{"id":8464,"date":"2020-06-11T09:35:58","date_gmt":"2020-06-11T16:35:58","guid":{"rendered":"https:\/\/blog-prod.qad.com\/blog\/?p=8464"},"modified":"2020-06-11T09:35:58","modified_gmt":"2020-06-11T16:35:58","slug":"doing-business-in-south-africa","status":"publish","type":"post","link":"https:\/\/www.qad.com\/blog\/2020\/06\/doing-business-in-south-africa","title":{"rendered":"Doing Business in South Africa"},"content":{"rendered":"<p>[vc_row][vc_column][vc_single_image image=&#8221;8465&#8243; img_size=&#8221;full&#8221;][vc_column_text]<span style=\"font-weight: 400;\">Judging by the fossils found there, South Africa was home to some of the earliest of modern humans, many years ago. Dutch traders established the coastal city of Cape Town as a stopping point for the spice trade on South Africa\u2019s southern tip. Then, European immigrants swarmed to South Africa after the discovery of diamonds in 1867 and gold in 1886.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">South Africa, officially the Republic of South Africa, includes the Prince Edward Islands and is the 26<\/span><span style=\"font-weight: 400;\">th<\/span><span style=\"font-weight: 400;\"> largest country in the world, with a landmass of 1,214, 470 sq. km. That makes it slightly less than twice the size of the US state of Texas.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Manufacturing in South Africa<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">South Africa is the world\u2019s largest producer of platinum, gold and chromium, making mining a key industrial sector. In addition, automobile assembly, metalworking, machinery, textiles, iron and steel mills, chemicals, fertilizer and food are important manufacturing sectors for the country. Commercial ship repair is also significant. Industrial production is growing at about 1.2% per year. Industry currently equals about 29.7% of South Africa\u2019s GDP.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Other Important Industries<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Finance and banking services, insurance, agriculture, dairy products, cotton and tourism are all important industries for South Africa. Service industries make up about 67.5% of the GDP, while agriculture is about 2.8%.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Agricultural products include corn, wheat, sugarcane, fruits, vegetables, beef, poultry, mutton, wool and dairy products.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Supply Chain Infrastructure for Manufacturing in South Africa<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">South Africa has a relatively modern infrastructure that supports the distribution of goods to most urban centers in the country, but of its 750,000 km of roadways, only 158,000 km are paved, so moving goods outside of the main urban centers can be challenging.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">South Africa has the most modern communications systems in Africa. The country is in the middle of 5G trials and 94% of cellular accounts have access to 4G\/LTE services. While it does have a history of sporadic electrical system outages, being primarily powered by thermal sources, the country is on a <\/span><a href=\"https:\/\/www.smart-energy.com\/industry-sectors\/business-finance-regulation\/africas-power-industry-insights-in-2020\/\"><span style=\"font-weight: 400;\">path to growth and sustainability in the power sector<\/span><\/a><span style=\"font-weight: 400;\">. South Africa also exports electricity to other southern African countries.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Shipping<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">South Africa has 407 airports, 130 of which have paved runways. Registered airlines moved 885,277,991 mt-km of freight in 2015.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">South Africa\u2019s merchant marine includes over 100 vessels, including two bulk carriers, and six oil tankers. Major ports include Cape Town, Durban, Port Elizabeth, Richards Bay and Saldanha Bay. Durban is a container port and Mossel Bay is a liquefied natural gas (LNG) port.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The country\u2019s railway system is robust, with nearly 21,000 km of track. Access to and from South Africa is easy, and so is importing and exporting goods and raw materials.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Workforce<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">South Africa\u2019s workforce is 22.19 million strong, even though economic growth has decelerated in recent years. Unemployment is high at 27%, and even higher for certain segments of the population.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The country\u2019s workforce lacks some important skills that have contributed to its declining global competitiveness. The workforce also engages in frequent work stoppages and strikes that can make manufacturing on time a challenge.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">About 4.6% of the workforce is in agriculture, 71.9 % in service industries and 23.5% in industrial occupations. About 87% of the population can read and write, and most citizens complete 13 to 14 years of schooling.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The government has also taken steps to foster education and skills development through its Sector Education and Training Authorities (SETA) program. Businesses can partner with SETA to develop employee skills development, education and training.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Economy<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">South Africa has an abundance of natural resources and a well-developed financial infrastructure. And although the Rand has been a volatile currency in the world market, there are <\/span><a href=\"https:\/\/finance.yahoo.com\/news\/worst-over-rand-says-nedbank-111113436.html\"><span style=\"font-weight: 400;\">signs of improvement<\/span><\/a><span style=\"font-weight: 400;\">. The government has been attempting to control inflation while expanding the economic base, but the shortage of skilled workers and slow job growth inhibit the program\u2019s success.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Despite its infrastructure and workforce issues, South Africa\u2019s GDP is the 30<\/span><span style=\"font-weight: 400;\">th<\/span><span style=\"font-weight: 400;\"> largest in the world at $767.2 Billion. However, most international credit rating agencies have downgraded South African debt.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In 2017, South Africa exported $94.93 billion worth of goods to China, the US, Germany, Japan, India, Botswana and Namibia. Primary exports included gold, diamonds, platinum, other metals and minerals, machinery and equipment.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Imports for 2017 were $89.36 billion and included machinery and equipment, chemicals, petroleum, scientific instruments and food. Primary import partners included China, Germany, the US, Saudi Arabia and India.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Political Landscape<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">South Africa is a parliamentary republic. The capital city is Pretoria, and the country consists of nine provinces. Formed from four British colonies, it achieved independence on May 31, 1920, but it wasn\u2019t until 1994 that the government became a republic with majority rule.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Tax Rules<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Taxes equal 26.6% of the GDP, putting South Africa at 107<\/span><span style=\"font-weight: 400;\">th<\/span><span style=\"font-weight: 400;\"> in the world. Companies pay 29.2% of profit and make seven different tax payments per year, and it can consume more than 200 hours to calculate and file. Company owners must complete several forms in person at South African Revenue Service offices at startup.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Getting Down to Business<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Doing business in South Africa has its challenges, but the country is working hard to resolve them, and things have been looking up in recent years. <\/span><a href=\"https:\/\/www.qad.com\/\"><span style=\"font-weight: 400;\">QAD Adaptive ERP<\/span><\/a><span style=\"font-weight: 400;\"> can flex with the manufacturer\u2019s needs as a company in South Africa grows and evolves, while <\/span><a href=\"https:\/\/www.qad.com\/erp-solutions\/financials-erp\/data-sheet\/qad-internationalization-data-sheet.pdf\"><span style=\"font-weight: 400;\">QAD Internationalization<\/span><\/a><span style=\"font-weight: 400;\"> enables companies to identify and overcome the challenges associated with taxes, regulations and globalization. Furthermore, QAD is able to adapt to any style of <\/span><a href=\"https:\/\/www.qad.com\/manufacturing-erp\"><span style=\"font-weight: 400;\">manufacturing<\/span><\/a><span style=\"font-weight: 400;\"> and to the needs of all geographic locations.<\/span><\/p>\n<p><i><span style=\"font-weight: 400;\">How would you describe the state of Manufacturing in South Africa? Learn more about manufacturing and <\/span><\/i><a href=\"https:\/\/www.qad.com\/blog\/?s=%22doing+business+in%22\"><i><span style=\"font-weight: 400;\">doing business<\/span><\/i><\/a><i><span style=\"font-weight: 400;\"> in other great countries around the world.<\/span><\/i>[\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column][\/vc_column][\/vc_row]<\/p>\n","protected":false},"excerpt":{"rendered":"<p>[vc_row][vc_column][vc_single_image image=&#8221;8465&#8243; img_size=&#8221;full&#8221;][vc_column_text]Judging by the fossils found there, South Africa was home to some of the earliest of modern humans, many years ago. Dutch traders established the coastal city of Cape Town as a stopping point for the spice trade on South Africa\u2019s southern tip. Then, European immigrants swarmed to South Africa after the discovery [&hellip;]<\/p>\n","protected":false},"author":13,"featured_media":8465,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[182,199],"tags":[505,507,493,508,24,510,1238,509],"class_list":["post-8464","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-featured","category-manufacturing-trends","tag-doing-business-in","tag-economy","tag-industry","tag-infrastructure","tag-manufacturing","tag-politics","tag-south-africa","tag-workforce"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.7 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Doing Business in South Africa | QAD Blog<\/title>\n<meta name=\"description\" content=\"Doing business in South Africa has challenges, but modern supply chain infrastructure and resource-rich production is promising for 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