Background to Business in South Africa

Few other countries offer the business visitor the number of apparent contradictions that can be found when doing business in South Africa.

It is difficult to think of another country anywhere in the world which contains such a diverse mixture of first world economic infrastructure and third world poverty. Who should South Africans compare themselves and their country to? Do they judge themselves by African economic standards (which makes them a superpower,) or by first world yardsticks?

South African GDP per head of population is relatively low in world terms and yet it accounts for about 25% of the total gross domestic product of the whole of Africa and more than 40% of the continents total manufacturing output. Thus, South Africa is by far the wealthiest country in Africa and it is proud of this fact. It also has a male life expectancy of only 52 years, an AIDS epidemic and an economy where 10% of the population accounts for more than half the nation’s income. It is indeed a country of contrast and contradiction.

It is also a country which is undergoing rapid and unprecedented changes and where many of the old structures (both economic and social) have been swept away in a maelstrom of post-apartheid adjustments. What is true about doing business in South African today may not be true tomorrow.

By far the biggest change to have hit South Africa has, of course, been the abolition of the apartheid system and the integration of the majority black population into the mainstream political system. Although the transition from apartheid to the current Rainbow Nation status appears from the outside to have been achieved relatively smoothly it would be naive to believe that there are no longer enormous racial tensions within the country. These racial tensions permeate life and can have a significant impact on the development and maintenance of good business relations.

A brief overview of some key concepts to consider when doing business in South Africa

Written and Produced by Keith Warburton

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Overview

If central Africa is poised to take off from an economic perspective then South Africa should be seen as the continent’s engine. South Africa takes on super-power qualities when looked at from an African perspective. South Africa is far and away the largest economy in Africa and the economic health of so many of its neighbours are intrinsically linked with the robustness of South Africa’s commercial sector.

The transition from the previous apartheid-led policies to a fully functioning democracy, offering equal opportunity for all, was never going to be an easy one. The birth pangs of the new rainbow nation are still being felt and political corruption and in-fighting have not helped the process. Nonetheless, South Africa has made significant progress in most areas and, critically, has not descended towards social chaos and economic meltdown as many predicted. South Africa survives and South Africa grows. Its future will be fascinating to watch and its future could, to a large measure, determine the future of Africa.

If you are considering doing business in Africa (and more and more companies are moving into Africa), then it is probably a good idea to do business in South Africa first as a stepping stone to the rest of the continent.

However, South Africa is complex. It is a complex mix of cultures, races, languages and differing approaches to business. You need to be flexible in South Africa and you need to be observant. You need to know that there is no ‘one size fits all’ process that will work in such a complicated environment. Learn about the country before you go on a business trip to – it makes commercial sense to do so (and its fascinating at the same time.)

This country profile provides an overview of some of the key aspects of South African business culture in a concise, easy to follow-format. The document includes information on:

  • Background to business
  • Business Structures
  • Management style
  • Meetings
  • Teamwork
  • Communication
  • Women in business
  • Entertaining
  • Top tips