South Africa’s Investment Landscape: Mapping Economic Incentives

The document analyzes South Africa's efforts to attract sustainable local and foreign investment through a combination of industrial policies, such as the New Growth Path (NGP), and a diverse catalogue of financial and fiscal incentives. It highlights a significant decline in foreign direct investment (FDI) between 2008 and 2010, attributed largely to high labor costs, and examines the 'Gateway into Africa' initiative designed to make South Africa a regional investment hub. The paper details various dti-managed incentives targeting SMMEs, industrial development, and specific sectors like automotive and film, while noting that many investors remain unaware of these schemes or find the application process cumbersome.

• South Africa experienced a sharp decline in foreign direct investment (FDI) flows, dropping from a peak of $9 billion in 2008 to $5.4 billion in 2009 and further to $1.6 billion in 2010, a decrease of over 80% from the 2008 peak.
• The South African government's 'Gateway into Africa' initiative, introduced by the Treasury in 2010, aims to attract investment by proposing a 'headquarter company' regime that reduces tax obstacles, including exemptions from controlled foreign company (CFC) rules and secondary tax on companies.
• The New Growth Path (NGP) and the Industrial Policy Action Plan (IPAP 2) focus on accelerating growth and employment through public infrastructure investment, labour-intensive value chains in agriculture, mining, manufacturing, construction, and services, and low-carbon innovation.
• The government utilizes a wide array of dti-managed incentives, including the Critical Infrastructure Programme, which supported 42 projects worth ZAR34 88.4 billion and created 47,219 permanent jobs, and the Automotive Investment Scheme, which led to planned investments of ZAR13 billion.
• Industrial Development Zones (IDZs) provide specific tax and customs relief to boost FDI; as of the report, South Africa has four IDZs (Coega, East London, Richards Bay, and OR Tambo International Airport), with a fifth planned for Saldanha Bay.
• The Business Process Services (BPS) incentive programme was revised on 1 January 2011 to increase competitiveness against rivals like India and the Philippines, offering ZAR 112,000 for each full-time job created and maintained.
• The Broad-Based Black Economic Empowerment Act (BBBEE Act) of 2003 drives many SMME development incentives, aiming to integrate black people, women, youth, and people with disabilities into ownership and management of productive assets.
• Research indicates that fiscal incentives are most effective in economies that already possess a strong investment climate and are less effective for resource-seeking FDI or investments serving only the domestic market.
• Interviews with provincial investment promotion agencies (IPAs) reveal that many investors are unaware of available incentive schemes or find the application process cumbersome, often requiring the use of specialized consulting firms.

APA

Wentworth, L. (2012). South Africa’s Investment Landscape: Mapping Economic Incentives. South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2012/02/Occasional-Paper-105.pdf

Chicago

Wentworth, Lesley. South Africa’s Investment Landscape: Mapping Economic Incentives. South African Institute of International Affairs, 2012. https://saiia.org.za/wp-content/uploads/2012/02/Occasional-Paper-105.pdf.

Wikipedia

{{cite report |last1=Wentworth |first1=Lesley |title=South Africa’s Investment Landscape: Mapping Economic Incentives |publisher=South African Institute of International Affairs |date=January 2012 |url=https://saiia.org.za/wp-content/uploads/2012/02/Occasional-Paper-105.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{wentworth2012south, author = {Wentworth, Lesley}, title = {{South Africa’s Investment Landscape: Mapping Economic Incentives}}, institution = {South African Institute of International Affairs}, year = {2012}, month = jan, url = {https://saiia.org.za/wp-content/uploads/2012/02/Occasional-Paper-105.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }