Incentives for investors

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Several investment incentives have been created for the potential investor in South Africa. Foreign investment is welcomed - all business sectors are open to investors, no government approval is required, and there are almost no restrictions on the form or extent of foreign investment.

The current tariff reform programme is specifically aimed at lowering input costs for the producer, while import controls have been relaxed in line with South Africa’s GATT and World Trade Organisation obligations.

Exporters are granted incentives such as export marketing assistance, zero rating for value added tax (VAT) on exports of goods and services and relief from various customs and excise duties.

In his February 2001 budget speech, Finance Minister Trevor Manuel announced a R3-billion incentive package for inventors in strategic industrial projects for the next four years. This will entail tax allowances of either 50% or 100% of an approved investment, and will be managed through the Strategic Industrial Project (SIP) programme.

The trade and industry department announced in April 2002 that the SIP programme had come on stream after finalising the criteria for the evaluation of projects. See: SIP incentives on stream

REGIONAL INCENTIVES

To encourage investors to establish or relocate industry and business to areas throughout South Africa, the country’s various regions (provinces) have development bodies that offer incentives. These incentives, which vary from area to area, include reduced interest rates, reduced rentals for land and buildings, cash grants for relocation of plant and employees, reduced rates for basic facilities, railage and other transport rebates and assistance in the provision of housing.

Industrial, technology and agro-tourism strategic development initiatives have been planned in various provinces and include the Maputo Corridor in Mpumalanga, the Gauteng special economic zone and the Wild Coast and Fish River areas in the Eastern Cape.

STATE FINANCING BODIES

Industrial Development Corporation of South Africa Limited (IDC)

The state-owned Industrial Development Council promotes investment by funding viable projects with development impact. It operates throughout South Africa and offers a range of financing services for small, medium and large scale industries, so as to assist businesses in the establishment of manufacturing concerns in South Africa and the Southern African region. The most common form of financing given by the IDC is a medium to long-term low interest rate loan. The IDC has in certain cases taken equity stakes in industrial entities.

Department of Trade and Industry

The Department of Trade and Industry (DTI) has developed a package of incentives, which include the following schemes:

Click here for the DTI site

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