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As senior commercial officer for the U.S. Embassy, commercial section, Craig Allen knows the ins and outs of doing business in South Africa. Here he offers tips for American business owners to keep in mind as they find their way into the South African economy.
Consider partnering with locals. “The general rule of thumb is to identify an agent or distributor based in South Africa to represent your product, brand, or company. But if you’re looking to relocate, a joint venture partnership or a licensee is recommended, because while setting up a business here is easy, the residency and permit requirements can be complicated for entrepreneurs. It is legal to do business here without a South African partner, however, that doesn’t give you the right to live here. You need a residency permit, or after six months [180 days], you will be in violation.”
The currency is convertible. “Unlike in many other countries in Africa, you don’t have to get permission from the government to convert money. Anybody can change any amount at any time,” he says. “There are some residual controls on exorbitant amounts, but for trade purposes it’s fairly easy to bring money in and take money out.”
Take advantage of black empowerment laws. “The legacies of the country’s grave injustices are still very much in existence, which is why you must be aware of South Africa’s structure. Black economic empowerment is in place through 2017. Such laws are necessary for bedrock stability, for political stability. They encourage companies to work with empowered African firms, to strengthen them and spread out the economic benefit,” Allen says. “In many cases, particularly if you’re selling to the government, having a black empowered partner will give you advantages over a company that doesn’t. Being sensitive both to South African laws and its history is smart.”
Tennille M. Robinson is the small business editor at Black Enterprise.