ECOLOGICAL CONDITION OF SOUTH AFRICA

Population and GDP

South Africa is a middle-income, emerging market with an abundant supply of natural resources; well-developed financial, legal, communications, energy, and transport sectors; a stock exchange that is the 18th largest in the world; and modern infrastructure supporting a relatively efficient distribution of goods to major urban centers throughout the region. At the end of 2007, South Africa began to experience an electricity crisis. State power supplier Eskom encountered problems with aged plants, necessitating "load-shedding" cuts to residents and businesses in the major cities. Growth was robust from 2004 to 2007 as South Africa reaped the benefits of macroeconomic stability and a global commodities boom, but began to slow in the second half of 2007 due to the electricity crisis and the subsequent global financial crisis' impact on commodity prices and demand. GDP fell nearly 2% in 2009. Unemployment remains high and outdated infrastructure has constrained growth. Daunting economic problems remain from the apartheid era - especially poverty, lack of economic empowerment among the disadvantaged groups, and a shortage of public transportation. South Africa's former economic policy was fiscally conservative, focusing on controlling inflation, and attaining a budget surplus. The current government largely follows the same prudent policies, but must contend with the impact of the global crisis and is facing growing pressure from special interest groups to use state-owned enterprises to deliver basic services to low-income areas and to increase job growth. More than a quarter of South Africa's population currently receives social grants.

South Africa's geography
South Africa occupies the southern tip of Africa, its long coastline stretching more than 2500km from the desert border with Namibia on the Atlantic coast, southwards around the tip of Africa, then north to the border with subtropical Mozambique on the Indian Ocean.
The low-lying coastal zone is narrow for much of that distance, soon giving way to a mountainous escarpment that separates it from the high inland plateau. In some places, notably the province of KwaZulu-Natal in the east, a greater distance separates the coast from the escarpment.
Size and provinces
South Africa is a medium-sized country, with a total land area of slightly more than 1.2-million square kilometres, making it roughly the same size as Niger, Angola, Mali and Colombia.
It is one-eighth the size of the US, twice the size of France and over three times the size of Germany. South Africa measures some 1 600km from north to south, and roughly the same from east to west.
The country has nine provinces, which vary considerably in size. The smallest is tiny and crowded Gauteng, a highly urbanised region, and the largest the vast, arid and empty Northern Cape, which takes up almost a third of South Africa's total land area.

Borders

Figure 1. South Africa, showing the position of its neighbours, enclaves, the boundaries of its nine provinces and the location of some important cities.
South Africa's population was estimated at 40.6 million in 1996 (Stats SA 1996), of which approximately 46% was rural and 54% urban (according to the World factbook the July 2006 population estimate was 44,187,637 with a minus 0.4% growth rate). Agriculture accounts for 3.2% of GDP and 7% of exports (R14.57 billion in 2000; R1.00=US$0.12 in August 2001) and supports, directly or indirectly, 15% of the population (Department of Agriculture and Land Affairs 2001).
South Africa is a multi-cultural nation, with many ethnic groups and colonial nations represented in its populations. It is this wide variation in the origin of its people which make understanding the management of its natural resources so interesting. The remaining San people of the southern Kalahari represent the oldest traditional users of natural vegetation for survival. San people are still able to subsist as hunter gatherers in the most arid regions of the country, providing some evidence of how it is possible to sustain small human populations in this region. San exhibit a strong understanding of resource limitations and probably follow the principles embodied in the dis-equilibrium theory (Ellis & Swift 1988) the closest of all southern African people. The San were also able to remain in the mountainous regions of the Drakensberg and along the Great Escarpment. The evidence of their history is found in the numerous rock paintings and other artefacts which occur in caves along the Great Escarpment.
The Nguni people of the eastern seaboard are graziers with a long (10000 year) history of maintaining domestic livestock. These people comprise the Seswati, AmaZulu and AmaXhosa nations, and occupy the leasehold lands in Gazankulu, KwaZulu Natal, Transkei and Ciskei. The society is organized around a village, comprising dwelling units, cultivated lands and grazing lands. The early cattle were of the Bos indicus stock and this line is being developed and protected in recent years with the establishment of an Nguni stud book.
Europeans of Dutch descent arrived in South Africa in 1652, and settled at first at the supply station in Cape Town. These settlers where joined by French Huguenots, who brought with them a knowledge of viticulture and animal husbandry (mainly sheep). Descendants of the early Dutch settlers began moving into the interior of the country with the abolition of slavery, and developed the extensive cattle and sheep farming enterprises which currently occupy land in the Kalahari, central Free State and the North West Province. It was only in 1820 that settlers of British origin arrived and settled on the eastern seaboard. They developed mixed-farming operations in the Eastern Cape and Kwa-Zulu Natal, and included cattle and wool-sheep enterprises.
There are four broad categories of land tenure in South Africa. Approximately 70% of the country is so-called "commercial" farmland under freehold tenure, 14% is allocated to communal areas with leasehold tenure, 10% is formally conserved, and the remaining 6% is used for mining, urban and industrial development. The communal areas are situated mainly in former homelands of Transkei, Ciskei, Bophutatswana, Kwa-Zulu, Lebowa, Venda and Gazankulu in the north and east of the country, while the commercial areas occupy most of the west, centre and the south of the country.
In 2000, the greasy wool clip came to 52 671 t (this declined to 44,156 tonnes in 2004) and South Africa produced 25% of Africa's wool crop. In 2000, the country's mutton production amounted to 118 000 t (and 108,000 t in 2004). The main breeds of sheep are fine-woolled Merino, the South African mutton Merino, Dohne Merino, Dormer, Dorper (the latter two are locally developed breeds) and the Karakul. The Karoo is one of the main sheep-farming areas in the country with the Karakul industry limited to the dry north-western regions of the Northern Cape Province. In 2000 the national herd was estimated at 28.6 million sheep (29.1 million in 2004).
South Africa's national commercial cattle herd is estimated at 13.5 million, including various international breeds of dairy and beef-cattle, as well as indigenous breeds such as the Afrikander and Nguni. Locally developed breeds include the Drakensberger and Bonsmara. These breeds are systematically and scientifically improved through breeding programmes, performance testing and the evaluation of functional efficiency. Almost 590 000 t of beef were produced in 2000. Owing to the relatively low carrying capacity on the natural pastures, extensive cattle-ranching is practised in the lower rainfall regions.
The rangeland resources of South Africa have been reported on extensively in the recent past, with three important publications having appeared (Cowling et al 1997, Dean & Milton 1999, Tainton 1999, Tainton 2000). These publications provide exhaustive information on the types of rangeland resources, their general ecology, including plant species composition and associated environmental variables, and the productivity and management. In addition, information on the management of rangelands in southern Africa is provided in the approximately 960 research publications which have appeared in the African Journal of Range & Forage Science and is predecessors since 1966. Other journals which provide exhaustive information on the natural resources of South Africa include the South African Journal of Botany and Bothalia. South African range researchers are strongly encouraged to publish in the wider international literature, and many important research articles appear in peer-reviewed journals published on other continents. This chapter does not attempt to synthesize or review all this available information, but provides a brief summary of the current status of our understanding of southern African rangeland eco-systems.

On dry land, going from west to east, South Africa shares long borders with Namibia and Botswana, touches Zimbabwe, has a longitudinal strip of border with Mozambique to the east, and lastly curves in around Swaziland before rejoining Mozambique's southern border.
In the interior, nestled in the curve of the bean-shaped Free State, is the small mountainous country of Lesotho, completely surrounded by South African territory.
Cities
South Africa has three capitals: Cape Town, Bloemfontein and Pretoria. The Western Cape city of Cape Town, where the country's Parliament is found, is the legislative capital. In the Free State, Bloemfontein is the judicial capital, and home to the Supreme Court of Appeal. In Gauteng province, Pretoria, where the Union Buildings and a large proportion of the civil service are found, is the administrative capital, and the ultimate capital of the country.
The largest and most important city is Johannesburg, the economic heartland of the country. Other important centres include Durban and Pietermaritzburg in KwaZulu-Natal, and Port Elizabeth in the Eastern Cape.

Climate and topography
Although the country is classified as semi-arid, it has considerable variation in climate as well as topography.
The great inland Karoo plateau, where rocky hills and mountains rise from sparsely populated scrubland, is very dry, and gets more so as it shades in the north-west towards the Kalahari desert. Extremely hot in summer, it can be icy in winter.

Habitat types:

South Africa has seven major terrestrial biomes, or habitat types - broad ecological life zones with distinct environmental conditions and related sets of plant and animal life. |
In contrast, the eastern coastline is lush and well watered, a stranger to frost. The southern coast, part of which is known as the Garden Route, is rather less tropical but also green, as is the Cape of Good Hope - the latter especially in winter.
This south-western corner of the country has a Mediterranean climate, with wet winters and hot, dry summers. Its most famous climatic characteristic is its wind, which blows intermittently virtually all year round, either from the south-east or the north-west.
The eastern section of the Karoo does not extend as far north as the western part, giving way to the flat landscape of the Free State, which though still semi-arid receives somewhat more rain.
North of the Vaal River, the Highveld is better watered, and saved by its altitude (Johannesburg lies at 1 740m; its average annual rainfall is 760mm) from subtropical extremes of heat. Winters are cold, though snow is rare.
Further north and to the east, especially where a drop in altitude beyond the escarpment gives the Lowveld its name, temperatures rise: the Tropic of Capricorn slices through the extreme north. This is also where one finds the typical South African Bushveld of wildlife fame.

Those looking for an opportunity to ski in winter head for the high Drakensberg mountains that form South Africa's eastern escarpment, but the coldest place in the country is Sutherland in the western Roggeveld Mountains, with midwinter temperatures as low as -15ºC.
The deep interior provides the hottest temperatures: in 1948 the mercury hit 51.7ºC in the Northern Cape Kalahari near Upington.
Oceans and rivers
By far South Africa's biggest neighbour is the ocean - or two oceans, which meet at the southwestern corner. Its territory includes Marion and Prince Edward Islands, nearly 2 000km from Cape Town in the Atlantic Ocean.
The cold Benguela current sweeps up from the Antarctic along the Atlantic coast, laden with plankton and providing rich fishing grounds. The east coast has the north-to-south Mozambique/Agulhas current to thank for its warm waters. These two currents have a major effect on the country's climate, the ready evaporation of the eastern seas providing generous rainfall while the Benguela current retains its moisture to cause desert conditions in the west.
Several small rivers run into the sea along the coastline, but none are navigable and none provide useful natural harbours. The coastline itself, being fairly smooth, provides only one good natural harbour, at Saldanha Bay north of Cape Town. A lack of fresh water prevented major development here.
Nevertheless, busy harbours exist at Richards Bay and Durban in KwaZulu-Natal, East London and Port Elizabeth in the Eastern Cape, and Mossel Bay and Cape Town in the Western Cape. An additional commercial port, the Port of Ngqura, is being developed off the coast from Port Elizabeth.
There are only two major rivers in South Africa: the Limpopo, a stretch of which is shared with Zimbabwe, and the Orange (with its tributary, the Vaal) which runs with a variable flow across the central landscape from east to west, emptying into the Atlantic Ocean at the Namibian border.
In so dry a country, dams and irrigation are extremely important: the largest dam is the Gariep on the Orange River. Climatic and Atmospheric Change
South Africa is sensitive to climate change, and contributes about 1.2% to global warming.
The levels of sulphur dioxide, nitric oxide and ozone are on average within the accepted South African guidelines for human health and the prevention of direct ecosystem damage and the measured concentrations at ground level are not showing an upward trend.
There are occasions, especially in the major urban areas, where the concentrations of sulphur dioxide, nitric oxide, ozone and particles are likely to lead to further health problems in people who are already experiencing respiratory problems. No trend in the number of times which these levels are exceeded is apparent, but with more people living in urban areas, the impact is likely to increase.
Indoor air quality constitutes a health hazard in poorly-ventilated dwellings without chimneys where coal, wood, paraffin or dung are used as fuel. The electrification of houses will assist this situation, as will the general improvement in housing design and construction brought about by the national housing policy. Greater efforts to improve the ambient air quality (for instance by paving of roads in informal settlements), to promote low-smoke fuels and to educate the public on the dangers of open fires inside houses are necessary.
Susceptible land and freshwater ecosystems are likely to show adverse effects of acid deposition in a few decades if the current emission rates of sulphur dioxide and nitric oxide are continued or increased.

LEGAL ASPECTS OF DOING BUSINESS IN SOUTH AFRICA

INTRODUCTION
A number of legal issues have an influence on a foreign investor in South Africa including those that are common to investments in most international ventures such as company structures, taxation, and competition law and employment aspects. More recent developments in the areas of Corporate Governance, Money Laundering and Environmental law have been introduced in South Africa including Black Economic Empowerment.
BLACK ECONOMIC EMPOWERMENT.
One of the major deal drivers in South Africa in recent years has been the empowerment of black South Africans. Black economic empowerment has been driven by legislation in the form of the Employment Equity Act of 1998 and various industry –specific empowerment Charters (effectively agreements between government and sectors of the economy, such as the mining, oil and petrochemical financial services and most recently the information technology sectors), which have placed substantial empowerment requirements on local businesses. These requirements include equity/asset ownership, employment and procurement requirements and targets, and are linked to specific timeframes.
INVESTMENT FORMS AND STRUCTURING (COMPANY STRUCTURES)
As in Europe most common forms of investment include buyouts, mergers, later stage investments and replacement capital. The most common vehicle used is a locally incorporated company that can either be privately held or open to the public (listed and non-listed). A foreign company can also register an External Company, which is effectively a branch office of the foreign registered entity.
Locally incorporated companies do not have any restriction on non SA citizen or resident shareholders and directors save for a few of consequences relating to local borrowing powers, thin capitalization rules and anti transfer pricing provisions.
An External Company must file a copy of its annual financial statements with the Registrar of Companies.
It is important to note that the Companies Act is under review with a view to facilitating foreign investment, including provisions for greater transparency and accountability and to acknowledge the interest of a greater scope of stakeholders including employees and creditors. Finally the new law will be comprehensive forming one reference source in simple language.
EXCHANGE CONTROL
Exchange control regulations, which restrict the free flow of capital in and out of the country, exist in South Africa. These regulations, which until the recent past were rather strict, have been significantly relaxed. The expressed goal of the South African government is the ultimate equal treatment of residents and non-residents in relation to inflows and outflows of capital and the abolition of exchange control measures.
MONEY LAUNDERING LEGISLATION
Although not part of the exchange control system as such, money laundering activities are now controlled by the Financial Intelligence Centre
Act of 2001, the Prevention of Organised Crime Act of 1998, and the regulations published under these Acts.
This legislation, in keeping with worldwide trends, aims at curbing the use of the proceeds of crime and money laundering. Rigorous compliance obligations are imposed on “accountable institutions” in terms of this legislation. An accountable institution includes attorneys such as Christodoulou & Mavrikis Inc. Accountable institutions are obliged to follow ‘know your client’ procedures, namely to:
• identify and verify new and existing clients;
• keep records of identities of clients and all transactions entered into with clients;
• report certain transactions to the authorities;
• train employees; and
• appoint a compliance officer.

FINANCIAL SERVICES AND CONSUMER PROTECTIONS
In terms of recent legislation any person who gives financial advice or who provides an intermediary service to consumers in South Africa must All financial services providers will have to obtain licences for the class or classes of businesses about which they provide advice in accordance with the Financial Advisory and Intermediary Services Act 37 of 2002 (FAIS) The FAIS Act is designed to protect consumers and in addition regulates advertising, marketing and canvassing;

Foreign companies operating in south Africa either through permanent representatives and who send representatives on an intermittent basis to visit clients, fall within the ambit of the FAIS Act.
Licensed financial advisers must appoint a compliance office and Christodoulou & Mavrikis Inc are registered by the Financial Services Board to render this service.
COMPETITION
The South African economic system is predominantly based upon the principles of a free market economy. However, as in most developed economies, competition in South Africa is controlled. Competition is regulated both by the common law and the Competition Act, 1998. This legislation aims to control anti-competitive behaviour and applies not only to economic activity in South Africa, but also to all economic activity having an effect in South Africa.
MERGER CONTROL
In terms of the Act, a party to a merger, which is in excess of certain turnover/asset thresholds, is required to notify the South African competition authorities of the merger. Mergers are classified as small, intermediate or large depending on the turnover/asset values of the parties to the transaction. A small merger is one that falls below the thresholds for an intermediate merger. An intermediate merger is one where the “combined figure” is R200 million or more and the assets or turnover of the target firm are R30 million or more. A large merger is one where the turnover or assets of the target firm are R100 million or more and the “combined figure” is R3.5 billion or more. The “combined figure” is the combined assets or turnover in South Africa of the acquiring firm and the target firm, or the assets of the one and the turnover of the other, in whichever combination reaches the highest figure. Both legs of the enquiry must be met.
TAXATION
Residents are taxed on the residence basis, while non-residents are taxed on the source basis. The effect on non-residents is that any income accruing from a South African source is taxable in the Republic
i) Capital Gains Tax
Since 1 October 2001 a capital gains tax (CGT) has applied in South Africa
The effective rate of tax for companies is thus 15% ii) Tax Rates
Companies and close corporations are taxed at a flat rate of 30% on income. There is also a Secondary Tax of 12.5% on declared dividends
External companies are taxed on branch profits at a flat rate of 35% on income. The Secondary Tax on Companies does not apply to external companies. iii) Withholding Taxes
At present only royalties are subject to a withholding tax.
A withholding tax of 12% is deductible from gross royalties payable to non-residents.
A proposed withholding tax is in the pipeline in the case where a purchaser pays a non resident seller for the purchase of a property, the purchaser will be obliged to withhold from the amount that the person must pay, a so-called advance tax of between 5 – 10% of the purchase price. iv) Double Taxation Agreements
South Africa has concluded bilateral agreements for the avoidance of double taxation with more than 50 countries including Greece and Cyprus and is continually increasing this number. Most of the agreements are comprehensive, while there are several limited Sea and Air Transport bilateral agreements in force.
v) Value Added Tax (VAT)
Value Added Tax (VAT) must be charged and paid over by all suppliers of goods and services (other than very limited exempt goods and services).
The current rate is 14%.
CORPORATE GOVERNANCE
South African business has adopted wholeheartedly a code on corporate governance termed the King I, which advocates principles of openness, integrity and accountability. King II is not a statute but a set of guidelines. Listed companies are however required to disclose in their annual reports the degree to which they have complied with the provisions of King II. Private companies are encouraged but not obliged to comply with the provisions.
King III is in the process of being compiled, which will further enhance the principles of good corporate governance.
EMPLOYMENT
The principle legislation is the Labour Relations Act, 1995 whose aim is to advance economic development, social justice, labour peace and the democratization of the workplace. The LRA is specifically designed to promote orderly collective bargaining at industry level, particularly by means of bargaining councils that have the power to conclude and enforce collective agreements. The LRA also promotes employee participation in decision-making in the workplace through consultation and joint decision-making.
Important amendments to the LRA were introduced during the first half of 2002. The amendments afford greater protection to employees in the event of the transfer of a business or the reduction of staff on the grounds of the operational requirements of the employer.
ENVIRONMENTAL LAW
With the transition of South Africa to democracy, environmental law has undergone a major change in focus to a more coherent, integrated approach towards environmental management and pollution control through legislation, and an environmental right has been enshrined in the Bill of Rights under South Africa’s Constitution. This has created a new form of legal standing for individuals and classes’ of individuals not previously recognized under South African law, and has given the public the tools for enforcement of environmental laws, for example, through class actions.