Accountancy in South Africa

Background

South Africa, officially the Republic of South Africa (RSA), is located on the southern tip of the African continent, bordered by Namibia, Botswana, Zimbabwe and Mozambique. It is one of the most advanced, broad-based industrial and productive economies in Africa.

South Africa covers approximately 1,200,000 square kilometres. The capital is Pretoria, located in the northeast central area of the country. Other major cities include Johannesburg, Soweto, and Bloemfontein in the interior of the country and Cape Town, Port Elizabeth, and Durban on the coast.

Its population is approximately 55 million, with population density of 45 per Km2. Per the 2011 Census data from Statistics South Africa, Africans are in the majority making up approximately 80% of the total population. The coloured and white populations are each about 9% while the Indian/Asian population stands at 3%.

South Africa is a constitutional democracy with a three-tier system of government and an independent judiciary. The national, provincial and local levels of government all have legislative and executive authority in their own spheres and are defined in the Constitution as “distinctive, interdependent and interrelated”. National government is further divided into three separate spheres: legislative, executive, and judicial.

South Africa is generally known as the “Rainbow Nation” for its multicultural diversity and features one of the world’s largest stock exchanges, the Johannesburg Stock Exchange. There are 11 officially recognised languages, most of them indigenous to South Africa. English is predominant used for business communication.

Its attractiveness as a business and investment location is based on the following:

  • Democratic country with a disciplined fiscal framework which promotes domestic competitiveness, growth and employment and increases the economy’s outward orientation.
  • The South African Reserve Bank, the central bank, maintains its independence from the government. Its programme of inflation targeting has shown good results in stabilising both interest and exchange rates.
  • The investor-friendly policies welcoming foreign investment.
  • Its world-class infrastructure includes a modern transport network, sophisticated telecommunications and excellent tourism facilities.
  • Its location at the southern tip of the continent grants easy access to the 14 countries in the Southern African Development Community (SADC), whose combined market reaches over 250-million people.
  • Trading relationships with more than 200 countries and territories.
  • Sophisticated tax policy, which includes a wide network of double taxation agreements.
  • Competitive merchant and investment banking system.

Economic overview

While much of the world was adversely affected by the global financial meltdown towards the end of 2010, South Africa managed alright, largely because of its prudent fiscal and monetary policies.

South Africa’s growth is stuck in low gear with real GDP growth estimated at 1.3% in 2015/16 and projected at 0.8% for 2016/17, due to a combination of domestic and external constrains. Furthermore, the weak growth performance contributes negatively to the already high unemployment, inequality, and macro vulnerabilities.

As part of the Budget Law 2016/17, the government announced an adjustment package of expenditure savings and tax measures to reduce the budget deficit from 3.9% of GDP in 2015/16 to 3.0% of GDP in 2017/18 and stabilize the gross debt burden at about 51% of GDP,  helping minimize pressures on the sovereign rating.

The high unemployment rate of 25% remains one of the most challenging hurdles, and a focus for South Africa’s government.

The measures announced in Parliament during the 2016 Budget Speech were aimed at stopping the country falling into recession and to appease the rating agencies who have threatened to downgrade South Africa to junk status, which would raise borrowing costs for  the country.

The country is politically stable and has a well-capitalized banking system, abundant natural resources, well developed regulatory systems as well as research and development capabilities, and an established manufacturing base.

The country remains rich with promise. It was admitted to the BRIC group of countries of Brazil, Russia, India and  China (now known as BRICS) in 2011.

Transport infrastructure

South Africa’s road, rail, sea, pipeline and air transport systems are the biggest and most efficient transport networks in Africa, and contribute to the country’s economic growth, social development, and competitiveness in the global market.

South Africa has eight commercial ports, from which approximately 96% of the country’s exports are conveyed up Africa, and to Europe, Asia and the US.


Latest version updated 15th March 2018

Country Breakdown

55.91

Million

Population

R

South African Rand

Currency

$ 294.8

Billion

GDP

1.22

Million

km2