the Supreme Court in Bloemfontein. They are also considered capitals. This is due to the fact that South Africa was originally a confederate state, in connection with this, during the formation of the Union of South Africa (from British possessions) with its capital in Cape Town, the Orange Free State with its capital in Bloemfontein and the Republic of South Africa (Transvaal) with its capital in Pretoria), the authorities were evenly distributed among the capitals of the states included in it.

Also, the largest cities in the country — Johannesburg and Durban.

Pretoria — an important economic, scientific and commercial center of the country. The city has well-developed roads and a railway line. There is an international airport.

Johannesburg — the largest economic and financial center of South Africa, producing about 16% of the country's total GDP. The city hosts the headquarters of many mining companies. The services and manufacturing industries are of great importance for the city's economy. Various branches of industry are developed, the production of steel and cement plays an especially important role. The non-manufacturing sector includes such sectors as banking, information technology, transport, real estate, media, etc. The city center is built up with skyscrapers, which house the offices of the largest banks, national industrial companies, transnational corporations, the stock exchange, large hotels, etc.< /p>

Cape Town — the second most populous city (after Johannesburg) in South Africa. The city has several ports and marinas, the largest of which is the port of Cape Town,

Durban — center of South Africa's third largest agglomeration. The Durban agglomeration has a developed diversified economy with strong manufacturing, tourism, transport and financial sectors. The coastal location and large port give the city an advantage over the economic centers of South Africa (Johannesburg, Pretoria and Bloemfontein), located in the interior of the country. The port of Durban is the busiest port in Africa south of the equator and the third largest container port in the Southern Hemisphere.

The territory of the country is administratively divided into 9 provinces (with their own administrative centers).

History, geography, culture, mentality

Before the arrival of Europeans, the Khoikhoi (Hottentots) and numerous representatives of the Bantu lived on the territory of the country. The first Europeans on the Cape of Good Hope were the Dutch, and in 1652 — Dutch Cape Colony founded. By the 18th century, almost all the lands of the Hottentots were in the possession of white settlers, who acquired distinctive features both in language and culture and began to be called Boers or Afrikaners. At the end of the 18th century, part of the territory was occupied by British troops, and in 1814 the entire territory of the colony was bought from Holland. In 1822, English became the official language of the colony, English laws were introduced, and in 1833 slavery was banned.

The Boers, dissatisfied with these changes, migrated north and founded two states there: the Republic of Orange and the Republic of Transvaal. By the end of the 1850s, the territories around the Vaal River united into the Republic of South Africa, recognized by Great Britain. However, after a huge diamond deposit was discovered there, Britain renewed its claims to the territory of South Africa. However, after the 1881 rebellion, Britain granted partial autonomy to the Republic of South Africa. In 1899, war broke out between the Boer states and Great Britain, which lasted until 1902 and brought a complete victory for Britain. Transvaal and the Orange Republic became colonies of Great Britain, and the Republic of South Africa — British dominion. In 1910, these colonies and dominions actually gained independence.

Since 1948, apartheid has become the official policy of South Africa, providing for separate education, accommodation, recreation, etc. for white and black people. In 1959, several so-called bantustans (pseudo-independent African states on the territory of South Africa) were organized: Bophuthatswana, Ciskei, Transkei, Venda. The apartheid system actually ceased to exist in 1990 after the coming to power of Frederick de Klerk, who began to carry out democratic changes in the country, ending with the first free elections that brought Nelson Mandela, leader of the African National Congress, to the presidency. After the elections, the name of the state and its flag were changed, and African languages were recognized as state languages.

South Africa is located in the southern part of the continent, bordering the Atlantic Ocean to the west and the Indian Ocean to the south and east. Its neighbors are Namibia in the northwest, Zimbabwe and Botswana in the north, Mozambique and Swaziland in the northeast. Inside the territory of South Africa is the state-enclave of Lesotho.

The central part of the country is occupied by the flat plateaus of the South African Plateau. Mountain ranges stretch along most of the coasts. In the east of the country, these are the Dragon Mountains with sheer cliffs and numerous waterfalls, and in the south — mid-altitude Cape Mountains.

In the northwest and west, semi-deserts and deserts are common (parts of the Kalahari and Namib). There are few rivers, the largest of them — Orange and Limpopo.

Culture of South Africans — this is a mixture of the original cultures of each of the peoples inhabiting this amazing multi-colored country. Here and exotic, unchanged since primitive times, the culture of black African tribes — Zulu, Xhosa, Bushmen and others, and a mixed synthetic Afrikaner culture revolving around the conservative Dutch churches, and the European culture of the English, and the rich cultural heritage of the Asian peoples.

The most important ancient monument of the creativity of the South African peoples — rock art created by the Bushmen (images of animals and people found in the Drakensberg Mountains). Even more ancient are the petroglyphs carved on stones along the banks of the rivers in the Transvaal and in the north of the Cape.

The architecture of South African cities is very diverse. Local architects brought originality to the European styles — neoclassicism, neogothic — and created the "Cape" architecture.

South African society is diverse in its racial and ethnic composition, so there are different customs and rules of communication within different ethno-confessional groups. In general, South Africans are polite and friendly to others, in shops and other public places it is customary to greet service personnel, show respect for women and older people. In a conversation, representatives of the black and colored population are allowed to be called "black" respectively; or "coloured", the word "Negro" — unacceptable.

Power

South Africa — presidential-parliamentary republic. The president in almost all his decisions on most issues must rely on the support of parliament. A South African citizen over 30 years old can become a presidential candidate.

South Africa has a bicameral parliament, consisting of the National Council of Provinces (upper house — 90 members) and the National Assembly (400 members). Members of the lower house are elected by proportional voting system: half of the deputies are on national lists, half — by provincial. Each province, regardless of population, sends ten members to the National Council of Provinces. Elections are held every five years. The government is formed in the lower house, and the leader of the party that has received the majority in it becomes president.

Economy

The economy of South Africa is based on rich natural resources and is the most developed in sub-Saharan Africa. Leading industries — mining, manufacturing (engineering, metallurgy, chemical production), transport, energy, tourism, agriculture.

According to the South African Statistical Service, in the 1st and 2nd quarters of 2021 — real GDP (in 2015 prices) increased by 0.9% and 1.2%. In the III quarter of 2021, a 1.5% decrease in GDP was stated, in the IV quarter of 2021 — growth by 1.4%.

The country's economy produces 2/3 of the continent's GDP. The country's economy is determined by its mining industry. About 52% of South Africa's exports come from mining products. The country ranks second in the world in diamond mining, third — for the extraction of uranium ores. Almost all types of minerals have been found in South Africa, excluding oil. Developed coal mining — in terms of the use of coal for energy, the country ranks 3rd in the world.

The production of gold bars (25% of world production) and platinum is closely related to the mining industry. The main center of gold mining is Johannesburg, the largest city in South Africa and the economic capital of the country. Several dozen gold mines operate here, and an urban agglomeration has formed (about 5 million people). The branch of specialization of the country is ferrous metallurgy. South African steel is the cheapest in the world. Non-ferrous metallurgy is represented by the production of most non-ferrous metals: from copper, antimony and chromium to rare earth metals.

The service sector is developing rapidly. The banking sector and trade received the greatest development. The service sector provides up to 62% of GDP.

In agriculture, animal husbandry plays a leading role, primarily — wool sheep breeding. Sheep wool and leather make up a significant part of the export. Cattle and goats are also bred. South Africa — the world's largest producer of mohair from angora goat wool (South African mohair is considered the best in the world). They also breed ostriches.

The development of agriculture is affected by droughts, 1/3 of all land is subject to erosion. Cultivated land makes up about 12% of the territory. The main crops — corn, wheat, sorghum. South Africa provides itself with all basic food products, exports sugar, vegetables, fruits and berries, citrus fruits. Many lands are marginal and need constant irrigation and fertilization.

The main export commodities — industrial products, mineral raw materials (platinum group metals, gold, nickel, iron and manganese ore), food and agricultural raw materials. Imported are mainly machinery and equipment, products of the chemical and oil refining industries.

South Africa is a country with a well-developed transport and energy infrastructure, with 34,000 km of railways and 6,000 km of roads.

The state has eight deep water ports, with a large volume of cargo turnover, largely due to the extractive industries providing a large share of exports. In South Africa, in the north of the industrial hub Kwa Zulu Natal, there is the port of Richards Bay, which has 13 berths, where bulk ore, coal, and mineral cargo are reloaded. The port of Durban is the busiest port in Africa, which handles import and export containers incoming and outgoing to Australia, Europe, China, North America, Japan. The Elizabeth Export-Import Port handles a wide range of goods, including fertilizers, wheat, corn, soda ash, soybeans, construction and containerized cargo. The Port of East London, the only river port in South Africa, located between the Buffalo and Nakhun rivers, has the largest granaries on 3 thousand km of the coast of South Africa, as well as a multifunctional bulk cargo terminal and container facilities.

Saldanha Port, located 150 km northeast of Cape Town, is the deepest natural port on the South African coast, where five berths reach a depth of 17.5 m, which allows handling tankers and ships that have the maximum dimensions to pass through the locks Panama Canal. Port of Njikwura handles traffic from South and Central America, works to West African markets

South Africa's foreign trade turnover in 2021 increased by 27% compared to the previous year to $216.5 billion

South Africa — member of the UN (the country was elected a non-permanent member of the UN Security Council for the period 2019-2020), BRICS, India-Brazil-South Africa Union (IBSA), Non-Aligned Movement, African Union, Southern African Development Community (SADC), New Partnership for Development Africa (NEPAD), the Indian Ocean Association for Regional Cooperation (ARSIO) and a number of other international and regional organizations.

South Africa also closely cooperates with Russia. The contractual and legal framework of Russian-South African relations includes about 70 different documents and provides for such areas as investment protection, avoidance of double taxation, energy, agriculture, exploration, mining and processing of minerals, intellectual property, etc. Fundamental documents — the Treaty of Friendship and Partnership in September 2006 and the Joint Declaration on the Establishment of a Comprehensive Strategic Partnership. The main mechanism for coordinating bilateral relations is the Joint Intergovernmental Committee for Trade and Economic Cooperation between the Russian Federation and the Republic of South Africa (CMPC).

In order to mutually promote business in the markets of Russia and South Africa, the Russian-South African Business Council has been functioning since 2006.

Also, at the Russia-Africa summit, which took place at the end of March 2023, the key topic of the meeting was the discussion of the Russian initiative to create the "BRICS Geological Platform". Within the framework of bilateral cooperation, one of the promising areas of the two countries is the geological study of the territory of South Africa, mapping, search for new deposits, evaluation and exploration of minerals, primarily platinum group metals, chromium and manganese ores. It is also planned to continue a constructive dialogue in the diamond industry within the framework of the Kimberley Process, including on countering the illegal circulation of raw precious metals.

During the meeting, the possibilities of expanding the supply of products, machinery and equipment from Russia were discussed. The parties noted the growing interest of Russian energy companies in the South African market. First of all, it concerns the construction and modernization of power generating facilities. In total, 11 intergovernmental and interdepartmental memorandums of cooperation in key areas are currently being developed by the countries. Some of them are planned to be signed "in the margins" the second Russia-Africa Summit, which will be held on July 26-29, 2023 in St. Petersburg.

Business climate

Registering a business and obtaining a work permit for foreigners in South Africa is closely linked to local legislation on preferential support for the black population.

When starting a firm, it is generally necessary to ensure that it has a proportionate number of employees of African descent. In this regard, obtaining a permanent job for foreigners is difficult. An exception is made for highly qualified specialists in scarce specialties, who are provided with various preferences, including the possibility of preferential obtaining a residence permit and citizenship.

Why is it profitable to buy or register a company in South Africa:

• State is not blacklisted offshore;
• developed and efficient banking system;
• possibility of successful tax planning.

The country's financial services sector is highly developed and includes two major stock exchanges, one of which (the Johannesburg Stock Exchange JSE) is one of the twenty largest exchanges in the world.

The telephone system is the most advanced on the continent, with a relatively reliable Internet communications infrastructure in major urban centers. On-premise cloud infrastructure includes two Microsoft Azure data centers in Johannesburg and Cape Town, and three more managed by Amazon Web Services in Cape Town.

International investors operating in South Africa can be assured of an environment characterized by multiple world-class companies, an efficient company registration system and a stable tax policy.

In 2020, in the World Bank's ease of doing business ranking of 190 countries, South Africa ranked 84th and 2nd among the countries participating in the BRICS economic and trade bloc, created as an alternative to the European Union and other associations. The assessment takes into account many indicators, such as the speed of registering enterprises, access to electricity, the level of tax burden.

Investment climate

South Africa has become an excellent investment platform for foreign investors, having the opportunity to enter one of the largest consumer markets.

There is a stable financial system and banking sector in the country; a foreign investor should not have any difficulties with the repatriation of capital and free disposal of his own funds. Currently, FDI is attracted to all sectors of the economy; this does not require approval from the South African government, since there are no restrictions on the types of investment projects.

MNEs from Germany, France, Sweden and Switzerland have located their branches in South Africa, investors from the USA, Great Britain, Holland and the UAE are actively working in the automotive industry, food industry, energy and other sectors of the economy. Most of the companies are focused on the fuel and energy complex. Rich in natural resources, South Africa continues to attract more FDI than other countries in Africa that do not have large resource reserves.

In South Africa, in 2000, a special Industrial Development Zone Program was developed, and in 2014, an industrial policy plan was developed that defines free economic zones (FEZs) as key elements in the development of the South African economy. SEZs are important tools in achieving the strategic goals of countries in the field of industrialization, regional development and the labor market.

There is a need to ensure smooth border crossings for intra-regional trade, which will stimulate economic growth in Africa. Investments in infrastructure in South Africa and other countries in Africa indicate that countries are investing in transport corridors to connect urban agglomerations and transform them into public clusters. Such investments will grow with the deepening of market integration by reducing transport and trade costs. They will also promote competition and productivity, making Africa more attractive to foreign investors.

Regional integration makes it possible to positively influence the synchronization of regional cycles of economic growth, contributes to sustainable economic growth and socio-economic development, and helps to improve the level and quality of life of the local population.

The Southern African Development Community (SADC) was created with the aim of achieving economic integration, where the countries of southern Africa seek to promote the efficient use of regional resources for accelerated and sustainable economic growth.

Integration is beneficial to South Africa and other SADC countries, primarily due to the expansion of the sales market, the strengthening of regional trade, the increase in intra-regional investment flows, the transfer of technology and experience. The main trading partners of the SADC countries are China, the US, Japan, Germany, India and the UK. To facilitate the achievement of integration within the framework of SADC, measures have been developed and adopted by the participants, the main task of which is to create the necessary conditions for accelerating the process of convergence.

The process of regional integration has contributed to the international integration of South Africa into the BRICS economic and trade bloc. The inclusion of South Africa in the BRICS forced investors from Russia to pay attention to this country with its significant economic potential. Russia should cooperate with BRICS partners to enter African markets.

The main investors from Russia in South Africa are mining companies, such as the mining and metallurgical MNP Norilsk Nickel, which invested $ 200 million in the development of two copper-nickel mines. The partner is the South African company AfricanRainbowMinerals (ARM). Investment activity in South Africa is shown by the Renova Group of Companies; (exploration and mining of manganese ore, production of silicomanganese), PJSC «Kamaz» (delivery of trucks and dump trucks to South Africa, preparation for assembly of vehicles in South Africa). JSC "Rosgeologiya" and the South African state corporation "Petro-ES-A" establish cooperation in the exploration and development of hydrocarbons on the southern shelf of South Africa. South African "SAB-Miller" operate in Russia (beer production), "Mondi" (pulp production), "Naspers" (information technology), «Bateman» (supply of equipment and technologies for enterprises in the mining and metallurgical industries), «Bell» (heavy engineering), "Standard Bank" (financial services).

The vertically integrated steel and mining company Severstal acquired a 25.6% stake in the South African company Iron Mineral Beneficiation Services (IMBS), which is a technology developer for the production of valuable metal products from crushed iron ore and thermal coal. China is the largest investor in South Africa among the BRICS countries.

Business and investment support structures

Investment Promotion Agencies (IPAs)

These agencies in the format of "one stop shop" provide investors with services that include a set of tools and mechanisms to facilitate FDI inflows. IPAs are the main platform for multinational enterprises (MNEs), where significant assistance is provided to foreign investors through the simplification of procedures for registering enterprises, as well as reducing the time for obtaining licenses and certificates.

South African Trade and Investment Agency (SATI)

The Agency was established by the Ministry of Trade and Industry of South Africa. It assists investors, provides information services for the implementation of investment projects, informs about the investment climate, and offers specialized after-sales services for investors. SATI organizes import and export missions and facilitates funding and government support for activities related to trade and investment. Among other things, measures were taken to reduce tax rates in South Africa, which became one of the lowest rates in Africa (corporate tax is — 12.5%, value added tax — 19%).

Business Unity South Africa — BUSA (Business Union of South Africa)

BUSA is committed to creating an enabling environment for a vibrant, diverse and globally competitive economy that harnesses the full economic and human potential of South Africa.

BUSA structures its work through two political committees.

All policy discussions are reviewed by policy committees. This includes new and changing areas of policy and legislation. Both political committees focus on transformation and small business.

Business Leadership South Africa and TAMDEV National Business Initiative

The NBI-supported Technical Assistance Mentor Development Program (TAMDEV) is a partnership between government and business to use relevant, second-hand knowledge and technical skills from both the private and public sectors to help improve service delivery by participating in the implementation and support of potential solutions to strengthen public institutions and remove restrictions on service delivery.

BLSA has partnered with NBI to fund the establishment and development of the Eastern Cape Program Management Unit (PMU) and Project Management Office (PMO) for infrastructure, whereby support is provided to the government (Eastern Cape Joint Management and traditional affairs). Thus, the focus is on planning, scoping and managing individual infrastructure projects to enhance the service delivery capacity of municipalities.

South African Chamber of Commerce and Industry

SACCI is the most widely represented national business body not only in South Africa, but throughout southern Africa, focusing on national and international issues. The South African Chamber of Commerce and Industry has nearly 35 member chambers.