Introduction
With the financial crunch sweeping all over the world, there is a need to look for places where one invest for good returns. A good business environment is good for any business. This is the reason many business people will assess a country before investing in it. This paper will assess the business environment for South Africa. The main aim is to assess the possibility to invest in South Africa for good returns.
Membership in investment opportunities
There are great investment opportunities that are recorded in South Africa. This is the case even with the hard financial times that is experienced in many parts of the world. The funds for private equity grew to R103 billion; this is 3.2% of the GDP of South Africa. This is a tremendous growth. Many investors who invest in this country go for internet-related business ventures as the internet access rate in South Africa higher; there are 80% of people who shop online in South Africa. This is the reason why many new investors go for internet businesses. There are also other sectors which are gaining substantive funding. These include healthcare, communication technology, and craft. There has been a trend to invest in green technologies like renewable energy and energy solutions that enhance sustainability. There have been favorable investments in the film industry because of the attractive landscapes that are found in South Africa. The production cost of films is much reduced when compared to developed countries. The production cost is 40% less in Europe and United States. With these developments, there has been a great attraction to South Africa for film investment(Dupasquier and Osakwe 2006).
Bilateral relations
South Africa has good bilateral relations with many countries making business conducive in this country. It is easier to undertake business transactions with almost all African countries because of the good bilateral relations South Africa has with African countries. It has good relations with countries like Kenya, and Nigeria which provide further bilateral relations with other countries in the world. It has been involved with trade relations with Zimbabwe where it has played a key role in solving the political challenges that Zimbabwe has faced. Apart from good relations with Zimbabwe, the two countries have shared cordial business relations. South Africa has good relations with foreign countries like the United States and France. These good bilateral relations makes the country a good place where members from these countries can start and run business in this country without fear of stringent business rules and policies being applied to them. It also has good relations with India and China. There has been an agreement with China regarding investment in the energy, and trade sectors. This was undertaken when China’s vice president Xi Jinping, visited South Africa. South Africa argues that the development of South Africa will depend on these relationships and for other upcoming Asian countries. They have enhanced the imports and exports policies in these countries and they have, therefore, developed good business environments for traders who choose to work with these countries. With these enhancements, there have been developments that have helped investors from these countries to invest in this country. Trade relations have been enhanced from time to time with care to have countries which support the interests of South African people(Mahony and Zyl 2002).
Regional trade relations
After coming out successfully from the isolation from the apartheid movement that it had initially, South Africa has developed and enhanced its relations with other countries in the region. It has good bilateral relations with its neighbors. It has an active role with Southern African Development Community which is a trade bloc that encompasses African countries in the southern part. This trade relation makes it possible to carry out business with the neighboring countries. In this aspect, it has played a crucial role in ending many conflicts in the region like Burundi, DRC, Comoros, and Zimbabwe. With all these developments, it has earned itself a good name as a safe place where peace is enhanced.
South Africa has been involved in enhancing good governance in African countries so that investors can be attracted to invest in Africa. The country has been involved in New Partnership for Africa’s Development. With this, the country has been championing African countries to eliminate corruption and develop good governance for development. With this objective, South Africa itself has been involved in enhancing good governance for the regional investors(Africa 2005).
There is also Southern Africa Customs Union (SACU) which has helped South Africa republic have a common customs with her neighbors. This has helped the country achieve better cooperation for imports and exports. With these, it is possible and easier to trade with neighboring countries in South Africa. The cost of imports and exports to this country will be reduced. The aspect of importation is guided by the government. While importing items, there is a requirement to have documentation regarding this importation. This is a requirement that is a regulation for importing goods. These regional trade agreements have made trading in South Africa easier. The trade barriers have been eradicated(Kirsten and Rogerson 2002).
Logistics and costs of transaction
New business registration is seen to be deteriorating by the day. The index includes new registration of limited liability companies. The index of registering of new companies in South Africa is 2.92 as of the year 2009. The highest value that it has gone is 5.42 which were recorded in the year 2006. The lowest value is that of 2009.The delay that one has to wait in order to get electrical connection is 9.30.This was taken and recorded in 2009. This measure is the time it takes for one to get electricity after applying for this connection. In the same breath, the time it takes to get electricity connected permanently is 101.00(Africa 2005). This is the measurement to gauge the delay that one has to wait in order to get a permanent connection of power. This is the median that the provider and user indicate should be ideal to wait to get electricity. The rate of firing costs of a worker who is considered to be redundant is 56.00. This is the highest and lowest rate. This is recorded in weekly basis. Informal firms in South Africa are ranked at a value of 18.33. These are firms which do not report all the sales that they have made for fear of tax being applied to them. The rate of firms which are expected to give gifts to officials of taxes stands at 14.34. Informal gifts are the gifts that are given when the firm meets the tax officials. The labor tax contributions in South Africa stand at 36.70. These are the taxes and contributions that are mandatory to be made on labor. Profit tax in South Africa stands at 1.20. This is the tax that is charged at the profits obtained from a given company(Kirsten and Rogerson 2002).
References
Africa, FI into. 2005. “South-South Investment: The Case of Africa.” Africa in the World Economy.
Dupasquier, C, and PN Osakwe. 2006. “Foreign Direct Investment in Africa: Performance, Challenges, and Responsibilities.” Journal of Asian Economics.
Kirsten, M, and CM Rogerson. 2002. “Tourism, Business Linkages and Small Enterprise Development in South Africa.” Development Southern Africa.
Mahony, K, and J Van Zyl. 2002. “The Impacts of Tourism Investment on Rural Communities: Three Case Studies in South Africa.” Development Southern Africa.
