South Africa’s Investment Landscape: Mapping Economic Incentives

This research paper by the South African Institute of International Affairs (SAIIA) maps the investment landscape of South Africa as of January 2012. It examines the impact of the global economic crisis on foreign direct investment (FDI), analyzes the government's industrial policies such as the New Growth Path (NGP), and provides a detailed catalogue of financial and fiscal incentives designed to attract investment and create jobs. The document also includes survey results from provincial investment promotion agencies (IPAs) regarding the effectiveness and awareness of these incentive schemes.

• South Africa experienced a sharp decline in foreign direct investment (FDI) flows between 2008 and 2010, dropping from a peak of $9 billion in 2008 to $1.6 billion in 2010, a decrease of over 80%. This trend is largely attributed to the country's high unit cost of labour compared to India and China.
• The South African government introduced the 'Gateway into Africa' initiative in 2010 to compete with tax-friendly neighbors like Mauritius, Kenya, and Nigeria. The initiative proposes a 'headquarter company' regime to remove tax-related obstacles, including exemptions from controlled foreign company (CFC) rules and secondary tax on companies (STC).
• The New Growth Path (NGP), released in December 2010, and the Industrial Policy Action Plan (IPAP) aim to accelerate growth and employment. Key focus areas include expanding public infrastructure investment, promoting low-carbon innovation, and concentrating on labour-intensive value chains in mining, agriculture, manufacturing, construction, and services.
• The Department of Trade and Industry (dti) manages various incentive programmes through The Enterprise Organisation (TEO). Notable examples include 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 ZAR13 billion in planned investments and supported 24,000 jobs.
• Industrial Development Zones (IDZs) are purpose-built estates linked to international ports designed to boost FDI. South Africa has four established IDZs: Coega (Port Elizabeth), East London, Richards Bay, and OR Tambo International Airport (Johannesburg), with Saldanha Bay declared as a designated IDZ on October 24, 2011.
• The Business Process Services (BPS) incentive programme was revised on January 1, 2011, to increase competitiveness against rivals in India, the Philippines, Egypt, Malaysia, and Kenya. The revised scheme pays investors 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. These aim to integrate black people (African, Indian, and Coloured), women, youth, and people with disabilities into the ownership and management of enterprises.
• A World Bank (FIAS) study concluded that South Africa's tax system is broadly competitive with other SADC countries and does not have an 'over-abundance' of targeted incentive schemes, as it does not offer tax holidays.
• Survey data from provincial IPAs indicate a significant lack of awareness among investors regarding available incentive schemes. Many investors, particularly foreign ones, rely on specialized consulting firms to navigate the application process, which is often perceived as cumbersome.

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} }