South Africa's Investment Landscape: Mapping Economic Incentives
by Lesley Wentworth
SAIIA Occasional Paper No 105, January 2012
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For an economy to attract productive, sustainable local and foreign investment, a stable investment climate along with a supportive investment policy framework is necessary. Government-owned or -mandated investment promotion agencies (IPAs) have an important role to play in marketing the country and its particular investment opportunities to potential investors. Furthermore, government can help remedy structural weaknesses in sectors or regions allocated for priority development through economic incentives programmes. Financial incentives such as grants and subsidies reduce the investor's initial capital outlay; while tax-relief incentives increase net income by lowering the tax bill. This paper considers the effects of the global economic crisis on the South African government's recent economic policy developments, especially those aimed at job creation. In addition, it considers the work in progress on creating an investment policy framework to support sustainable investment. The investment setting is examined by presenting the views of provincial IPAs, as well as government office-bearers at provincial and national level. Finally, a catalogue of economic incentives is presented which constitutes the government's economic support measures to encourage domestic and foreign firms' to invest in specific regions or sectors.
