About South Africa - The Sovereign Group

South Africa (SA), officially the Republic of South Africa (RSA), is a country located at the southern end of the African continent and boasts of being the “Hong Kong” of sub Saharan Africa. It is bordered by the South Atlantic and Indian oceans, with the neighbouring countries of Namibia, Botswana, Zimbabwe and Mozambique lying to its north. With a land area of 1,221,037 sq km and around 53 million people, SA is both the world’s 25th largest and most populous nation.

The Union of South Africa, which included the former British colonies of the Cape and Natal as well as the republics of Orange Free State and Transvaal, was created and granted nominal independence under the South Africa Act 1909 by the British parliament. In 1931 the union became fully sovereign from the UK under the Statute of Westminster. SA became a parliamentary republic following a referendum in 1961. The National Assembly, the lower house of Parliament, consists of 400 members and is elected every five years by a system of party-list proportional representation. The National Council of Provinces, the upper house, consists of 90 members, with each of the nine provincial legislatures electing ten members. After each parliamentary election, the National Assembly elects one of its members as President, who is both head of state and head of government. SA held its first universal elections in 1994.

SA has no legally defined capital city. The three branches of government are split over different cities. Cape Town, as the seat of parliament, is the legislative capital; Pretoria, as the seat of the President and Cabinet, is the administrative capital; and Bloemfontein, as the seat of the Supreme Court of Appeal, is the judicial capital. The primary sources of South African law are Roman-Dutch mercantile and personal law, along with English Common law.

SA is divided into nine provinces and there are 11 offical languages. Two of these languages are of European origin: Afrikaans developed from Dutch and serves as the first language of most white and coloured South Africans; English is commonly used in public and commercial life. There is excellent infrastructure with the most up to date telecommunications and air, road and rail transport system.

SA was one of the founding members of the African Union (AU) and is also a member of the Southern African Development Community, Southern African Customs Union, World Trade Organisation, International Monetary Fund, G20 and G8+5. In 2010, bilateral ties with China were strengthened under the Beijing Agreement, which elevated SA’s “strategic partnership” with China to the higher level of “comprehensive strategic partnership” in both economic and political affairs. In 2011, SA formally joined the Brazil-Russia-India-China (BRICS) grouping of countries.

SA is ranked as an upper-middle income economy by the World Bank and is considered to be a newly industrialised country. The economy is the second largest in Africa and the 34th largest in the world. The country’s economy is reasonably diversified with key economic sectors including mining, agriculture and fisheries, manufacturing, food processing, clothing and textiles, telecommunications, energy, financial and business services, real estate, tourism, transportation, and wholesale and retail trade. There is an excellent range of professional services because SA serves as a major business centre for the whole of Africa.

The local currency is South African Rand (ZAR) which is interchangeable with other major world currencies. Exchange controls govern the flow of funds in and out of SA. There is a total prohibition on dealing in foreign exchange except with the permission of and on the conditions set by the South African Reserve Bank. However, since 1997 there has been a gradual relaxation of exchange controls such that South African individuals are now permitted to invest in foreign currency up to R1 million per year without having obtained a tax clearance certificate (single discretionary allowance). An additional R4 million per year is permitted provided that a tax clearance certificate is obtained from South African Revenue Authority.

A company is resident in SA if it is incorporated, formed or established in SA or has its place of effective management in SA. Normal tax is payable by South African companies on their worldwide taxable income at the rate of 28%. South Africa is ideally suited to serve as a base for investment into Africa. As South Africa has concluded more than 70 double taxation treaties worldwide, many with African countries, it is thus perceived as a natural holding company gateway into Africa.