Executive Summary

Botswana has a population of 2.2 million and is centrally located in Southern Africa, enabling it to serve as a gateway to the region.  Botswana has historically enjoyed high economic growth rates and its export-driven economy is highly correlated with global economic trends.  Development has been driven mainly by revenue from diamond mining, which has enabled Botswana to provide infrastructure and social services. The economy grew by 2.9 percent in 2017 after registering growth of 4.3 percent in 2016, which was mainly due to a significant contraction in the mining sector (Bank of Botswana Annual Report 2017).  In recent years and during 2018 inflation remained at the bottom end of the central bank’s 3 to 6 percent spectrum.  According to the Government of Botswana (GoB), investments within Botswana totaled USD 6.6 billion in 2015. Botswana is classified as an upper middle-income country by the World Bank based on its per capita income of USD 7,595.

Botswana is a stable, democratic country with an independent judiciary system.  It maintains a sound macroeconomic environment, fiscal discipline, a well-capitalized banking system, and a crawling peg exchange rate system.  Moody’s and S&P rate Botswana’s sovereign debt as A2 and A-/A-2, respectively. Botswana has minimal labor strife. It is a member state to both the International Centre for Settlement of Investment Disputes (ICSID) convention and the 1958 New York convention.  Corruption in Botswana remains less pervasive than in other parts of Africa; nevertheless, foreign and national companies have commented on increasing tender-related corruption. The World Bank ranked Botswana 86 out of 190 economies in the category of Ease of Doing Business in 2019, falling by five places from 81 in 2018, although Botswana’s score increased slightly from 64.94 in 2018 to 65.40 in 2019 due to improvement in dealing with construction permits.  The country also fell in the 2018 World Economic Forum’s Global Competitiveness Index to 90 out of 140 from 85 out of 135 in 2017.

The GoB created the Botswana Investment and Trade Centre (BITC) to assist foreign investors, offers low tax rates, and has no foreign exchange controls.  Its topline economic goals are to diversify the economy, create employment, and transfer skills to Botswana citizens. GoB entities, including BITC, use these criteria in determining whether it assists foreign investors.  The GoB is currently drafting an investment facilitation law with the United Nations Conference on Trade and Development (UNCTAD) support. The GoB has committed to streamline business-related procedures, and remove bureaucratic impediments based on World Bank recommendations as part of a business reform roadmap; under this framework, it introduced some electronic tax and customs processes in 2016 and 2017.  It also set up the Special Economic Zones Authority (SEZA) to streamline investment in sector-targeted geographic areas in the country.

In addressing the ease of doing business challenges, the GoB, through the Companies and Intellectual Property Authority (CIPA), has taken a firm step towards the implementation of the ease of doing business reforms.  Parliament passed legislation that will enable the streamlining of the company registration process from 12 working days to one day. The Companies and Intellectual Property Authority (CIPA) is working with New Zealand to develop the relevant online systems.  Discussions are ongoing to bring other organizations to streamline and simplify their processes as well.

Table 1: Key Metrics and Rankings

Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2018 34 of 180 
World Bank’s Doing Business Report 2019 86 of 190
Global Innovation Index 2018 91 of 126 
U.S. FDI in partner country ($M USD, stock positions) 2018 N/A 
World Bank GNI per capita 2017 $6,730 

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

The GoB publicly emphasizes the importance of attracting foreign direct investment (FDI).  It is currently drafting an investment facilitation law, as recommended by the 2014 Organisation for Economic Co-operation and Development (OECD) investment review.  UNCTAD is providing technical assistance in support of the legislation.  The GoB has launched initiatives to promote economic activity and foreign investment in specific areas, including the establishment of hubs to promote economic growth in the agriculture, diamond, education, health, and transportation sectors.  Additional investment opportunities in Botswana include large water, electricity, transportation, and telecommunication infrastructure. Economists have also noted Botswana’s considerable potential in the mining, mineral processing, energy, cattle, tourism, and financial services sectors.  The Botswana Trade and Investment Centre (BITC), the GoB’s investment and trade promotion authority, assists foreign investors with projects intended to diversify export revenue, create employment, and transfer skills to Botswana citizens.

Limits on Foreign Control and Right to Private Ownership and Establishment

Botswana’s 2003 Trade Act reserves licenses in 35 sectors for citizens, including butcheries, general trading establishments, gas stations, liquor stores, supermarkets (excluding chain stores), bars (other than those associated with hotels), certain types of restaurants, boutiques, auctioneers, car washes, domestic cleaning services, curio shops, fresh produce vendors, funeral homes, hairdressers, various types of rental/hire services, laundromats, specific types of government construction projects under a certain dollar amount, certain activities related to road and railway construction and maintenance, and certain types of manufacturing activities including the production of furniture for schools, welding, and bricklaying.  The law allows foreigners to participate in these sectors as minority joint venture partners in medium-sized businesses. Foreigners can hold the majority share if they obtain written approval from the trade minister.

The Ministry of Investment, Trade and Industry (MITI), which administers the citizen participation initiative, has taken an expansive interpretation of the term chain stores, so that it encompasses any store with more than one outlet.  This broad interpretation has resulted in the need to apply exemptions to certain supermarkets, simple specialty operations, and general trading stores. These exceptions were generally granted prior to 2015 and many large general merchandise markets, restaurants, and grocery networks are owned by foreigners as a result. Since 2015, the GoB has denied some exception requests, but reports they have approved some based on localization agreements directly negotiated between the ministry and the applying company.  These agreements reportedly include commitments to purchase supplies locally and capacity building for local workers and industry.

Other Investment Policy Reviews

In December of 2014, the OECD released an Investment Policy Review on Botswana. (  ).

Botswana has been a World Trade Organization (WTO) member since 1995. As a member of the Southern African Customs Union, the WTO last conducted a trade policy review in 2016. (  )

Business Facilitation

To operate a business in Botswana, one needs to register a company with the GoB’s CIPA.  The registration forms are available online from the MITI website:  .  According to CIPA the company registration process takes about 14 days, and it takes approximately 48 days to complete additional required registrations such as tax registrations, opening bank accounts, and obtaining necessary licenses and permits.  The World Bank ranked Botswana 157 out of 190 in the ease of starting a business category. In April 2018, CIPA announced a partnership with a New Zealand company to install a new online registration system, which will reduce the company registration process from 12 days to one.  The system is expected to be launched by July 2019.

BITC (  ), the GoB’s investment promotion agency, was designed to serve as a one-stop shop to assist investors to set up a business and find a location for operation.  BITC’s ability to streamline procedures varies based on GoB entity and bureaucratic requirements.

BITC’s criteria for support for investment projects is whether the project will diversify the economy away from dependence on diamond mining, and whether it will create jobs for and transfer skills to Batswana citizens.  The BITC also hosts the Botswana Trade Portal (  ) designed to ease trade across borders.  It is a single point of contact for all information relating to import and export to and from Botswana and represents a number of ministries and parastatals.

Botswana has a number of incentives and preferences for both citizen-owned and locally based companies.  Foreign-owned companies can benefit from local procurement preferences which are usually required for government tenders.  MITI instituted a program in 2015 to give locally based small companies a 15 percent preferential price margin in GOB procurement, with mid-sized companies receiving a 10 percent margin, and large companies a 5 percent margin.  Under this policy, MITI defines small companies as having less than five million pula in annual revenue reflected in their financial statements, medium companies with 5,000,001 to 19,999,999 pula in revenue, and large companies with 20 million pula or more. The directive applies to 27 categories of goods and services ranging from textiles, chemicals, and food, in addition to a broad range of consultancy services.

For Companies Act registration purposes, enterprises are classified as follows: Micro Enterprises —less than six employees including owner and annual turnover of up to 60,000 pula; Small Enterprises — less than 25 employees and annual revenue between 60,000 and 1,500,000 pula; Medium Enterprises — less than 100 employees and an annual revenue between 1,500,000 and 5,000,000 pula; Large Enterprises —more than 100 employees and an annual revenue of 5,000,000 pula or more.  This classification system permits foreigner participation as minority shareholders in medium-sized enterprises in the 35 business sectors reserved for citizens.

Outward Investment

The GOB neither promotes nor restricts outward investment.

2. Bilateral Investment Agreements and Taxation Treaties

The United States and the Southern Africa Customs Union (SACU), which includes Botswana, signed a Trade, Investment, and Development Cooperative Agreement (TIDCA) in 2008.  The TIDCA establishes a forum for consultative discussions, cooperative work, and possible agreements on a wide range of trade issues, with a special focus on customs and trade facilitation, technical barriers to trade, sanitary and phytosanitary (SPS) measures, and trade and investment promotion.

SACU has free trade agreements with Iceland, Liechtenstein, Norway, Switzerland, and the European Free Trade Association. SACU countries and MERCOSUR (Argentina, Brazil, Paraguay, and Uruguay) signed reciprocal preferential trade agreements in December 2008 and April 2009 respectively.  The PTA establishes fixed preference margins as a first step towards the creation of a free trade area between SACU and MERCOSUR. Botswana has ratified the agreement and is awaiting remaining Member States to complete ratification for the agreement to be implemented.

For more information on SACU’s tariff regime see the WTO document: .

Botswana is also a member of the Southern African Development Community (SADC), and is currently implementing the SADC Protocol on Trade. For more information about SADC, visit: .

On June 10, 2016, Botswana signed an Economic Partnership Agreement (EPA) with the European Union as part of SADC EPA Group.  The EPA guarantees access to the EU market without any duties or quotas for Botswana, and gives asymmetric access to the SADC EPA Group.

Botswana has a trade agreement with Zimbabwe, which provides duty-free access for goods that meet the 25 percent local content requirement.

In 2018, Botswana signed the Tripartite Free Trade Area (TFTA) agreement consisting of 26 countries of the three Regional Economic communities of the Common Market for Eastern and Southern Africa (COMESA), East African Commission (EAC) and the Southern African Development Community (SADC).

Botswana was also the 51st country to sign the African Continental Free Trade Agreement (AfCFTA) in February 2019, which will improve intra-regional trade and provide access to a market of 1.2 billion people.

4. Industrial Policies

Investment Incentives

Botswana has several mechanisms in place to attract foreign direct investment (FDI).  The BITC assists local and foreign investors. BITC is responsible for promoting FDI, investor aftercare, and the promotion of locally manufactured goods in export markets.  It assists investors with company registration, land acquisition, factory shells, utility connections, and work and residence permits for essential staff. Investors’ requests for support from BITC and other agencies are evaluated based on the extent to which the proposed project assists in the GoB’s diversification efforts, contributes to the growth of priority sectors, and provides employment and training to Botswana citizens.  The GoB also makes grants available to investors who partner with citizens and will extend credit to investors presenting proposals that have undergone appropriate due diligence and that have completed a feasibility study. Foreign investors are encouraged to transfer technology to Botswana and skills to Botswana citizens with a view to preparing them for promotion into management positions.

Botswana offers a relatively low tax rate of 22 percent on corporate taxable income and 7.5 percent withholding tax on all dividends distributed.  MITI can grant manufacturing companies the reduced level of 15 percent taxable income. Companies can pay the reduced rate of 15 percent of profit with accreditation from the Innovation Hub or the International Financial Services Centre on approved operations.

The Minister of Finance and Economic Development has the authority to issue development approval orders which are used for specific projects, which include providing tax holiday and education and training grants.  The Minister must be satisfied that the proposed project will be beneficial to Botswana’s economy. Any firm, local or foreign, may apply for a Development Approval Order through the Permanent Secretary at the finance ministry.  Applications are evaluated against the following criteria: job creation for Botswana citizens; the company’s training plans for Botswana citizens; the company’s plans to localize non-citizen positions; Botswana citizen participation in company management; amount of equity held by Botswana citizens in the company; the location of the proposed investment; the project’s effect on the stimulation of other economic activities; and the project’s effect on reducing local consumer prices.  MITI also offers rebates on imported materials for manufactures that produce products for export.

In 2017, Parliament approved and implemented a special incentive package for Selebi-Phikwe geared to promote economic growth and diversification.  Some of the incentives include reduced corporate tax of 5 percent for the first five years and 10 percent thereafter (versus the 22 percent national tax rate), zero customs duty on imported raw materials, rebates for customs duty and value-added tax for any exports outside the SACU, and a minimum of 50 years on land leases (instead of the standard lease of 25 years).

Foreign Trade Zones/Free Ports/Trade Facilitation

Parliament established a new parastatal organization, the Special Economic Zones Authority (SEZA), with the mandate to develop and operate special economic zones around the country.  It has earmarked five geographic areas with a total of eight zones though they are not yet fully operational. In 2015, Parliament approved a Special Economic Zones (SEZ) law to streamline investment in sector-targeted geographic areas in the country including two Gaborone area SEZs (multi-use, diamond processing, and financial services); two Selebi-Phikwe SEZs (mineral processing and horticulture); and additional SEZs in Lobatse (beef, leather, biogas); Palapye (energy); Pandamatenga (agriculture); and Francistown (mining and logistics).  The Special Economic Zones Act is available for sale in hard copy at the GoB bookshop. SEZA has prioritized four SEZs—Lobatse (leather park), Gaborone Fairgrounds (Financial Services), Gaborone Sir Seretse Khama Airport (Diamond and Logistics) and Pandamatenga (Agriculture)—and is actively recruiting investors, private developers, and manufacturers. The Botswana Unified Revenue Services has also introduced an electronic Customs Management System to replace the Automated System for Customs Data. This will pave the way for the National Single Window, an electronic trade platform that makes trading more secure and efficient.

Performance and Data Localization Requirements

Performance requirements are not imposed as a condition for establishing, maintaining, or expanding an investment in Botswana.  Foreign investors are encouraged, but not compelled, to establish joint ventures with citizens or citizen-owned companies.

Foreign investors wishing to invest in Botswana are required to register the company in accordance with the Companies Act and comply with other applicable legislation.  Investors are encouraged, but not required, to purchase from local sources. The GoB does not require investors to locate in specific geographical areas, use a specific percentage of local content, permit local equity in projects, manufacture substitutes for imports, meet export requirements or targets, or use national sources of financing for private-sector investments.  However, GoB entities, including BITC, use the criteria of diversifying the economy, creating employment, and transferring skills to Botswana citizens in determining whether to assist foreign investors.

As a matter of policy, the GoB encourages foreign firms to hire qualified Botswana nationals rather than expatriates.  The granting of work permits for foreign workers may be made contingent upon establishment of demonstrable localization efforts.  The government may additionally require evidence that a local is being trained to assume duties currently being fulfilled by foreign worker, specially focused at the middle-management level.  The GOB offers incentives to companies that train local employees, including the deduction of 200 percent of training expenses when an accredited institution conducts the training.

Foreign and local business managers noted increasing difficulty obtaining work permits for foreign skilled workers and managers over the last decade.  Permits for foreign workers decreased from 20,000 to about 5,000 during that time. Business leaders cite difficulty securing work permits combined with local skills deficits and constrained labor productivity as one of the foremost business constraints in Botswana.  In March 2019, GoB reports suggest permits for foreign workers has increased to over 8,000 with approval rates in excess of 90 percent. Select grants are available to foreign investors who partner with Botswana citizens. The Citizen Entrepreneurial Development Agency has established a venture capital fund to provide equity to citizens and ventures between citizens and foreign investors.  The majority of GoB loans and grants are designed specifically for citizen-owned contracting firms or for small enterprises and are therefore not available to foreign investors.

The GoB, the largest procuring entity in the country, has directed central government, local authorities and state-owned enterprises to purchase all products and services from locally based manufacturers and service providers if the goods and services are locally available, competitively priced, and meet tender specifications in terms of quality standards as certified or recognized by the Botswana Bureau of Standards.  Local preferences arise from numerous sources. In 2015, MITI instituted a program to give locally based small companies a 15 percent preferential price margin in GoB procurement, with mid-sized companies receiving a 10 percent margin, and large companies a 5 percent margin. The directive applies to 27 categories of goods and services ranging from textiles, chemicals, and food, in addition to a broad range consultancy services.  In 2014, the GoB and the Chamber of Mines created a committee to oversee the purchasing of mining supplies with a 10 percent preference towards those produced locally. The 2012 Citizen Economic Empowerment Policy also emphasized the preference for local companies and the GoB’s Public Procurement and Asset Disposal Board (PPADB) registers citizen-owned companies for preference purposes.

For a foreign firm to qualify with the Department of Industrial Affairs as a locally based manufacturer or service provider to sell goods or services to the government of Botswana, the firm first must be registered with the Registrar of Companies and possess a relevant license or waiver letter.  Few of these procedures can be completed online and in practice companies see the need to hire an agent on the ground to handle registrations. Tenders are generally designed based on the products available in the local market and with locally-based companies in mind. In addition, many tenders require local registration as a prerequisite for bids and the GoB frequently breaks up large-scale projects into a series of tenders.  All of these factors make it difficult to compete for tenders from outside Botswana.

5. Protection of Property Rights

Real Property

Property rights are enforced in Botswana.  The World Bank ranks Botswana 80 out of 190 in the Registering Property category.  There are three main categories of land in Botswana: freehold, state land, and tribal land.  Tribal and state land cannot be sold to foreigners. There are no restrictions on the sale of freehold land, but only about 5 percent of land in Botswana is freehold.  In the capital city of Gaborone, the number of freehold plots is limited.

State land represents about 25 percent of land in Botswana.  On application to the Department of Lands, both foreign-owned and local enterprises registered in Botswana may lease state land for industrial or residential use.  Commercial use leases are for 50 years and residential leases are for 99 years. Waiting periods tend to be long for leasehold applications, but subleases from current leaseholders are available.  In 2014, the GoB changed its implementing regulation to allow companies with less than five employees to operate in residential areas if their operations do not pose a health or safety risk to residents.

Tribal land represents 70 percent of land in Botswana.  To obtain a lease for tribal land, the investor must approach the relevant local Land Board.  Processes are unlikely to be streamlined or consistent across Land Boards.

Since independence, the trend in Botswana has been to increase the area of tribal land at the expense of both state and freehold land.  Landlord-tenant law in Botswana tends to be moderately pro-landlord.

In addition to helping investors who meet its criteria obtain appropriate land leaseholds, BITC has also built factory units for lease to industrialists with the option to purchase at market value.

Intellectual Property Rights

Botswana’s legal intellectual property rights (IPR) structure is adequate, although some improvements are needed.  The key challenge facing the GoB is effective implementation. The Companies and Intellectual Property Authority (CIPA) was established in 2014 and is comprised of three offices: the Companies and Business Office, the Industrial Property Office, and the Copyright Office.  Intellectual property is registered through CIPA. The priorities of this Authority are to strengthen and implement Botswana’s IPR regime and improve interagency cooperation. IPR infringement does occur in Botswana, primarily through the sale of counterfeit items in low-end sales outlets.  In 2017, CIPA cooperated with the Botswana Police to seize 12,923 counterfeit CDs and DVDs valued over USD 107,000.00. The U.S. government continues to work with the GoB to modernize and improve enforcement of IPR.

IPR is protected under the Industrial Property Act of 2010, which provides protections on patents, trademarks, utility designs, handicrafts, traditional knowledge and geographic indicators.  The 2000 Copyright and Neighboring Rights Act also protects art and literary works and the 1975 Registration of Business Names Act oversees corporate name and registration procedures. Other IPR-related Laws include the Competition Act, the Value Added Tax Act, the Botswana Penal Code, the Customs and Excise Duty Act, the Monuments and Relics Act, the Broadcasting Act, and the Societies Act.

Botswana is a signatory to the Beijing Treaty on Audiovisual Performances, the Hague Agreement Concerning the International Deposit of Industrial Designs, the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks, the Convention establishing the World Intellectual Property Organization (WIPO), the WIPO Copyright Treaty, the WIPO Performances and Phonograms Treaty, the Patent Cooperation Treaty, the Berne Convention for the Protection of Literary and Artistic Works, and the Paris Convention for the Protection of Industrial Property.  For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at  .

Resources for Rights Holders

Goitseone Montsho
Economic/Commercial Specialist
+267 373-2431

Local lawyers’ list:

6. Financial Sector

Capital Markets and Portfolio Investment

The government encourages foreign portfolio investment, although there are limits on foreign ownership in certain sectors.  It also embraces the establishment of new and diverse financial institutions to support increased foreign and domestic investment and to fill existing gaps where finance is not commercially available.  There are nine commercial banks, one merchant bank and one offshore bank, two statutory deposit-taking institution and one credit union operating in Botswana. All have corresponding relationships with U.S. banks.  Additional financial institutions include various pension funds, insurance companies, microfinance institutions, stock brokerage companies, asset management companies, statutory finance institutions, collective investment undertakings, and statutory funds.  Historically, commercial banks have accounted for 92 percent of total deposits and 98 percent of total loans in Botswana. A large portion of the population does not participate in the formal banking sector.

Money and Banking System

The central bank, the Bank of Botswana, acts as banker and financial advisor to the GoB and is responsible for the management of the country’s foreign exchange reserves, the administration of monetary and exchange rate policies, and the regulation and supervision of financial institutions in the country.  Monetary policy in Botswana is widely regarded as prudent, and the GoB has successfully managed to maintain a sensible exchange rate and a stable inflation rate, generally within the target of 3 to 6 percent.

Banks may lend to non-resident controlled companies without seeking approval from the Bank of Botswana.  Foreign investors usually enjoy better access to credit than local firms do. In July 2014, USAID’s Development Credit Authority, in collaboration with the Barclays Bank of Botswana, implemented a program to allow small and medium-sized enterprises (SME) to access up to USD 15 million in loans in an effort to diversify the economy.

As of the end of 2017, there were 24 companies on the Domestic Board and 11 companies on the Foreign Equities Board of the Botswana Stock Exchange (BSE).  In addition, there are 43 listed bonds and four exchange traded funds listed on the exchange. The total market capitalization for listed companies as at 2018 was USD 41.32 billion though one company constitutes the majority of that figure, Anglo-American Plc, which has a market capitalization of some USD 34.43 billion. The BSE is still highly illiquid compared to larger African markets and is dominated by mining companies which adds to index volatility.  Laws prohibiting insider trading and securities fraud are clearly stipulated under section 35 – 37 of the Securities Act, 2014 and charges for contravening these laws are listed under section 54 of the same Act.

The government has legitimized offshore capital investments and allows foreign investors, individuals and corporate bodies, and companies incorporated in Botswana to open foreign currency accounts in specified currencies.  The designated currencies are U.S. dollar, pound sterling, euro, and the South African rand. There are no known practices by private firms to restrict foreign investment participation or control in domestic enterprises. Private firms are not permitted to adopt articles of incorporation or association which limit or prohibit foreign investment, participation, or control.

In general, Botswana exercises careful control over credit expansion, the pula exchange rate, interest rates, and foreign and domestic borrowing.  Banking legislation is largely in line with industry norms for regulation, supervision, and payments. However, the country failed to meet compliance requirements of the Financial Action Task Force (FATF) resulting in a grey listing in October 2018.  Botswana is currently implementing an action plan to remedy the situation. The Non-Bank Financial Institutions Regulatory Authority (NBFIRA) was established in 2008 and provides regulatory oversight for the non-banking sector. It extends know-your-customer practices to non-banking financial institutions to help deter money laundering and terrorist financing.  NBFIRA is also responsible for regulating the International Financial Services Centre, a hub charged with promoting the financial services industry in Botswana.

Foreign Exchange and Remittances

There are no foreign exchange controls in Botswana or restrictions on capital outflows through financial institutions.  Commercial banks are required to ensure customers complete basic forms indicating name, address, purpose and other details prior to processing funds transfer requests or loan applications.  The finance ministry monitors data collected on the forms for statistical information on capital flows, but the form does not require government approval prior to the processing of a transaction and does not delay capital transfers.

To encourage portfolio investment, develop domestic capital markets, and diversify investment instruments, non-residents are able to trade in and issue Botswana pula-denominated bonds with maturity periods of more than one year, provided such instruments are listed on the Botswana Stock Exchange (BSE).  Only Botswana citizens can purchase Botswana’s Letlole Saving Certificate (equivalent to a U.S. Treasury bond). Foreigners can hold shares in BSE-listed Botswana companies.

Travelers are not restricted to the amount of currency they may carry, but they are required to declare to customs at the port of departure any cash amount in excess of 10,000 pula (~USD 950.00).  There are no quantitative limits on foreign currency access for current account transactions.

Bank accounts denominated in foreign currency are allowed in Botswana.  Commercial banks offer accounts denominated in U.S. Dollars, British Pounds, Euros and South African Rand.  Businesses and other bodies incorporated or registered domestically may open accounts without prior approval from the Bank of Botswana.  The GoB also permits the issuance of foreign currency denominated loans.

Upon disinvestment by a non-resident, the non-resident is allowed immediate repatriation of all proceeds including profits, rents, and fees.

The Botswana pula has a crawling peg exchange rate and is tied to a basket of currencies comprised of the South African rand, whose weighting was adjusted from 50 percent to 45 percent in January 2017, with the IMF’s Special Drawing Rights (consisting of the U.S. dollar, the Euro, British pound, Japanese yen, and Chinese renminbi) comprising the remaining 55 percent.  The GoB also reduced the upward rate of crawl from 0.38 percent to 0.26 percent. Under the regular five-year review of the composition of the SDR, the IMF added the Chinese renminbi to the pool. Movements of the South African rand against the U.S. dollar heavily influence the pula. There is no difficulty in obtaining foreign exchange. Shortages of foreign exchange that would lead banks to block transactions are highly unlikely.

Remittance Policies

There are no restrictions or limitations placed on foreign investors in converting, transferring, or repatriating funds associated with an investment.

Sovereign Wealth Funds

The Bank of Botswana maintains a long-term sovereign wealth fund, known as the Pula Fund, in addition to a regular foreign reserve account providing basic import cover. The Pula Fund, with an estimated value of some USD 5.06 billion as at 2016, was established under the Bank of Botswana Act and forms part of the country’s foreign exchange reserves, which are primarily funded by diamond revenues.  The Pula Fund is wholly invested in foreign currency-denominated assets and is managed by the Bank of Botswana Board with input from recognized international financial management and investment firms. All realized market and currency gains or losses are reported in the Bank of Botswana’s income statement. Botswana is among the founding members of the International Forum of Sovereign Wealth Fund and was one of the architects of the Santiago Principles in 2008.  More information is available at percent20PULA percent20FUND percent20- percent20SANTIAGO percent20PRINCIPLES percent20(2).pdf 

7. State-Owned Enterprises

State-owned enterprises (SOEs), known as “parastatals,” are majority or 100 percent owned by the GoB.  There is a published list of SOEs at the GoB portal (  ) with profiles of financial and development SOEs. Some SOEs are state-sanctioned monopolies, including the Botswana Meat Commission, the Water Utilities Corporation, Botswana Railways, and the Botswana Power Corporation.

The same business registration and licensing laws govern private and government-owned enterprises.  No law or regulation prohibits or restricts private enterprises from competing with SOEs. Botswana law requires SOEs to publish annual reports, and private sector accountants or the Auditor General audits SOEs depending on how they are constituted.  GoB ministries together with their respective SOEs are compelled on an annual basis to appear before Parliamentary Public Accounts committee to provide reports and answer questions regarding their performance. Some SOEs are not performing well and have been embroiled in scandals involving alleged fraud and mismanagement.

Botswana is not party to the Government Procurement Agreement within the framework of the WTO.

Privatization Program

The GOB has committed to privatization on paper.  It established a task force in 1997 to privatize all of its state-owned companies and formed a Public Enterprises Evaluation and Privatization Agency (PEEPA) to oversee this process.  Implementation of its privatization commitments has been limited to the January 2016 sale offer of 49 percent of the stock of the state-owned Botswana Telecommunications Corporation to Botswana citizens only.  In February 2017, the GOB issued an Expressions of Interest for the privatization of its national airline, but progress stopped due to the decision to re-fleet the airline before privatization. Conversely, the GoB has created new SOEs such as the Okavango Diamond Company, the Mineral Development Company, and Botswana Oil Limited in recent years.

8. Responsible Business Conduct

The GoB, some foreign and local firms, and customers recognized and embraced Responsible Business Conduct (RBC), although Botswana is not an adherent of the OECD’s RBC Guidelines for Multinational Enterprises and has not specified its definition of RBC.  Large companies in the mining, communications technology, food supply, and financial services sectors have established RBC programs, sponsor projects, and support local nonprofit concerns. However, the ethos has not taken hold in many smaller firms. The U.S. Embassy worked with the local chamber of commerce, Business Botswana, on the issue of corporate social responsibility and ethical compliance to help enlist companies to sign onto a Corporate Code of Conduct that covers, among other things, conflicts of interest, bribery, political interference, political party funding, procurement and bidding and issues surrounding residence and work permits.  To date more than 300 firms have signed the Code of Conduct.

The Companies Act also sets out the expectations of business conduct and governance for directors and shareholders for both private and public companies.  Botswana is not a member of the Extractive Industries Transparency Initiative. Botswana’s Mines and Minerals Act and associated regulations govern mineral contracts and licenses.  Botswana’s laws and procedures for awarding mining contracts are fairly well developed. Mining licenses are required to undergo a public comment period before they are awarded, and that rule is followed.

9. Corruption

Botswana has a reputation for a relative lack of corruption and a willingness to prosecute corrupt officials.  Transparency International ranks Botswana as the least corrupt country in Africa (34th worldwide). Investors with experience in other developing nations describe the relative lack of obstruction or interference by law enforcement or other government agents as among the country’s most important assets.  Nevertheless, private sector representatives note rising corruption levels in government tender procurements.

The major corruption investigation body is the Directorate on Corruption and Economic Crimes (DCEC).  Anecdotal reports on the DCEC’s effectiveness vary. The DCEC has embarked on an education campaign to raise public awareness about the cost of corruption and is also working with GoB departments to reform their accountability procedures.  Corruption is punishable by a prison term of up to 10 years, a fine of USD 50,000, or both. The GoB has prosecuted high-level officials. Corruption allegations have surfaced recently around pension fund management and government procurement procedures.

The 2000 Proceeds of Serious Crime Act expanded the DCEC’s mandate to include combatting money laundering.  The 2009 Financial Intelligence Act provides a comprehensive legal framework to address money laundering and establishes a financial intelligence agency (FIA).  The FIA, which operates under the Ministry of Finance and Development Planning, cooperates with various institutions, such as Directorate of Public Prosecutions, Botswana Police Service, Bank of Botswana, the Non-Banking Financial Institutions Regulatory Authority, the DCEC, and foreign FIAs to uncover and investigate suspicious financial transactions.  Botswana is a member of the Eastern and Southern Anti-Money Laundering Group, a regional standards-setting body for ensuring appropriate laws, policies and practices to fight money laundering and the financing of terrorism. In October 2018, Botswana was “gray-listed” by the Financial Action Task Force and is currently implementing an action plan to address shortcomings that led to the listing.

UN Anticorruption Convention, OECD Convention on Combatting Bribery

Botswana is not a party to the OECD Anti-bribery Convention but is a party to the 2005 UN Anti-corruption Convention.

Resources to Report Corruption

Contacts for agencies responsible for combating corruption:

Name: Brigadier Joseph Mathambo
Tittle: Director General
Organization: Directorate on Corruption and Economic Crime
Address: Madirelo Extension 6, Gaborone, Botswana
Telephone Number: +267 3914002/+267 3604200

Name: Mr. Elijah Motshidi
Tittle: Executive Director (Acting)
Organization: Public Procurement & Asset Disposal Board
Address: Private Bag 0058, Gaborone, Botswana
Telephone Number: +267 3602000
Email: Mr. Abraham Sethibe

Tittle: Director
Organization: Financial Intelligence Agency
Address: Private Bag 0190, Gaborone, Botswana
Telephone Number: +267 3998400

One can also reach out to the Minister of the relevant Ministry for a particular tender and provide a copy of the complaint to the Public Procurement & Asset Disposal Board (PPADB) Executive Director.

10. Political and Security Environment

The threat of political violence is low in Botswana.  Public demonstrations are rare and seldom turn violent.  The last large-scale strike which involved public sector employees, occurred in April to June 2011 and was not violent. In September 2015, roughly 200 people participated in a peaceful march organized by an opposition political party to protest water shortages in the capital.  In August 2016, police forcefully dispersed a small demonstration protesting unemployment outside the National Assembly. In February and March 2017, some student-led protests occurred at tertiary institutions necessitating police deployment, but were not overtly political. There were multiple reports of police brutality, including the use of rubber whips and rubber bullets.  Another peaceful march against corruption was held on March 28, 2018. This followed allegations of embezzlement of the National Petroleum Levy Funds by a company charged with the management of the funds together with some GoB officials.

11. Labor Policies and Practices

Botswana has a high unemployment rate and a constricted worker skills base.  Latest statistics released in 2017 have shown a decline of unemployment rate from 20 percent to 17.6 percent, although the actual rate is suspected to be over 20 percent taking into consideration the closure of several mines where more than 5,000 people lost their jobs.  Employers can expect to engage in significant training efforts, depending on the industry. Retention of workers and absenteeism can pose problems. In addition, managers often cite workforce productivity as a point of frustration. The lack of trained local citizen professionals is generally resolved by the use of expatriates if they can secure work permits.  There is minimal labor strife in Botswana. In 2015, there were a handful of small and peaceful strikes, the most notable of these was by a portion of Botswana Unified Revenue Service (BURS) officials, but as with most unions across sectors, only a portion of BURS officials were unionized, allowing the GoB to maintain customs operations.

The Employment Act provides basic guidelines for employment in Botswana.  The legislation sets requirements for a minimum wage, length of the workweek, annual and maternity leave, hiring and termination.  Standards set by the Act are consistent with international best practice as described by ILO model legislation and guidelines.

Employment-related litigation occurs and is both an example of trust in the court system and a cost to doing business in Botswana.  Employers avoid considerable expense and frustration if they observe the provisions of the Employment Act, relevant labor regulations, and prudence in advance of potential litigation.  Before a potential litigant goes to one of eleven labor courts, the parties must attempt mediation through the Department of Labor. Court cases over severance terms for employees laid off due to fluctuating market conditions are also common.  Section 25 of the Employment Act allows employers to terminate contracts for reducing the size of his work force, known as redundancy, using the first-in-last-out principle. This method of terminating contracts is separate from firing for serious misconduct as specified by Section 26 of the act. The GOB has social safety net programs in place to assist the unemployed and destitute.

Collective bargaining is common in government and the private sector and the Labor Commissioner can grant collective bargaining authority upon request.  The largest unions are comprised of public sector workers.

In August 2016 Parliament passed a Trade Disputes Act with a list of services deemed “essential” and barred from striking that exceeds international labor standards. The Ministry of Employment, Labour Productivity, and Skills Development is coordinating with the ILO and other partners to review labor laws to ensure they align with ILO standards.  In March 2019, it signaled its intent to have draft amendments brought to Parliament by the end of the year.

12. OPIC and Other Investment Insurance Programs

The Overseas Private Investment Corporation (OPIC) makes insurance available for projects in Botswana.  In June 2016, it signed a USD 125 million loan guarantee with Barclays Bank Botswana which represents the first tranche of the approved USD 250 million guarantee facility for the diamond industry.  The second tranche of this facility it announced in 2018 will be utilized through the Stanbic Bank Botswana. Other OPIC programs in Botswana are in place to support lending to SMEs.

Botswana is a member of the Multilateral Investment Guarantee Agency (MIGA), which offers investors protection against inconvertibility, or transfer of currency, expropriation, breach of contract, and war and civil disturbance.

The Botswana Export Credit Insurance and Guarantee Ltd. allows investors to purchase coverage against certain events and losses such as the insolvency and inability of buyers to pay for purchases, unanticipated import restrictions, or the blockage by the buyer’s country of foreign exchange transfer.

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy

Host Country Statistical Source USG or International Statistical Source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount
Host Country Gross Domestic Product (GDP) ($M USD) 2017 $17,380 2017 $17,410   
Foreign Direct Investment Host Country Statistical Source USG or International Statistical Source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) 2015 $32 2015 $19 BEA data available at  
Host country’s FDI in the United States ($M USD, stock positions) N/A N/A 2016 $-1 BEA data available at  
Total inbound stock of FDI as % host GDP N/A N/A 2017 35.8% UNCTAD data available at  

Table 3: Sources and Destination of FDI

According to the Bank of Botswana, investment in Botswana totaled 84.75 billion pula in 2016, of which 31 billion pula were non-FDI investments.  Africa (33.3 percent) and Europe (64.4 percent) accounted for most of the 54 billion pula influx of FDI. Within these regions, South Africa and United Kingdom were the predominant players, accounting for 9.7 and 32.5 billion pula respectively.  Little data on FDI sources is available for countries and regions with limited investments in Botswana. Retail and Wholesale Trade surpassed the mining sector in 2016 to account for 38.9 percent of Foreign Investment inflows.

Direct Investment From/in Counterpart Economy Data
From Top Five Sources/To Top Five Destinations (US Dollars, Millions)
Inward Direct Investment Outward Direct Investment
Total Inward $5.05 100% N/A N/A N/A
Africa $1.69 33.5% N/A N/A N/A
Europe $3.25 64.3% N/A N/A N/A
Asia Pacific $0.09 1.8% N/A N/A N/A
North & Central America $0.02 0.4% N/A N/A N/A
Other $0 0% N/A N/A N/A
“0” reflects amounts rounded to +/- USD 500,000.

Table 4: Sources of Portfolio Investment

IMF Coordinated Direct Investment Survey data are not available for Botswana.  Equity securities represent 82 percent of Botswana’s portfolio investment assets abroad.  Information about country destination of these portfolio investments is not available.

14. Contact for More Information

Goitseone Montsho
Economic/Commercial Specialist
+267 373-2431


Executive Summary

The Government of Lesotho (GOL), through its National Strategic Development Plan (NSDP), recognizes the critical role that domestic and foreign investment and the development of the private sector play in driving shared economic growth.  The government actively encourages foreign direct investment (FDI) in all areas of the economy, and it has earmarked four sectors (Agriculture, Manufacturing, Technology/Innovation, and Tourism/Creative Industries) as productive sectors with the potential to promote private sector-led sustainable and inclusive growth.  There are limited restrictions on foreign ownership of small businesses, and foreign investors enjoy the same rights and protections as Basotho investors. Lesotho’s standards of treatment and protection of foreign investors are good in practice, but the legal framework guaranteeing these norms remains weak. There is no foreign investment law, and there are limited bilateral investment treaties (BITs) to protect foreign investors and ensure their fair treatment.

Lesotho’s performance in attracting FDI has been credible by regional standards, particularly for a landlocked nation.  The country has a free-market economy with relatively open capital markets and an improving business climate. In recent years, FDI inflows have been mainly driven by investments in mining, textiles and apparel, manufacturing, construction, and water.  Lesotho currently enjoys temporary trade incentives under the United States’ African Growth Opportunity Act (AGOA). There are concerns as to how the export market will perform when AGOA expires in 2025.

Despite some political uncertainty, the investment climate is reasonably conducive to U.S. investment.  Lesotho, a relatively small market of only 2 million people, is a member of the Southern African Customs Union (SACU) and the Southern African Development Community (SADC) market.  These memberships allow foreign businesses to use Lesotho as a gateway to larger regional markets.

The commercial legal, regulatory, and accounting systems are transparent and consistent with international norms.  While there has been recent alleged executive interference in the judiciary, this has not directly extended to the Commercial Court.  The judicial system remains a means for enforcing property and contractual rights, though a recent stoppage of the Court of Appeal and case backlogs have led to processing delays.  Lesotho has a written and consistently applied commercial law. A Commercial Court was established in 2010 with the support of a U.S. government-funded Millennium Challenge Corporation (MCC) grant in an effort to improve the country’s capacity in resolving commercial cases.  The Commercial Court is currently operational and has two judges and two mediators. The court heard approximately five cases related to foreign investors in 2018. Foreign investors have equal treatment before the courts in disputes with national parties or the government. The government has little history of investment disputes involving U.S. or other foreign investors or contractors in Lesotho, though in the past four years two foreign companies with government contracts have had disputes.

Corruption remains a problem in Lesotho.  Giving or accepting a bribe is a criminal act under the Prevention of Corruption and Economic Offences Act of 2006.

Lesotho is a member of the International Labor Organization (ILO) and has ratified 23 international labor conventions, including all eight fundamental human rights instruments.  Lesotho’s Labor Code Order of 1992 and its subsequent amendments are the principal laws governing terms and conditions of employment in Lesotho. The law provides for freedom of association and the right to bargain collectively.  The law stipulates that employers must allow union officials reasonable facilities for conferring with employees.

Lesotho has accomplished significant recent policy reforms, and the government plans to undertake further reforms.  The Land Act of 2010 and Land Regulations of 2011 reformed the land tenure system, allowing foreign investors to hold land titles as long as 20 percent of the company is owned by local investors.  The Land Act has also allowed the use of land as collateral which has expanded access to credit. The Act recognizes the right of women to hold title to land. Furthermore, under the Married Person’s Equality Act 2006, women are provided equal access to investment development and protections.  The Equality Act repeals the marital power that a husband had over his wife and her property, and confers equal powers on both spouses married in community of property.

The Companies Act of 1967, amended in 2011, also enables women to become promoters or directors of companies without having to seek their husbands’ consent.  The Act further reduced the time it takes to start a business from 40 days to 5 days and strengthened investor protections. In 2016, Lesotho launched a credit information bureau to improve credit market conditions and facilitate effective credit risk management by registered credit providers.  The country implemented the Automated System for Customs Data (ASYCUDA) in 2018 which improved import and export processes. The government plans to relaunch the Investment Climate Reform Committee in the future.  The Committee will likely be chaired by the Deputy Prime Minister and be comprised of technical and policy players and will aim to make it easier to invest in Lesotho by coordinating investment issues.  A credit bureau is now operational to improve credit market conditions and facilitate effective credit risk management by registered credit providers.

The Payment Systems Regulations of 2017 are now in place to improve mobile money regulation in Lesotho.  A government e-portal launched in November 2018 now includes e-visa and e-customs services. In addition, the government established a formal dialogue with the private sector in 2018 through investor laboratories.  The outcome is an ambitious plan to launch 77 projects within five years to create an estimated 20,000 jobs. As a result of such reforms, Lesotho’s rank in the World Bank’s Doing Business report has improved from 153 in 2012 to 104 in 2019.

Despite progress in improving its attractiveness for FDI, Lesotho faces various investment constraints.  These include macroeconomic instability, limited access to credit, skills gaps, limited infrastructure, and policy uncertainty.

Table 1

Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2018 78 of 175
World Bank’s Doing Business Report “Ease of Doing Business” 2018 106 of 190 
Global Innovation Index 2018 130/140 
U.S. FDI in partner country (M USD, stock positions) 2017 USD 3
World Bank GNI per capita 2017 USD 1270

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Toward Foreign Direct Investment

The GOL maintains a strong commitment to private investment and is generally open to FDI, with the exception of limited restrictions on foreign ownership of small businesses.  The GOL welcomes foreign investments that:

  • Create jobs and open new markets and industries in accordance with the national objective of diversifying Lesotho’s industrial base;
  • Improve skills and productivity of the workforce and nurture local business suppliers and partners;
  • Support knowledge and technology transfer and diffusion;
  • Improve the quality and accessibility of infrastructure.

Lesotho follows World Trade Organization (WTO) laws and regulations.  The government does not discriminate against foreign investors.  Foreign investors enjoy the same rights and protections as Basotho investors.  The government is aware of the challenges it faces as a small, landlocked, and least developed country in facilitating investment and expresses commitment to improving the climate for investment.

The GOL has undertaken several policy reforms in recent years to improve the investment climate in Lesotho.  The Land Act of 2010 allows foreign investors to hold land titles so long as the local investors own at least 20 percent of the enterprise.  The GOL also enacted the Companies Act of 2011, which strengthened investor protections by increasing the disclosure requirements for related-party transactions and improving the liability regime for company directors in cases of abuse of power related-party transactions.  In 2013, the government launched the Consumer Protection Policy.

Lesotho’s investment promotion agency, the Lesotho National Development Corporation (LNDC), is responsible for the initiation, facilitation, and promotion of Lesotho as an attractive investment destination.  LNDC also undertakes investment project appraisals, provides pre-investment and after care services, risk management, trade and investment research, and strategic planning. It also ensures investors’ compliance with the country’s legal frameworks.  Through LNDC, the government actively encourages investment in the following sectors: chemicals, petrochemicals, plastics and composites, energy and mining, environmental technologies, health technologies, textiles and apparel, sporting goods, and travel.  LNDC implements the country’s industrial development policies. LNDC also provides assistance through supportive services to foreign investors and publishes information on investment opportunities and the services it offers to foreign investors. Furthermore, it offers incentives such as long-term loans, tax incentives, factory space at discounted rental rates, assistance with work permits and licenses, and logistical support for relocation.  LNDC maintains an ongoing dialogue with investors by attending annual trade and investment forums both locally and internationally. For more information, please visit:  .

Limits on Foreign Control and Right to Private Ownership and Establishment

Lesotho is open to foreign investment without case-by-case approval or a requirement for partial national ownership, with the exception of a defined number of small-scale businesses in certain sectors that are reserved exclusively for Lesotho citizens to encourage local entrepreneurship.  The activities reserved for local ownership under the Trading Enterprises Regulations of 2011 include: agent of a foreign firm, barber, butcher, snack-bar, domestic fuel dealer, dairy shop, general café or dealer, greengrocer, broker, mini supermarket (floor area < 250m2), and hair and beauty salon.  Foreigners are not permitted to own or sit on the boards of these businesses.    Despite the Trading Enterprises Regulations 2011, there appear to be a significant number of foreign-owned shops in reserved industries.  The Central Bank of Lesotho Act of 2000 stipulates a foreign investment minimum threshold of USD 250,000. The Mines and Minerals Act No.4 of 2005 restricts mineral permits for small-scale mining operations on less than 100m2 to local ownership.  Diamond mining, regardless of the size of the operation, is subject to the large-scale mines licensing regime, which has no restrictions on foreign ownership; however, the Government reserves the right to acquire at least 20 percent ownership in any large-scale mine.

The Ministry of Trade and Industry screens foreign investments in a routine, non-discriminatory manner to ensure consistency with national interests.  The lack of local entrepreneurs has meant the government is under no pressure to exclude foreign investment to the advantage of local investment, though some foreign companies have reported difficulties in obtaining work permits for expatriate staff.  No government approval is required, and there are almost no restrictions on the form or extent of foreign investment, except investment in small-scale retail and services businesses (see above).

Other Investment Policy Review

Lesotho’s investment policy was approved by Cabinet and became law in early 2016.  The policy was developed with assistance from the United Nations Conference on Trade and Development (UNCTAD  ).  The government has not undertaken any third-party investment policy reviews in the past three years.

Business Facilitation

To make it easier to do business and facilitate FDI, the government established a “One Stop Business Facilitation Centre” (OBFC), placing all services required for the issuance of licenses, permits, and imports and exports clearances under one roof.  OBFC services, coupled with the implementation of the Companies Act of 2011, have reduced the number of days it takes to start a business from 40 days to 3 days. The OBFC also hosts the Lesotho Trade Information Portal, a single online authoritative source of all laws, regulations, and procedures for importing and exporting.  The portal provides transparency and predictability to trade transactions and reduces the time and cost of trading across borders. The 2019 World Bank Doing Business report notes the country has begun initiatives to improve the business environment, particularly with cross-border trade, access to credit, contract enforcement, property transfers, and strengthening investor protections.  However, businesses still face issues with construction permits and obtaining electricity. The OBFC web site is  .  The website can be used by foreign investors to register their businesses from outside Lesotho.

The process of company registration includes: work permit application with the Ministry of Labor and Employment, visa application and resident permit with the Ministry of Home Affairs, trader’s license with the Ministry of Trade and Industry, tax clearance with Lesotho Revenue Authority, police clearance with the Ministry of Police and Public Safety, and medical clearance with the Ministry of Health.

In 2015, Lesotho established a platform to facilitate equitable treatment of women and underrepresented minorities — the financial inclusion project run by the Ministry of Finance and the Central Bank of Lesotho.  The project assists beneficiaries to form and register cooperations/associations, access finance, link them with relevant service providers, and negotiate tax incentives on their behalf. The Ministry of Finance, together with the United Nations Development Program (UNDP) and local network providers, drafted the Financial Sector Strategy Development policy to help facilitate access to finance through mobile banking.  The project started in 2016 as one of government’s financial inclusion mechanisms.

Outward Investment

There are no incentives for or restrictions on outward investment.  The government facilitates quality standard processes and export permits for outward investment.  For AGOA exports, the Ministry of Trade and Industry, LNDC, and LRA provide support including on export requirements.  Other agencies such as the U.S. Agency for International Development Southern Africa Trade Hub provide capacity to the government for the implementation of AGOA.  The government has assigned Lesotho Standard Authority to provide assistance to investors who export to the Republic of South Africa (RSA).

2. Bilateral Investment Agreements and Taxation Treaties

Lesotho does not have a bilateral investment treaty or a free trade agreement with an investment chapter with the United States.  Lesotho does, however, have bilateral investment protection agreements with the United Kingdom (1981), Germany (1985), and Switzerland (2010).  The three agreements are posted in full on the UNCTAD website. In 2008, SACU member states and the United States signed a Trade, Investment, and Development Cooperative Agreement (TIDCA).  In addition, Lesotho signed an Economic Partnership Agreement (EPA) with the European Union in June 2016. Lesotho does not have a bilateral taxation treaty with the United States. There are no taxation issues of concern to U.S. investors.  However, Lesotho has a bilateral taxation treaty, the Double Taxation Agreement (DTA), with the RSA and the United Kingdom (UK). The DAT between Lesotho and RSA came into effect in 1997. The DTA between Lesotho and the UK was signed in 2016, and came into effect in 2018.

4. Industrial Policies

Investment Incentives

There are no incentives for, and no performance requirements imposed on, foreign investors as a condition of investment.  However, there are tax, factory space, and financial incentives available to manufacturing companies establishing themselves in Lesotho, such as: no withholding tax on dividends distributed by manufacturing firms to local or foreign shareholders, unimpeded access to foreign exchange, export finance facility, and long-term loans.  These incentives are applied uniformly to both domestic and foreign investors. For more information, see  .  The incentives are specified in government administrative policies and regulations.

Foreign Trade Zones/Free Ports/Trade Facilitation

Although Lesotho does not have any free or foreign trade zones, on March 21, 2018, the country signed the declaration, not the agreement, on the African Continental Free Trade Area (AfCTA). The main objective of the AfCTA is to create a single continental market for goods and services, with free movement of business persons and investments, and thus pave the way for the establishment of the Continental Customs Union and the African Customs Union.  The labor-intensive textile manufacturing companies that export beyond the SACU market, however, enjoy the benefits of free trade zones since they can import raw materials then export finished products duty and tax free.  The LNDC maintains five industrial areas with direct road links to attract foreign investors. These areas are mainly occupied by foreign manufacturing firms which enjoy the same investment opportunities as local entities.  Feasibility studies for the construction of a sixth industrial area at the Belo Industrial Estate in Botha-Bothe district have been conducted, and the construction of shells commenced in 2018.

Performance and Data Localization Requirements

With the exception of textile companies that export to the United States under the African Growth and Opportunity Act (AGOA), which are bound by SACU regulations to export all their products, there is no requirement that investors purchase from local sources or export a certain percentage of output, or only have access to foreign exchange in relation to their exports.  The GOL does not impose “offset” requirements, whereby major procurements are approved only if the foreign supplier invests in manufacturing, research and development or service facilities in the country related to the items being procured. The GOL does not impose conditions on permission to invest, with the exception of land titling, which requires the entity to have at least 20 percent local ownership.  The government does not impose forced localization, but it does have mandates for local employment with an exception on shareholders and investors.

Requirements for visas and residence permits are not discriminatory; however, procedures are lengthy and not integrated.  For executive positions, work permits to foreign nationals are generally issued and renewed without significant delay; for technical positions, firms have to provide justification based on local skill shortage.  The procedures for obtaining permits are transparent although foreign investors complain about excessive fees charged and long delays in processing. Work permits for the manufacturing sector are issued at the One Stop Business Facilitation Centre (OBFC), while all other sectors need to lodge their applications with the office of the Labor Commissioner.  The maximum period provided for a work permit is one year and is not in line with the type of work permit issued. For more information on requirements for visas, residence permits and work permits, please visit:  

The GOL does not follow a policy of “forced localization” designed to force foreign investors to increase investment and/or employment in the local economy.  The government does not force foreign investors to establish and maintain data storage within Lesotho; however, foreign investors are required to keep records of local sales and employees’ remuneration locally for tax purposes.

5. Protection of Property Rights

Real Property

The right to private property is protected under the law.  All foreign and domestic private entities may freely establish, acquire, and dispose of interests in business enterprises.  Under the Land Act of 2010, foreign nationals are permitted to buy and hold land provided they have a local partner with at least 20 percent ownership.  Lesotho has no competition or overall competition regulator. The Industrial Licensing Act 1969, which allowed businesses to apply for protection against competition for up to 10 years, was repealed in 2014.

Secured interests in property, both movable and real, are recognized and enforced under the Land Act 2010.  The concept of a mortgage exists; and mortgages are protected under the Deeds Registry Act of 1967. Secured interests, including mortgages, are recorded and filed by the Deeds Registry.  Through the support of the Millennium Challenge Corporation, the government of Lesotho significantly improved the process of registering land titles; peaking at 88 under the “Registering Property” index of the World Bank’s Doing Business Report in 2014.

Commercial banks are the only financial mechanisms/sources available in Lesotho for securitization of properties for lending purposes.  In cases in which land is accepted as collateral, the banks work with the Land Administration of Authority (LAA) to develop secured lending capabilities for investors.  LAA is an autonomous government body established to modernize and improve land administration and to reduce land transactions costs and the time it takes to acquire or dispose of a leasehold title to land.

All allocated land in Lesotho is held under title (Form C’s).  However, the Land Administration Act (LAA) encourages titleholders to register their titles into leases so they are recorded in a formal registration system.  LAA undertook a Scheme of Regularization in 2011 to assist title holders acquire leases. This followed the establishment of the LAA, funded by the U.S. Government through the Millennium Challenge Corporation (MCC).  Presently, LAA is awaiting publication of a Regularization Gazette to continue with regularization of land parcels, mainly for commercial plots in four urban areas of Berea, Botha-Bothe, Mohale’s Hoek, and Quthing.

Land titles (leases) as well as secondary land transactions (transfers, mortgages, subleases, and mining leases) are registered in the Deeds Registry and can be enforced in the Land Courts, Magistrate Courts, and High Court.  Mortgages are registered in the Deeds Registry, which serves as a reliable recording system. For more information please visit  .

Intellectual Property Rights

Legal structures to protect intellectual property rights (IPR) are relatively strong.  Investors complain that enforcement is somewhat weak, although infringements and theft are not common.  Lesotho respects international IPR laws and is a member of the World Intellectual Property Organization (WIPO) as well as the African Intellectual Property Organization.

Protection of IPR is regulated by the Industrial Property Order of 1989 and the Copyright Act of 1989, which conform to the standards set out in the Paris Convention and Berne Convention.  The laws protect patents, industrial designs, trademarks, and grant of copyright, but they do not protect trade secrets or semi-conductor chip lay-out design. The Law Office is responsible for enforcement of the Industrial Property Order, while the Ministry of Tourism, Sports and Culture is responsible for enforcement of copyright (reflecting the law’s focus on protection of artistic works).  The Deeds Registry carries out registration.

Two bills with IP related regulations are yet to be passed in Lesotho Parliament.  The Ministry of Communications, Science and Technology in liaison with the Lesotho Communications Authority (LCA) have finalized the drafting of the Computer Crime and Cyber Security bill and the Electronic Transactions and Commerce bill.  If enacted, the bills will improve the protection of IPR by addressing cyber-crime and protecting electronic transactions.

Lesotho is not included in the United States Trade Representative (USTR) Special 301 Report or the Notorious Markets List.

For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at  .

Resources for Rights Holders

Contact at Mission:

Matt Jamrisko
Political and Economic Officer
+266 2231-2666

Local Lawyers List:

1st Floor, Metropolitan Building
Maseru, Lesotho
Tel.  : +266 22 314 986
Fax   : +266 22 310521

6. Financial Sector

Capital Markets and Portfolio Investment

The regulatory system is effectively established to encourage and facilitate portfolio investment.   Through the Central Bank of Lesotho (CBL), the GOL promotes the development of financial markets in Lesotho through managing official foreign reserves, implementation of monetary policy through Open Market Operations, and contracting and managing the Government’s domestic debt through issuance and redemption of treasury securities.  Financial markets in Lesotho have been developed in phases.  The first phase focused on money markets development (treasury bills) in 2008 by increasing the frequency of auctions and increasing the number of tenors.  To broadly develop capital markets, this was followed by the introduction of government bonds in 2010, with the last phase being the development of a corporate bonds and equities market.  The stock of portfolio investment liabilities amounted to USD28.5 million at the end of 2010 and comprised mostly bonds. Lesotho’s capital market is relatively underdeveloped, with no secondary market for capital market transactions.  Through publication of the Capital Markets Regulations of 2014, the government established and launched the Maseru Securities Market, the country’s stock market, in January 2016. The Regulations, documented in the Government Gazette No. 76, provide for the operation of a market that is fair, orderly, secure, and transparent.  The Regulations further provide for investor protectios and the licensing of all market players. Although the stock market was formally launched three years ago, it is not functioning; there are neither companies listed nor securities being traded. The registering of companies in the stock market will increase the ability of businesses to raise medium to long-term capital.  The trading of government bonds; corporate bonds and company shares is strictly electronic—there is no physical building. For now, bond trading is operated by the Central Bank of Lesotho, with the hope that the private sector will take over when fully capacitated. For the 2018/19 fiscal year, the government financed a fiscal deficit of approximately USD 85.7 million through domestic borrowing.

The government accepted the obligations of IMF Article VIII in 1997, and continues to refrain from imposing restrictions on the making of payments and transfers for current international transactions.  Foreign participation in government securities is allowed as long as foreign investors can open accounts with local banks through which funds can be collected. Lesotho is part of the Common Monetary Area (CMA) and therefore facilitates free movement of capital.  The current account has been fully liberalized for all inward and outward cross-border transactions. However, some transactions still need approval from the Central Bank. Credit is usually allocated on market terms, although there are structural bottlenecks in the market and perceived distortions.  For example, lending rates are considered to be higher in the country despite excess liquidity in the system.

According to the IMF and the World Bank private sector credit is growing.  A Central Bank of Lesotho report in December 2018 reflected that private sector credit grew by 10.2 percent.  Credit is allocated on market terms, and foreign investors are able to get credit on the local market. However, the banking sector is characterized by conservative lending guidelines, high interest rates, and large collateral requirements.  Foreign investors that meet credit extension criteria are provided with credit from commercial banks. While the local banking system may not be as developed in terms of credit instruments, there are foreign investors who have qualified for loans, bank overdrafts, etc. from commercial banks.  LNDC does not provide credit to foreign investors but can acquire equity in foreign companies investing in strategic economic sectors. The private sector has access to a limited number of credit instruments, such as credit cards, loans, overdrafts, checks, and letters of credit.

In January 2016, Lesotho’s first credit bureau was launched; the latest in a long series of incremental steps by the government to further improve access to finance for the private sector.  The credit bureau, run by Compuscan, a South African credit bureau, facilitates the exchange of consumer credit information among credit providers to enable them to make better assessments of risk and promote responsible borrowing and lending practices.

Money and Banking System

Lesotho has a central bank and four commercial banks—three subsidiaries of South African banks (subject to measures and regulations under the Institutions Act of 2012) and the government-owned Lesotho Post Bank (LPB)— which serve about 435,000 Basotho, approximately 38 percent of the adult population, through 49 branches.  The number of bank branches and automated teller machines (ATMs) are distributed unevenly across the country. In Maseru, there are about 16 branches and ATM locations for every 100,000 people, whereas in Mokhotlong, for example, there are only three branches and ATM locations for every 100,000 people. According to the CBL, the banking system is sound—commercial banks in Lesotho are well-capitalized, liquid, and compliant with international banking standards.  Three South African banks account for almost 92 percent of the country’s banking assets, which totaled over M16.07 billion (USUSD 1.1 billion) by December 2017. The share of bank nonperforming loans to total gross loans was approximately 3.7 percent in December 2018. Foreigners are allowed to establish a bank account and may hold foreign currency accounts in local banks; however, they are required to provide a residence permit as a precondition for opening a bank account to comply with the “know your customer” requirements.

Foreign Exchange and Remittances

Foreign Exchange Policies

There are no restrictions on converting or transferring funds associated with an investment into a freely usable currency and at a legal market-clearing rate.  Subject to foreign exchange (forex) control rules, Lesotho’s policy is that foreign investors may access forex for day-to-day business purposes and can remit capital and profits overseas.  Investors may hold foreign currency accounts in local banks. Lesotho has acceded to Article VIII of the IMF charter, which provides for foreign exchange convertibility of current account transactions.  For loan repayments, investors must notify the Central Bank of Lesotho (CBL) at the outset of an investment that the capital for that investment is a loan and must disclose the terms of the loan. Lesotho is a member of the Southern African Common Policy on approval of foreign loans.  The Central Bank has fully liberalized inward flows. For outward flows, individuals are allowed to invest up to USD 285,714 per year while legal entities are allowed up to USD 36 million per year. Repatriation of funds abroad by non-residents is not restricted provided there is proof that the declaration of such funds was made when non-residents came to the country.  Loans require approval from the Central Bank.

The CBL has authorized three commercial banks and two private money exchange bureaus in Lesotho to deal in forex. However, the CBL still retains the power to approve forex requirements for all capital account transactions including FDI, capital disinvestment, and contracting and servicing offshore debt.  The procedures for approving dividend remittances are somewhat bureaucratic, similar to other countries that have forex control regimes. Copies of audited company accounts are required for final dividend payments, while interim dividends require only management accounts. Tax clearance certificates are required for both interim and final dividend payments.

Lesotho’s fiscal and monetary policies operate within the context of its membership of the Common Monetary Area (CMA).  The CMA consists of the following SACU countries: Lesotho, Namibia, Swaziland, and South Africa. Under the CMA, the national currency, the loti, is pegged at par to the South African rand, which is also accepted as legal tender in Lesotho.  As a member of the CMA, Lesotho has free convertibility of transactions with Namibia, South Africa, and Swaziland. Under this regime, Lesotho has effectively surrendered its monetary policy to the South African reserve bank, and, therefore, cannot engage in currency manipulation.  To maintain the rand/loti peg, Lesotho maintains reserves in rand and other foreign currencies. Lesotho’s prudent management of its reserves enables it to offer free forex convertibility for all current account transactions.

The country, through its central bank, issued a statement on November 2017, to announce its position on emerging block-chain technologies, in particular cryptocurrencies.  In its statement, the bank highlighted that cryptocurrencies do not fall under the purview of its regulatory scope, and the nature of cryptocurrency transactions violate existing laws, exchange laws, and anti-money laundering/combatting of terrorist financing laws.

Remittance Policies

According to the CBL, there are no plans to change remittance policies in the near future.  The current average delay period for remitting investment returns such as dividends, return of capital, interest and principal on private foreign debt, lease payments, royalties, and management fees through normal legal channels is two days, provided the investor has submitted all the necessary documentation related to the remittance.  There has never been a case of blockage of such transfers, and shortages of forex that could lead to blockage are unlikely given that the CBL maintains net international reserves at a target of six months of import cover.

Sovereign Wealth Funds

There is no sovereign wealth fund or asset management bureau in Lesotho. 

7. State-Owned Enterprises

Lesotho privatized most state owned enterprises (SOEs) following the adoption of the Privatization Act of 1995, including telecommunications, banks, and the government vehicle fleet.  The government did not privatize the electricity and water utility companies, which enjoy monopolies in their respective sectors. In 2004, the government established the Lesotho Postbank, which is mandated to provide Basotho greater access to financial services.  The government also introduced state-owned buses in the public transportation sector in 2008, with a mandate of providing public transport to underserved areas of the country. The government further has stakes in private companies in utilities and the telecommunications, mining, and manufacturing sectors.  There is a significant level of competition within these sectors—SOEs do not play a leading role. There are no laws that seek to ensure a primary or leading role for SOEs in certain sectors/industries. SOEs operate under the same tax law, value-added tax (VAT) rebate policies, regulatory, and policy environment as other private business, including foreign businesses.

Private enterprises are allowed to compete with public enterprises under the same terms and conditions with respect to access to markets, credit and other business operations, such as licenses and supplies.  Private enterprises have the same access to financing as SOEs and on the same terms as SOEs, including access to finance from commercial banks and government credit guarantee schemes.

SOEs are subject to hard budget constraints under the law and these provisions are enforced in practice.  SOE senior management reports to an independent board of directors, some of whom are political appointees.  SOEs are required by law to publish an annual report and to submit their accounts to independent audit. SOEs are subject to the same domestic accounting standards and rules as other private investors, and these standards are comparable to international financial reporting standards.  There are 14 state-owned organizations and 16 state-invested enterprises. In 2018, the government engaged a consultancy firm to improve SOE financial and operational performance as part of public financial management reforms financed by the World Bank, the European Union, and the African Development Bank (AfDB).

SOEs do not exercise delegated governmental powers.  U.S. firms have not reported any commercial activity by government departments or quasi-government institution that has an adverse commercial impact on their operations.  There are no reported cases of SOEs being involved in investment disputes. Lesotho’s judicial system is fairly independent; court processes are transparent and non-discriminatory.  

Privatization Program

There is no ongoing privatization program in Lesotho.

8. Responsible Business Conduct

There is a general awareness of responsible business conduct (RBC) and corporate social responsibility among both producers and consumers.  The government maintains and enforces domestic laws with respect to labor and employment rights, consumer protections, and environmental protections.  Labor laws and regulations are rarely waived in order to attract investment, and the government does not compromise on environmental laws. Since 2013, the Policy Analysis and Research Institute of Lesotho has monitored mining companies on corporate social responsibility.  Additionally, Lesotho’s Consumer Protection Association (CPA) and the Media Institute of Southern Africa (MISA) have been planning to develop a comprehensive monitoring program that will assess corporate social responsibility (CSR) in a variety of economic sectors. However, the process is incomplete as the two organizations have not been able to collect data from all districts.  Their initial plan to publish the inaugural joint report in 2016 has been postponed indefinitely.

Foreign and local enterprises tend to follow generally accepted CSR principles such as those contained in OECD Guidelines for Multinational Enterprises and the United Nations’ Guiding Principles on Business and Human Rights, although the government does not actively promote adherence to these principles.  Firms that pursue CSR are viewed favorably by society, but CSR does not necessarily provide any advantages in dealing with the government.

Although Lesotho has an extractive/mining industry, it does not participate in the Extractive Industries Transparency Initiative (EITI), since it does not extract/produce any of the minerals supported through the initiative.

9. Corruption

In Lesotho, the Directorate on Corruption and Economic Offences (DCEO) has a mandate to prevent and to combat corruption.  The country has laws, regulations, and penalties to combat corruption of public officials. Parliament passed anti-corruption legislation in 1999 that provides criminal penalties for official corruption.  The DCEO is the primary anticorruption organ and investigates corruption complaints against public sector officials. The Amendment of Prevention of Corruption and Economic Offences Act of 2006 enacted the first financial disclosure laws for public officials.  On February 5, 2016, the government issued regulations to initiate implementation of the financial disclosure laws for public officials who must file their declarations annually by April 30. The law may also be applied to private citizens if deemed necessary by the DCEO.  The law prohibits direct or indirect bribery of public officials, including payments to family members of officials and political parties. While the government made significant efforts to implement the law, some officials have engaged in corrupt practices with impunity. The DCEO has claimed it cannot effectively implement the law because it lacks adequate resources.  The Money Laundering and Proceeds of Crime Act of 2008 (amended in 2017) and Public Financial Management and Accountability Act of 2011 serve as additional anti-corruption laws. The Prevention of Corruption and Economic Offences Act (section 14 (1)) and Public Procurement Regulations of 2007 have provisions that address conflict-of-interest in awarding government procurement contracts.  Section 6 (g) (h) (i) of the Prevention of Corruption and Economic Offences Act of 1999 encourages private companies to develop internal controls to prevent corruption. Corruption is most pervasive in government procurement, awarding licenses, and customs fraud.

In 2013, the DCEO indicted both a sitting minister and a former minister for separate incidents of corruption.  A court case regarding a sitting Minister (since resigned) was recently dismissed due to a missing police docket while the other case still has not yet had a final resolution.  In an effort to prevent corruption and economic offences, the DCEO encourages companies to establish internal codes of conduct that, among other things, prohibit bribery of public officials.  Many companies have effective internal controls, ethics, and programs to detect and prevent bribery. 

No U.S. firms have identified corruption as an obstacle to foreign direct investment in Lesotho.  One U.S. firm recently claimed a solicitation of a bribe in a government tendering process. The ministry suspended the tender and stated it would be rebid.  Giving or accepting a bribe is a criminal act under the Prevention of Corruption and Economic Offences Act of 2006, the penalty for which is a minimum of 10,000 maloti (USUSD 667) or 10 years imprisonment.  Local companies cannot deduct a bribe to a foreign official from taxes. Corruption is common in government procurement.

UN Anticorruption Convention, OECD Convention on Combatting Bribery

Lesotho acceded to the UN Anticorruption Convention in 2005, but it is not yet a signatory to the OECD Convention on Combating Bribery.  Lesotho acceded to the African Union Convention on Preventing and Combating Corruption in 2003. The country is also a member of the Southern African Development Community Protocol against corruption, Southern African Forum against corruption, African Peer Review Mechanism (APRM), and the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG).

The country is currently undertaking a National Benchmark Survey to determine the effectiveness of an overall anti-corruption strategy.  In 2018, a Special Anti-Corruption Sub-Committee of ministerial principal secretaries was established to capacitate principal secretaries to identify corruption, implement preventative measures, and to hold perpetrators accountable.

Resources to Report Corruption

Contact at government agency or agencies are responsible for combating corruption:

Sefako Seema


Mamello Mafelesi
P.O.  Box 16060, Maseru, 100 Lesotho
+266 2231-3713

10. Political and Security Environment

Since 2012, Lesotho has been governed through coalition governments which have not lasted beyond three years.  (Note: the constitution states that elections should be held every five years). The nation has been increasingly polarized and the political environment unpredictable.  However, the arrest of LDF members previously involved in human rights abuses and the appointment of a new commander has stabilized the security sector significantly.

In August 2014, the army attacked three police stations and killed one police officer.  The then Prime Minister, some ministers, and police officers fled to South Africa. Following the incident, the Southern African Development Community (SADC) provided VIP protection for the Prime Minister and former Minister of Gender and Youth, Sports and Recreation; also Leader of the Basotho National Party (BNP); and facilitated the February 28, 2015 snap elections.  The elections were peaceful and widely regarded as free and fair, and a seven-party coalition government emerged. In May and June 2015, more than 20 soldiers were detained and tortured in connection with an alleged mutiny. On June 25, 2015 former army Commander Maaparankoe Mahao was killed by other soldiers, leading to a SADC Commission of Inquiry which concluded that excessive use of force was used in an attempt to arrest him and recommended that those involved in the killing and other crimes should be prosecuted.  The Commission also found no evidence of alleged mutiny. It further recommended constitutional, public service, judicial, parliamentary and security reforms. In fulfillment of one of the SADC recommendations, the then army commander retired on December 1, 2016. He is currently facing charges for January 2014 bombings at the now First Lady’s, her neighbor’s, and former police commissioner’s residences, as well as the killing of a police officer in August 2014. He is also charged in Mahao’s murder. Over 30 other soldiers are facing charges for various crimes including the 2015 killing of the army commander.

On March 1, 2017, the government lost a vote of no-confidence in parliament for the first time in Lesotho’s history, prompting a snap election.  The June 3, 2017 elections (third in five years) were declared free and fair. A new four-party coalition was formed. In September 2017, another army commander was also killed in his office following a confrontation over the handing over of army suspects to the police.  The perpetrators, also army soldiers, were immediately killed by bodyguards and one more suspect is facing a court martial. In response, the government invited SADC troops, police, intelligence, and civilian personnel to Lesotho as a stabilization and training mission. The contingent arrived in December 2017 and departed in November 2018.

In August and September 2017, two opposition politicians including the former Deputy Prime Minister and Leader of the Lesotho Congress for Democracy (LCD) fled the country citing security concerns.  They returned in November 2018 to participate in the first plenary of the Multi-Sectoral National Dialogue aimed at finding solutions to Lesotho’s protracted political problems.

In August 2018, factory workers staged violent protests demanding a minimum wage increase.  Workers blocked roads with stones and other debris, set fires, and broke windows of local businesses.

The All Basotho Convention (ABC) held its National Executive Committee (NEC) elective conference in February 2019.  The conference elected Professor Nqosa Mahao as the Deputy Leader, reportedly contrary to Prime Minister Thabane’s wishes.  Party officials aligned to Thabane filed a court case challenging the conference election outcome. Thabane has stated that if not resolved, the ongoing ABC intra-party rivalry will lead to government collapse.

11. Labor Policies and Practices

Lesotho has abundant supply of unskilled labor but a limited supply of skilled labor.  The official unemployment rate is 27.75 percent, and youth unemployment stands at 38.53 percent (2017).   The Labor Code Order of 1992 and the Constitution of 1993 require hiring of citizens; however, non-citizens can be hired with a work permit to augment the limited supply of skilled labor.  A work permit is issued based on a labor quota formula by the Labor Commissioner who must be satisfied that no qualified Lesotho citizen is available for the position. Within the textile and garments sector, an informal policy permits a company to employ one expatriate worker for every 20 Basotho workers.  The statutory maximum duration of a work permit is two years. A work permit may be cancelled before term or renewed. Onerous and non-integrated procedures in visa applications, residency permits, and work permits can inhibit mobility of foreign investors and their employees. Employers can make restrictions on employment to respond to fluctuating market conditions including severance pay in cases in which there is a decline in orders placed.  In Lesotho there are currently no economic zones; however, the law permits waivers in order to attract investment.

The government is aware that Lesotho needs to preserve its competitive labor costs while affording workers fair wages and conditions.  Statutory minimum wages are fixed annually by the Ministry of Labor and Employment with recommendations from a tripartite Wages Advisory Board, representing the government, employers, and employees.  In 2018, textile factory workers engaged in a strike that resulted in monthly minimum wage increases from USD 114 to USD 142.

The law provides for freedom of association and the right to bargain collectively.  However, collective bargaining at the factory level is restricted in practice because the law requires that any union entering into negotiations with management represent 50 percent of workers at a factory, and only a few unions meet that condition.  Most unions focus on organizing apparel workers. Although the labor movement used to be fragmented, with multiple unions competing for membership among workers, the situation is improving. Through support from IndustriALL and its Swedish affiliate IF Metall, unions have worked on building unity amongst workers and merging to form an Independent Democratic Union of Lesotho (IDUL).  All worker unions are independent of the government and political parties except the Factory Workers Union (FAWU), which is affiliated with the Lesotho Workers Party.  The Labor Commissioner’s Office reported that the fragmented union movement could not previously influence labor market decisions, hence the formation of IDUL. The law provides for a limited right to strike.  In the private sector, the law requires workers and employers to follow a series of procedures designed to resolve disputes before the Directorate of Dispute Prevention and Resolution (DDPR), an independent government body, authorizes a strike.  The law does not permit civil servants to strike, and therefore all public sector strikes are illegal.

Lesotho has been a member of the International Labor Organization (ILO) since 1966 and has ratified 23 international labor conventions, including all the eight fundamental human rights instruments of the ILO.  In addition, Lesotho is a signatory to the following Conventions which enable social dialogue to take place: Freedom of Association and Protection of the Right to Organize Convention, 1947 (No. 87); Right to Organize and Collective Bargaining Convention, 1949 (No. 98); Workers’ Representatives Convention, 1971 (No. 135); Tripartite Consultation Convention, 1976 (No. 144); and Labor Administration Convention, 1978 (No. 150).  Lesotho has also ratified the Prohibition and Elimination of the Worst Forms of Child Labor Convention (No. 182) and the Minimum Age of Employment Convention (No. 138).

Lesotho’s Labor Code Order of 1992 and its subsequent amendments are the principal laws governing terms and conditions of employment in Lesotho.  The Labor Code regulates terms of employment and conditions for worker health, safety, and welfare. The law permits union organization. The country has various labor dispute resolution mechanisms in place.  This includes both formal and informal mechanisms. LNDC is one key institution that deals with labor disputes. For example, LNDC intervenes in strikes and tries to reconcile workers and employers. When this informal process fails, the more formal process of the DDPR can be engaged which can consist of conciliation and arbitration.  The Labor Code Amendment Act of 2000 established the DDPR, which serves as a semi-autonomous labor tribunal independent of the government, political parties, trade unions, and employers and employers’ organizations. The Labor Court and the Labor Court of Appeal are the key judiciary entities dealing with labor disputes. The Labor Court reviews the decisions of the DDPR while the Labor Appeal Court reviews the decisions of the Labor Court.

Lesotho’s high HIV/AIDS prevalence, estimated at 25.6 percent of the adult population, has heavily impacted the labor market; companies need to take the health of their workforce into account when making management decisions.  With the support of external donors, such as the Global Fund and the U.S. government’s President’s Emergency Plan for AIDS Relief (PEPFAR), the anti-retroviral drugs are easily accessible to HIV positive workers.

On September 19, 2016 the government published a comprehensive draft national labor policy which incorporates all existing labor market policies for the different areas of labor administration.  In April 2018, the Minister of Labor and Employment launched a National Labor Migration Policy. The policy seeks to protect national migrant laborers in foreign countries, and foreign migrant laborers in Lesotho.  Furthermore, the ILO is currently assisting the GOL to draft a labor law reform. In 2018, the government drafted the Labor Code Bill which was sent to ILO for vetting. The government has incorporated ILO‘s comments and the bill has been submitted to parliamentary council for review.  There are no major gaps in law, however, there are issues with the description of rural/remote areas and the differing allowances provided to private sector employees who work in such areas.

12. OPIC and Other Investment Insurance Programs

Lesotho does not have an Overseas Private Investment Corporation (OPIC) agreement with the United States.  OPIC insured one American-owned company: Lesotho Flour Mills, Seaboard Corporation’s joint venture with the Lesotho government.  Seaboard started operations in 1998 and currently employs 242 people.

With the implementation of the USD 2 billion Lesotho Highlands Water Project second phase, there is potential for operation of OPIC’s programs in Lesotho.  The project involves construction of a dam, expansion of the water delivery system to South Africa, and the construction of a 1,000 MW pump storage hydropower plant.  OPIC could provide political risk insurance or financing for equipment to U.S. companies interested in bidding on the project.

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

The Central Bank of Lesotho (Modeling and Forecasting Division) collects the provided data and publicly distributes them.

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy

Host Country Statistical Source USG or International Statistical Source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount
Host Country Gross Domestic Product (GDP) (M USD) 2016 $2,333 2016 $ 2,291   
Foreign Direct Investment Host Country Statistical Source USG or International Statistical Source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country (M USD, stock positions) 2016 $ 494 2015 $ 5 BEA data available at   
Host country’s FDI in the United States (M USD, stock positions) 2016 N/A 2016 N/A BEA data available at   
Total inbound stock of FDI as % host GDP 2016 21 2016 0.22  

Table 3: Sources and Destination of FDI

Data on Lesotho not available from the IMF Website

Table 4: Sources of Portfolio Investment

Data not available; Lesotho is not one of the economies reporting on the IMF’s CPIS data.

14. Contact for More Information

Matt Jamrisko
Political and Economic Officer
254 Kingsway Avenue
Maseru, Lesotho
Tel: +266 2231-2666
Fax: +266 22310116


Executive Summary

Madagascar remains a challenging environment in which to do business according to foreign investors, but the country’s immense potential can provide significant returns on investment.  After years of sluggish growth, the economy expanded by 4.0 percent in 2016, 4.5 percent in 2017, and 5.0 percent in 2018, with an estimated 5.4 percent growth for 2019. For the first time in Madagascar’s history, the country has had back-to-back peaceful democratic transitions, and the new government, which took office in January 2019, has stated it will make fighting corruption a core element of its development plans.

Madagascar remains one of the world’s poorest countries, with a GDP per capita of USD 450 (2017), 40 percent lower than its GDP per capita in the 1960s.  Attaining the country’s development goals will depend on the enactment of structural reforms.  Foreign direct investment is below potential due to allegedly persistent corruption in the public and private sectors. Many companies have complained that lack of infrastructure (roads and electricity), lack of transparency in the award and oversight of public works projects, the opacity and inadequate management of the budget, the government’s inability or unwillingness to properly enforce regulations and laws, and the weak financial system all hold back both foreign and domestic investment.

Under President Rajoelina, the government has embarked on an ambitious development plan called the Malagasy Emergence Initiative (IEM).  National and global firms are cautiously optimistic, but many are waiting for further evidence that the government is indeed serious about combatting corruption, especially given the track record of Rajoelina’s government from 2009-2014.  The IEM includes plans to create industrial, agricultural, and special economic zones to encourage international and national investors. The Economic Development Board of Madagascar (EDBM) continues to carry out a number of reforms in order to improve the business environment and investment climate.

Despite the reportedly challenging context, business and investment opportunities exist for U.S. companies in energy, extractive industries, information and communication technology, tourism, construction, agribusiness, and light industry (e.g., apparel, footwear, home goods, and food).  Vanilla exports, extractive industries (ilmenite, nickel, cobalt), and textile ready-made exports have been the largest drivers of economic growth over the past five years.

Table 1: Key Metrics and Rankings

Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2018 152 of 180 
World Bank’s Doing Business Report 2019 161 of 190
Global Innovation Index 2018 106 of 126 
U.S. FDI in partner country ($M USD, stock positions) 2013 $57
World Bank GNI per capita 2017 $400 

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

The president and his administration have underlined the importance of attracting foreign direct investment (FDI) to advance economic development in Madagascar.  To help implement his IEM development plan, his government has begun a review of existing regulations and laws with the goal to speed up processes, including laws on public private partnership, industrial development, the mining code, oil and natural gas law, and rules on special economic zones.  Investors in the energy sector have expressed concerns over the review of existing energy contracts, and investors in the mining sector have been similarly concerned over possible revisions to the mining code.

Although the government welcomes foreign investment, several businesses have noted that the country faces many impediments that make investing in Madagascar a challenge.  These include weakness in the judicial system, the banking sector, the high cost but poor reliability of electricity, the entrenched corruption at all levels of government, and limited infrastructures.  With the multiplication of air and sea carriers/routes and the promotion and diversification of travel and tourism, the cost of air transportation has decreased progressively though it remains higher than in other regions of the globe.

The legislative framework governing investment in Madagascar has no discrimination against foreign investors, nor does it prohibit, limit, or condition foreign investments.  Any natural person or legal entity, Malagasy or foreign, is free to invest in Madagascar. In accordance with the laws on investment, both national and foreign investor reward equal treatment in any sector.  There is no discrimination against foreign investors at the time of the initial investment or after the investment is made (e.g., through special tax treatment, access to licenses, approvals, or procurement).

Limits on Foreign Control and Right to Private Ownership and Establishment

In general, no limit is set for foreign ownership or control in a company.  The law stipulates that investors, foreign or Malagasy, are free to hold up to 100 percent of shares of stock in the company in which they carry out their activities since the business is officially registered and complies with the set of relevant regulations in force.  However, according to law no. 2003-051, the privatization trust fund set up to manage sales of government minority stakes in formerly state-owned enterprises, can only make sales to Malagasy citizens and or/corporations having majority of their shares held by Malagasy nationals.

Other Investment Policy Reviews

None within last three years.  UNCTAD and WTO conducted reviews in 2015.

Business Facilitation

In 2006, Madagascar set up the Economic Development Board of Madagascar (EDBM), a one-stop shop for receiving, processing, and delivering the required administrative documents to speed up the approval of all investment projects. Its primary recommendation is for a foreign company seeking to start a business in Madagascar to consider collaborating with a local business.  Post recommends the retention of competent local counsel, especially shortlisted law firms. It is almost impossible to register in Madagascar without permanent residence or contact when difficulties arise.

Madagascar ranks 81th out of 190 in the World Banks’ Doing Business indicators for time to start a business, compared with 76th out of 189 last year.  The company registration process is among the shortest in Sub-Saharan Africa.  At the EDBM one-stop shop, companies can obtain their statistical card, tax registration confirmation, commercial registration number, and apply for visa, work permit or professional card.  They must also register for social security and health insurance at the same shop. Companies in Madagascar are free to open and maintain bank accounts in foreign currency. Madagascar has no dedicated investment promotion agency.  Some companies raise concerns that while it can be straightforward to start a business on paper, actually establishing a business that exists in function continues to take time, including a good amount of time in country.

EDBM assists closely both local and foreign investors in registering and operating their businesses.  The country’s business facilitation mechanisms provide equal treatment regardless of sex or minority in the economy.  No mechanism is set to provide special assistance to these group of persons.

Outward Investment

The Malagasy Government has set up an economic section within the Ministry of Foreign Affairs with the objective of supporting local businesses growth and increasing the exports done by companies registered in Madagascar‎.

The government does not offer any incentives to promote outward investment.  Wealthy operators, supposedly and secretly, have invested vast amounts of cash in offshore tax havens, reportedly cited in some paradise paper leakage.

Capital controls do not exist.  The mandatory repatriation mechanism of foreign currency resulting from international trading constitutes an indirect restriction on investing abroad.

2. Bilateral Investment Agreements and Taxation Treaties

Madagascar does not have a separate free trade agreement with the United States.  The Malagasy government has expressed interest in negotiating a bilateral investment treaty (BIT) with the United States.  Initial BIT discussions began in late 2008, but stalled due to the unconstitutional change of government in March 2009. The United States signed an agreement in 2001 on the development of trade and investment relations with the Common Market for Eastern and Southern Africa (COMESA), of which Madagascar is a member.  In June 2014, the United States reintegrated Madagascar among 30 African countries benefiting from AGOA. In July 2017 Madagascar’s Prime Minister signed the TFTA (tripartite free trade agreement) which associates the EAC, COMESA, and SADC. Madagascar is one of the signatories to the African Continental Free Trade Area (AfCFTA), which would come into force once all 55 African countries ratify the free trade area.

According to the U.N. Conference on Trade and Development (UNCTAD), Madagascar has concluded nine BITs (Belgium-Luxemburg-Economic Union, France, Germany, Mauritius, Norway, South Africa, Sweden, and Switzerland), and five treaties with investment provisions (COMESA EU EPA, COMESA Investment Agreement, COMESA US TIFA, Cotonou Agreement, COMESA Treaty).

The United States has no tax treaties with Madagascar.  Madagascar has tax agreement with a few countries, including France and Mauritius.  In 2017, Madagascar signed a bilateral taxation treaty with Canada and ratified another bilateral taxation treaty with Morocco in November 2016.

4. Industrial Policies

Investment Incentives

Madagascar extends certain incentives for investment, outlined in domestic legislation, particularly in the Export Processing Zones, in the large mining investment (LGIM), and recently in the law on Special Economic Zone (SEZ), and the law on Industrial Investment Zone (ZII).

For example, the Law on large-scale mining investments – LGIM (Law n°2001-031, modified by Law n°2005-022) establishes a special regime in terms of currency exchange, taxes, customs duties, and legal protections in favor of large investments in the mining sector that are over USD 25 million.  It includes attractive royalty and taxation rates designed to incentivize not only investment in the mining sector, but also local transformation of the mined substances. These incentives include fixed tax rates on corporate profits of 25 percent, compared to 35 percent in the general tax regime, which fall to 10 percent when the investor processes locally the raw substances into final or semi-final products.  The Government has set up a steering committee called the “LGIM Committee” which would act as the only interface between the Malagasy government and the investor.

Foreign Trade Zones/Free Ports/Trade Facilitation

The January 2008 Law on Free Zone Companies (Law 2007-037) established an Export Processing Zone (EPZ) regime to incentivize investment in three categories: (1) investment in export-oriented manufacturing industries; (2) development or management of industrial free zones; and (3) provision of services to EPZ companies.  The EPZ regime provides certain tax advantages and incentives to EPZ companies, to include: temporary tax exemptions of two to fifteen years (depending on the category of enterprise); no VAT or customs duties on imports of raw materials; no registration taxes; no customs tax on exported goods; income tax on expatriation not exceeding 30 percent of the taxable basis; and free access to foreign currency deposited in the company’s foreign currency bank account.  Free zone companies are exempted to pay income tax in the first five years of operation. From the sixth year of operation, the income tax rate is only 10 percent. These incentives are conditioned upon a performance guarantee and requires 95 percent of an EPZ company’s output be exported.

Performance and Data Localization Requirements

Employment and Investor Requirements

The government encourages local employment and capacity building but does not mandate it.

EDBM has enhanced the mobility of foreign investors and their employees by streamlining processes for business visas, residency, and work permits.

Goods, Technology, and Data Treatment

The host government has no “forced localization,” policy, which forces foreign investors to use domestic content or technology.

There is no requirement for foreign IT providers to turn over source code and/or provide access to encryption.

No measurements prevent or unduly impede companies from freely transmitting customer or other business-related data outside the economy/country’s territory.

No mechanisms exist to enforce any rules on local data storage within the country/economy.

Investment Performance Requirements

The host country does not enforce performance requirements.

However, there are investment incentives that apply uniformly and systematically to both domestic and foreign investors.

The IT industry association (GOTICOM) is actively working with the relevant authorities to update the regulatory framework governing the IT sector.

5. Protection of Property Rights

Real Property

Upon independence, Madagascar continued the land tenure policies of the French colonial administration with the presumption of state ownership of all land and the central government being the sole provider of legitimate land titles.  However, due to the length and cost of the procedures for registering land, together with the remoteness of the authorities, customary practices for recognition of property rights prevailed at the local level. Recognition of property rights at this local level entailed the use of non-uniform, handwritten titles.  The Land Title Office in Antananarivo is the only place to obtain an official title whenever a locally registered business wants to acquire a large parcel of government land. Registering a land title or transfer remains difficult, costly, and time-consuming for those outside the capital.

In 2005, with the support of a Millennium Challenge Corporation Compact, the government embarked on a land reform project to simplify the registration process and to reconcile the existing formal and informal land titles.  The reform reversed the presumption of state ownership of land and introduced private ownership, while at the same time decentralizing land registration and recognizing/formalizing the existing local customs for social recognition of property rights.

The 2009 political crisis disrupted this reform process, leaving the country with approximately 10 percent of its existing land plots with formal title.  The majority of land ownership disputes are resolved at the local level without recourse to judicial proceedings. The small percentage of disputes that rise to the court system remain bogged down due to the complexity of the cases and the lack of clear evidence of ownership, and even when determinations are made, they are often not adequately enforced.

The Investment Law n°2007-036 provides foreign investors with authorization to access a real estate property through lease with a maximum duration of 99 years, renewable, so long as the concerned property serves exclusively and continuously to carry out commercial activity.  The law specifically prohibits the acquisition of land by foreign investors for resale in its original state, or for sale after its development.

Banks and insurance companies use mortgages and liens on commercial property to guarantee loans.

Over the past years, the government has re-initiated land reform with the intent to complete the process that was on standby since 2009.  By the end of 2017, the parliament adopted a new national land policy and act to redefine the status of every land. The purpose of the act is to determine the management of titled properties, the registration procedures for immovable property, and the procedure for restoring land documents.

Intellectual Property Rights

Protection of intellectual property rights (IPR) is uneven in Madagascar.  Officially, authorities protect against infringement but, in reality, enforcement capacity is quite limited due to resource constraints, weakness of the judicial system, and a lack of awareness of IPR among consumers.  These constraints have led some international investors to experience difficulties enforcing their rights. For example, it is common to see pirated digital film or song sold in street markets.

The administration failed to enact IP-related laws or regulations over the past two years, although there is currently a reform bill working its way through Parliament.  The bill would incorporate The Hague (international registration of industrial designs) and Lisbon (protection of origin appellation and international registration) Agreements, as well as adopt international treaty classifications for patents, design and industrial models, and brands and figurative elements into the legislative framework.

Madagascar does not track or report seizures of counterfeit goods.  Counterfeit goods are widely seen in local markets. Media counterfeit and piracy is extremely common even though the lack of electricity and media playback devices limits the size of the market.

In 2017, Madagascar’s IP authority (“Office Malgache des Propriétés Industrielles” – OMAPI) signed an agreement with its Chinese counterpart for OMAPI to train Malagasy officers and to support each other in protecting brands and commercial names. The Chinese entity promised to donate a new office building and equipment to OMAPI.

Madagascar is not included in the United States Trade Representative (USTR) Special 301 Report, nor is it included in the Notorious Markets List.

For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at .

6. Financial Sector

Capital Markets and Portfolio Investment

There is no stock exchange in Madagascar, though the private Mercantile Exchange Madagascar (MEX), launched crypto-currencies (bitcoin and ethereum) in January 2018.

The Central Bank and the Ministry of Finance require documents prior to any transfer of currency to foreign countries.  There is no ceiling imposed to international transactions but justification remains mandatory.

Credit is allocated on market terms and the Government/Central Bank does not cap.  The Central Bank uses indirect tools to limit credit/loans, such as reserve requirements ratio (13 percent of deposits) imposed on banks.  Foreign investors are able to get credit on the local market if they have an officially registered company/subsidiary located in the country.

The private sector has access to a variety of credit instruments, such as short, medium, and long-term loans in different categories (e.g., credit lines and leasing).  The Government does not limit the amount of credit available.

Money and Banking System

Madagascar’s financial sector is comprised of 11 commercial banks, one of which is local, with the rest subsidiaries of foreign banks, mostly based in Mauritius, France, and mainland Africa.  The top four banks account for more than 80 percent of assets and deposits. Only 12 percent of the population has a bank account, which includes accounts with microfinance institutions. The vast majority of the banking clientele is therefore represented by corporate or professional entities.

The sector is stable and highly profitable with a return on equity of approximately 31 percent.  The overall assets of all banks amount $2.1 billion. Following the IMF recommendation for further independence, the Central Bank has adopted a new chart in which two Deputy Governors assist the Governor, one dealing with the monetary policy and the other with all administration affairs.

In order to establish a bank account, foreigners must have established residency status.

Foreign Exchange and Remittances

Foreign Exchange

To date, there is no restriction on capital inflows and outflows; however, justification is mandatory before sending money overseas.

Funds must be converted into any world currency.  U.S. dollars and Euros are the most used foreign currencies.

The Central Bank performs a managed floating exchange rate. The exchange rate is neither fixed nor pegged to any major foreign currency.  However, the Central Bank allows it to fluctuate within a band of 2 percent (up or down) in a daily basis in order to avoid abrupt variation.  Therefore, whenever the local currency tends to fall beyond 2 percent within a day, the Central Bank intervenes by selling its reserve to respect the maximum acceptable daily variation rate.

Remittance Policies

There are no restrictions on converting or transferring funds associated with foreign investment, including remittances of investment capital, earnings, loan repayments, and lease payments.

There are no plans to change remittance policies that have tightened or relaxed access to foreign exchange for investment remittances.  There is no limitation on the inflow or outflow of funds for remittances of profits, debt service, capital, and returns on intellectual property.

Sovereign Wealth Funds

No Sovereign Wealth Fund (SWF) or Asset Management Bureau (AMB) exist in the country, aside from the Privatization Trust Fund established in 1996, whose sole function is to manage the State’s minority shares in privatized enterprises in preparation for their auction to the local private sector.  All of the Privatization Trust Fund’s investments are domestic, given that the shares it holds are the remaining minority shares of the State resulting from the privatization of earlier state-owned companies. The fund adopts a passive role as a portfolio investor and does not take an active role in the management of the assets in which it holds shares.

7. State-Owned Enterprises

Out of 53 companies with state stakes, 7 entities are wholly-owned, 12 majority-owned, and 24 minority-owned.  These entities remain active in various sectors/industries, but detailed data are scarcely available. Generally, the SOEs have independent boards but there is always majority government representation among board members that influence the management.

Two major SOEs operate in air transport and energy sectors, namely the national air transport company, Air Madagascar (90 percent state-owned until mid-2017), and the water and electric utility, JIRAMA (100 percent state-owned).

Two years ago the Government lowered its participation in Air Madagascar to 51 percent from 89.56 percent following the sale of Air Madagascar to France’s Air Austral.  The strategic plan aims to recover and restore the company’s fundamentals in order to return to profitable operation by 2020.

Private enterprises are, for the most part, allowed to compete with SOEs under the same terms and conditions for market access, credit, and other business operations. There are cases of non-market-based advantages for SOEs from the host government.  Recently, the government banned France’s Corsair from routes linking Reunion Island to Madagascar. The national water and electricity company JIRAMA keeps the monopoly of electricity transmission and distribution.

There is currently no specific structure of corporate governance specified for SOEs, though the government is currently in the process of establishing one.  Improving the governance of SOEs has long been a condition of multilateral donor institutions such as the World Bank and the IMF.

Privatization Program

Madagascar’s privatization program was established in 1996 through legislation calling for state divestment in public enterprises (Law 96-011).  The government subsequently listed 53 public enterprises in various sectors for privatization, including agriculture, oil (downstream), mining, transport, and telecommunications.

With support from the World Bank, the government privatized some of these firms between 2003 and 2010 through tender processes.  Privatized companies included: Hasyma, a cotton plantation; Telma, a telecommunications company; and three major banks (BFV, BNI and BTM).  Foreign investors were allowed to participate in these tenders. However, a number of the large state-owned enterprises that were also identified for divestment as part of the World Bank project were never privatized, including the national airline Air Madagascar and JIRAMA.

The administration established a Privatization trust fund to manage the government’s minority stakes in formerly state-owned enterprises for possible sale to private investors. The trust fund has auctioned off the state’s existing minority stakes in Telma, as well as in the numerous firms that emerged from the break-up and privatization of SOLIMA, the former national downstream petroleum company.  According to the law n°2003-051, the sale of these stakes by the privatization trust fund are restricted to Malagasy citizens and/or corporations having majority of their shares held by Malagasy nationals, in an effort to increase domestic shareholding.

8. Responsible Business Conduct

There is poor awareness of Responsible Business Conduct (RBC) among producers and consumers, but several large, formal sector companies, particularly those with foreign investment, carry out RBC activities.  For example, Rio Tinto and Ambatovy, the country’s two largest mining companies, have won the support of local communities through RBC programs and through responsible business ethics.

The government enforces labor, employment rights, and consumer and environmental protections in part through periodic inspections, though a lack of resources and capacity, as well as continued corruption at lower levels, impedes the effectiveness of this enforcement.  Nevertheless, the government does not waive these requirements in order to attract foreign investment, except for some particular exemptions to its labor code provided to EPZ companies.

Many companies with foreign investment, particularly from western countries, adhere gradually to international standards in these areas through their participation in voluntary certification schemes, such as the Worldwide Responsible Accredited Production (WRAP) principles in the apparel sector.  There is also a vibrant NGO and civil society sector, particularly regarding environmental issues, but it, too, suffers from a lack of resources and capacity.

Madagascar is a member of the Extractive Industries Transparency Initiative (EITI), under the Minister to the Presidency in charge of Mines and Petroleum.  However, there is no law or domestic transparency measures mandating the disclosure of payments for projects related to the commercial development of mines and hydrocarbon resources.

9. Corruption

While giving or accepting a bribe is a criminal act and is subject to trial by court, complicated administrative procedures introduce delays and uncertainties, increasing possibilities for corruption.  High levels of corruption exist in nearly all sectors, but are most pervasive in the areas of judiciary, police, tax, customs, land, and mining industry. Despite maintaining an anti-corruption stance publicly, the outgoing administration made little progress in reigning in corrupt practices or prosecuting corrupt officials.  The incoming administration leadership has announced measures to eradicate corruption, and has begun to prosecute major corruption cases.

The Independent Anti-Corruption Bureau (BIANCO) is the agency formally responsible for combating corruption.  Madagascar has a Financial Intelligence Unit (SAMIFIN) to carry out research and financial analysis related to money laundering.  At end of year 2018, the legal framework to combat corruption misses the law for recovery of unlawful assets pending its vote in national assembly.  By June 2018, BIANCO enacted the first Anti-Corruption Special Court for Antananarivo. Additional PACs are now present in all six provinces, including  Antsiranana, Fianarantsoa, Mahajanga, Toamasina, and Toliara.

Transparency International Initiative Madagascar (TI-IM) has an office in the country working here since 2002. TI-IM, BIANCO, SAMIFIN, POLICE and GENDARME collaborate closely to bring cases to the courts. In 2018, Transparency International’s Corruption Perceptions Index indicated that Madagascar ranked 152 out of 180 nations scoring 25/100, while remaining below the average for African countries.

There is no requirement for companies to establish internal codes of conduct that, inter alia, prohibit bribery of public officials.  However, some foreign companies have begun to orient their internal control, ethics, and compliance programs to prevent bribery, while the Foreign Corrupt Practices Act prohibits U.S. firms from engaging in such behavior.  Madagascar signed and ratified the UN Anticorruption Convention and the African Union Convention against Corruption.  It has not signed the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.

Resources to Report Corruption

Contact at government agency or agencies are responsible for combating corruption:


General Manager
>BIANCO (Independent Bureau Anti-Corruption)
Villa “La Piscine”, Ambohibao, Antananarivo, Madagascar, and P.O. Box 399
Telephone: +261 20 22 489 79; +261 20 22 489 93 ; +261 033 02 002 99
>Email: or 

Contact at “watchdog” organization (international, regional, local or nongovernmental organization operating in the country/economy that monitors corruption):


Chairperson of TI-IM
Transparency International Initiative, Madagascar
Villa Huguette (rez-de-chaussee), Lot II U86 Cite Planton – Ampahibe, 101 Antananarivo, Madagascar
Telephone: +261 20 22 288 73 ; +261 34 96 418 79
Email:; communication@transparency.mg 


Lawyer Sahondra RABENARIVO
Member, SEFAFI
Lot III M 33K Andrefan’Ambohijanahary, Antananarivo 101, Madagascar
Telephone: +261 32 59 761 52


Team Leader
Afrobarometer, Madagascar Office c/o COEF Resources
COEF Resources, PO Box 4075, Antananarivo 101, Madagascar
Telephone: +261 20 22 283 82

10. Political and Security Environment

At the beginning of 2018, there was significant uncertainty about the 2018 presidential election – which candidates would be allow to run, and whether the election would be free and fair.  The situation allegedly worsened in April after a controversial electoral bill, which resulted in street protests, prompting the president to form a caretaker government to help organize the elections with involvement of the international community including the AU, SADC, UN, EU, and United States.  The 2018 election occurred peacefully on November 7, followed by a second round on December 19, resulting in the first time Madagascar has had two peaceful democratic transitions back-to-back. Legislative elections held in May 2019 were largely peaceful as well.

Security remains a concern, with security deteriorating over the past few years as criminal elements took advantage of distracted and ineffective successive governments.  Reports of banditry, cattle rustling, and crime are rising and diversifying to spread over many areas. The new administration has made security issues a central element of its new mandate, and initial reports are that the security situation is improving across the country.

11. Labor Policies and Practices

Madagascar has a significant pool of available labor, due to the combined impacts of unemployment and underemployment, though the availability of skilled labor is more limited.  Nevertheless, the quality of Madagascar’s unskilled labor is high and is frequently raised by private investors as a key attraction for the country. The Labor Law (2003-044) differentiates between firings and lay-offs, and allows employers to adjust employment in light of fluctuating market conditions with the payment of a severance.  The monthly minimum wage was increased in 2018 to USD 50 per month.

The government does not mandate hiring of local nationals, except in the mining sector, in which large investment projects are required to give preference to nationals given equal skills and qualifications.  The law provides that public and private sector workers may establish and join labor unions of their choice without prior authorization or excessive requirements. Civil servants and maritime workers, however, have separate labor codes, while essential workers, including police, military, and firefighters, may not form unions.  The law provides that unions operate independently from government and political parties, and this is generally respected.

Labor protections under EPZ companies are slightly different from the general labor code, as EPZ labor contracts may differ in duration, restrictions on the employment of women during night shifts, and the amount of overtime permitted.  The labor law establishes labor dispute mechanisms, which proceed progressively from internal negotiation to outside mediation from the Ministry of Labor to arbitration or legal settlement through the competent courts.

The law provides workers in the private sector, except for seafarers, the right to bargain collectively.  According to union representatives, collective bargaining rights are more readily exercised and respected in larger international firms, such as those in the telecommunications and banking sectors.  In EPZs and smaller local companies, employees tend to be more reluctant to make demands for fear of reprisals.

12. OPIC and Other Investment Insurance Programs

On March 31, 1998, the Overseas Private Investment Cooperation (OPIC) signed a bilateral Investment Incentive Agreement with Madagascar, which updated the previous agreement signed in 1963.  OPIC and Madagascar concluded two memoranda of understanding in 2004 pledging cooperation attracting U.S. investment in several sectors, including telecommunications and information technology, agribusiness, mining, energy, and tourism.  The grain mill that was the only active OPIC project in the country, USD 11.6 million insurance facility for the revitalization and operation of the mill signed in 2011, closed its business in 2017 due to unlawful competition in import-distribution.  Madagascar has been a member of the Multilateral Investment Guarantee Agency (MIGA) since 1989.

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy

Host Country Statistical Source* USG or International Statistical Source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount
Host Country Gross Domestic Product (GDP) ($M USD) 2016 $10,001 2017 $11,500   
Foreign Direct Investment Host Country Statistical Source* USG or International Statistical Source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) 2014 $183.5 $57 N/A BEA data available at  
Host country’s FDI in the United States ($M USD, stock positions) N/A N/A N//A N/A BEA data available at  
Total inbound stock of FDI as % host GDP 2014 54.6% 2017 62.9% UNCTAD data available at  

* Source for Host Country Data: Figures taken from the Central Bank’s annual survey on FDI, last done in 2014.

Table 3: Sources and Destination of FDI

Direct Investment from/in Counterpart Economy Data
From Top Five Sources/To Top Five Destinations (US Dollars, Millions)
Inward Direct Investment Outward Direct Investment
Total Inward 554.9 100% Total Outward N/A 100%
Mauritius 342.1 61.6% N/A
France 100.2 18.1%
United States 16.4 2.9%
UK 9.0 1.6%
“0” reflects amounts rounded to +/- USD 500,000.

Table 4: Sources of Portfolio Investment

Madagascar does not have any portfolio investments from overseas. Foreigners are able to purchase neither internal debt securities nor Treasury bill. The absence of any stock market does not also provide the opportunity to foreign individuals or corporates to purchase shares in any Malagasy corporation.

14. Contact for More Information

Lucien Ratsimbazafy
Commercial (Economic) Assistant
U.S. Embassy, Antananarivo, Madagascar
Telephone: +261 20 23 480 00 ext 2277


Executive Summary

Mauritius is an island nation with a population of 1.3 million people.  The Government of Mauritius (GoM) claims an Exclusive Economic Zone (EEZ) of approximately 2.3 million square kilometers.  Mauritius has a stable and competitive economy, with a Gross Domestic Product (GDP) of USD 13.27 billion and per capita Gross National Income (GNI) of USD 10,130 in 2017.  According to the International Monetary Fund, real GDP growth is estimated at 3.8 percent for 2018 and projected to reach 3.9 percent in 2019. The inflation rate decreased from 3.7 percent in 2017 to 3.2 percent in 2018.  The unemployment rate decreased from 7.1 percent in 2017 to 6.9 percent in 2018. According to the World Bank’s 2019 Ease of Doing Business Index, Mauritius ranks first in Africa and 20th worldwide (out of 190 countries).

Since achieving independence in 1968, Mauritius has made a remarkable economic transformation from a mono-crop economy based on sugarcane production to a diversified economy driven by export-oriented manufacturing (mainly textiles), tourism, financial and business services, information and communication technology, seafood processing, real estate and education/training.  Authorities plan to emphasize services and innovation in the coming years. After several years of sluggish growth, the Government of Mauritius (GoM) is undertaking efforts to stimulate economic growth in five areas: serving as a gateway for investment into Africa; increasing the use of renewable energy; developing smart cities; growing the ocean economy; and upgrading and modernizing infrastructure, including public transportation, the port, and the airport.

Government policy in Mauritius seeks to promote trade and investment.  The GoM has signed Double Taxation Avoidance Agreements with 51 countries and maintains a legal and regulatory framework that keeps Mauritius highly ranked on “Ease of Doing Business” and good governance indices.  In recent years, Mauritius has been especially intent on attracting foreign direct investment from emerging economies like China and India, as well as courting more traditional markets like the United Kingdom, France and the United States.  The GoM, which is currently finalizing bilateral trade agreements with both India and China, promotes Mauritius as a safe, secure place to do business due to its favorable investment climate and tradition as a stable democracy. Corruption in Mauritius is low by regional standards but there remains room to improve in terms of transparency and accountability.

Table 1: Key Metrics and Rankings

Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2018 51 of 180 
World Bank’s Doing Business Report 2019 20 of 190
Global Innovation Index 2018 75 of 126 
U.S. FDI in partner country ($M USD, stock positions) 2017 $10,424 
World Bank GNI per capita 2017 $10,130 

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

Mauritius actively seeks foreign investment.  The Investment Office (formerly the Board of Investment) of the Economic Development Board (EDB) is the single gateway government agency responsible for promoting investment in Mauritius, and for helping guide investors through the country’s legal and regulatory requirements.

According to a number of surveys and metrics, Mauritius is among the freest and most business-friendly countries in Africa.  The 2019 Index of Economic Freedom, published by the Heritage Foundation, ranks Mauritius first among 47 countries in the Sub-Saharan Africa region and 25th globally.  For the eleventh consecutive year, the World Bank’s 2019 Doing Business report ranks Mauritius first among African economies, and 20th worldwide, in terms of overall ease of doing business.

There is no formal ongoing dialogue with investors.  However, one-to-one meetings are usually held with investors while the government prepares its annual budget.

Limits on Foreign Control and Right to Private Ownership and Establishment

A non-citizen can hold, purchase, or acquire real property under the Non-Citizens (Property Restriction) Act (NCPRA), subject to government approval.  A foreigner can acquire residential property and apartments under the government-regulated Property Development Scheme (PDS)  .  The NCPRA was amended in December 2016 to allow foreigners to purchase certain types of properties, as long as the amount paid is over 6 million Mauritian rupees (approximately USD 172,000).  A non-citizen is eligible for a residence permit upon the purchase of a house under the PDS if the investment made is more than USD 500,000. More information is available at  .

Regarding business activities, the GoM generally does not discriminate between local and foreign investment.  There are, however, some business activities where foreign involvement is restricted. These include television broadcasting, sugar production, newspaper or magazine publishing, and certain operations in the tourism sector.

In television broadcasting, the Independent Broadcasting Authority (IBA) will not grant a license to a foreign company or to a company more than 20 percent-owned or controlled by foreign nationals.  Similarly, a foreign investor cannot hold 20 percent or more of a company that owns or controls any newspaper or magazine, or any printing press publishing such publications. The IBA Act can be accessed via the following link:  .

In the sugar sector, no foreign investor is allowed to make an investment that would result in 15 percent or more of the voting capital of a Mauritian sugar company being held by foreign investors.  More information can be accessed via the following link: .

In the tourism sector, there are conditions on investment by non-citizens in the following activities:  (i) guesthouse/tourist accommodation; (ii) pleasure craft; (iii) scuba diving; and (iv) tour operators. Generally, the limitations refer to a minimum investment amount, number of rooms, or a maximum equity participation, depending on the business activity.  Details of the restrictions can be accessed via the following link:  .

In the construction sector, foreign consultants or contractors are required to register with the Construction Industry Development Board (CIDB).  Details on registration procedures are available on the following link:  .

The Investment Office of the EDB screens foreign investment proposals and provides a range of services to potential investors.  The EDB is a useful resource for investors exploring business opportunities in Mauritius and provides assistance with occupation permits, licenses, and clearances by coordinating with relevant local authorities.  In 2018, the U.S. Embassy in Port Louis did not receive negative comments from U.S. businesses regarding the fairness of the government’s investment screening mechanisms.

The Investment Office of the EDB reviews proposals for economic benefit, environmental impact, and national security concerns.  EDB then advises the potential investor on specific permits or licenses required, depending on the nature of the business. Foreign investors can also apply through the EDB for necessary permits.  In the event an investment fails review, the prospective investor may appeal the decision within the EDB or to the relevant government ministry.

Other Investment Policy Reviews

Mauritius’ most recent third party investment policy reviews through multilateral organizations were completed in 2014.  In June 2014, the GoM conducted an investment policy review with the Organization for Economic Cooperation and Development (OECD).  The review can be accessed via the following link:  .  The review concluded that, while policies and legislation in Mauritius support private sector development, incentive schemes tend to bias investment towards real estate and property development.  In October 2014, the GoM also conducted a trade policy review with the World Trade Organization (WTO), which can be accessed via the following link:  .

Business Facilitation

The GoM recognizes the importance of a good business environment to attract investment and achieve a higher growth rate.  In 2017, the Business Facilitation (Miscellaneous Provisions) Act 2017 entered into force. The main reforms brought about by this legislation were:  expediting the process to start a business, streamlining procedures for issuing construction permits, facilitating property registration, improving the system for tax collection, and implementing a national e-licensing platform (a single window for application and processing of licenses and permits).

The incorporation of companies and registration of business activities falls under the provisions of Companies Act 2001   and Business Registration Act 2002  All businesses must register with the Registrar of Companies.  As a general rule, a company incorporated in Mauritius can be 100 percent foreign-owned with no minimum capital.  According to the World Bank 2019 Doing Business report, while the procedures for registering a company takes one day, actually starting a business takes five days.

After the Registrar of Companies issues a certificate of incorporation, foreign-owned companies must register their business activities with the EDB.  The company can then apply for occupation permits (work and residence permits) and incentives offered to investors. EDB’s investment facilitation services are available to all investors, domestic and foreign.

In partnership with the Corporate and Business Registration Department (a division of the Ministry of Finance and Economic Development), the Mauritius Network Services (MNS) has implemented the Companies and Business Registration Integrated System, a web-based portal that allows electronic submission for incorporation of companies and application for the Business Registration Number, file statutory returns, pay yearly fees, register businesses, and search for business information.  Applicants can register with MNS at the following link: .    In March 2019, the National Electronic Licensing System (NELS), which is co-financed by the European Union, was officially launched.  NELS is a single point of entry for the processing of permits and licenses needed to start and operate a business. It can be accessed here:  .

Outward Investment

The GoM imposes no restrictions on capital outflows.  Due to the small size of the Mauritian economy, the government encourages Mauritian entrepreneurs to invest overseas, particularly in Africa, to expand and grow their businesses.  As part of its Africa Strategy, the government has established the Mauritius Africa Fund: a public company with USD 13.8 million capitalization to support Mauritian investment in Africa.  Through the Fund, the government participates as an equity partner up to 10 percent of the seed capital invested by Mauritian investors in projects targeted towards Africa. The government has signed agreements with Senegal, Madagascar, and Ghana establishing and managing Special Economic Zones (SEZ) in these countries and has invited local and international firms to set up operations in the SEZs.  In its 2018-2019 budget, the GoM announced that Mauritian companies collaborating with the Mauritius-Africa Fund for development of infrastructure in the SEZs will benefit from a five-year tax holiday. To further facilitate investment, Mauritius has also signed Investment Promotion and Protection Agreements and Double Taxation Avoidance Agreements with African states. 

Since 2012, the Board of Investment (now restructured as the Investment Office of the EDB) has been operating an Africa Center of Excellence, a special office dedicated to facilitating investment from Mauritius into Africa.  It acts as a repository of business information for Mauritian entrepreneurs about investment opportunities in different sectors in Africa.

In 2017, the most recent year for which the Central Bank of Mauritius has published data, gross direct investment flows abroad (excluding the global business sector) amounted to USD 72 million.  The top three sectors for outward investment were finance and insurance activities (44 percent), manufacturing (24 percent) and real estate activities (23 percent). Investment abroad was mainly geared towards developing countries and Africa was the biggest recipient of foreign direct investment (FDI) amounting to USD 41 million.  Kenya and France were the top two recipient countries with shares of 36 percent and 9 percent, respectively. Data on outward investment can be obtained here:  .

2. Bilateral Investment Agreements and Taxation Treaties

In 2006, Mauritius and the United States signed a Trade and Investment Framework Agreement (TIFA) aimed at strengthening and expanding trade and investment ties between the two countries.  The United States has not signed a bilateral investment treaty or a free trade agreement with Mauritius. Mauritius benefits from duty free and quota free access to the United States on approximately 6500 tariff lines through the African Growth and Opportunity Act (AGOA).  This trade preference is valid until 2025 unless Mauritius graduates out of AGOA by rising above the law’s maximum per capita GDP level before then.

Mauritius has been a member of the World Trade Organization since 1995 and has signed trade agreements with several regional blocs and countries.  These include the Common Market for Southern and Eastern Africa Free Trade Area (COMESA), the Indian Ocean Commission (IOC – only Madagascar offers trade preferences under the IOC), the interim Economic Partnership Agreement with the European Union (EU), the Southern African Development Community Free Trade Area (SADC), a free trade agreement with Turkey, and a preferential trade agreement with Pakistan.

The Mauritian government and the People’s Republic of China completed negotiations for a free trade agreement in September 2018.  The agreement has been signed by both countries but will not go into effect until ratified. In January 2018, the third round of discussions between Mauritius and India on the Comprehensive Economic Partnership Agreement (CECPA) was launched.  Mauritius also signed an agreement with the UK in January 2019 to safeguard trade preferences it currently enjoys under the interim Economic Partnership Agreement (iEPA) with the European Union.  The new agreement, known as the UK-ESA EPA, will enter into force when the UK completes the process of exiting the European Union.

As of March 2018, Mauritius has signed Investment Promotion and Protection Agreements (IPPA) with 44 countries.  The following 28 IPPAs have been ratified and are in force: Barbados, Belgium/Luxemburg Economic Union, Burundi, China, Czech Republic, Egypt, Finland, France, Germany, India, Indonesia, Kuwait, Madagascar, Mozambique, Pakistan, Portugal, Republic of Congo, Republic of Korea, Romania, Senegal, Singapore, South Africa, Sweden, Switzerland, Tanzania, Turkey, UK and Northern Ireland, and Zambia.  The following 16 IPPAs have been signed but await ratification: Benin, Cameroon, Chad, Comoros, Cote D’Ivoire, Gabon, Ghana, Guinea Republic, Kenya, Mauritania, Nepal, Rwanda, Swaziland, Sao Tome and Principe, United Arab Emirates, and Zimbabwe. Updated information on IPPAs can be accessed via the following link:  .

In 2013, Mauritius signed a Tax Information Exchange Agreement (TIEA) and an Inter-Governmental Agreement (IGA) with the United States to implement the Foreign Account Tax Compliance Act (FATCA).  Procedures for FATCA reporting can be accessed via the following link:  .

Mauritius has also signed TIEAs with Australia, Austria, Denmark, Faroe Island, Finland, Greenland, Guernsey, Iceland, Korea and Norway.  TIEAs with Argentina, Greece, and Isle of Man await signature.

As of mid-2019, Mauritius has concluded Double Taxation Avoidance Treaties (DTATs) with 46 countries:  Australia (partial), Bangladesh, Barbados, Belgium, Botswana, Cape Verde, China, Croatia, Cyprus, Egypt, France, Germany, Ghana, Guernsey, India, Italy, Jersey, Kuwait, Lesotho, Luxembourg, Madagascar, Malaysia, Malta, Monaco, Mozambique, Namibia, Nepal, Oman, Pakistan, Qatar, Rwanda, Republic of Congo, Senegal, Seychelles, Singapore, Sri Lanka, South Africa, Swaziland, Sweden, Thailand, Tunisia, Uganda, United Arab Emirates, United Kingdom, Zambia, and Zimbabwe.  Five DTAT treaties await ratification: Gabon, Kenya, Morocco, Nigeria, and Russia, and fifty-four DTAT treaties await signature: Cote d’Ivoire, Estonia, Gibraltar, Malawi and Gambia. Updated information on TIEAs and DTATs can be accessed via the following link:  .

Mauritius has adopted the OECD’s Standard for Automatic Exchange of Financial Account Information (Common Reporting Standard – CRS), which sets a global benchmark that participating countries will adhere to in a proactive fiscal-information world.  The first reporting under this standard was undertaken in September 2018. Further information on the list of reportable jurisdictions for the CRS can be accessed via the following link:  .

4. Industrial Policies

Investment Incentives

Mauritius applies investment incentives uniformly to both domestic and foreign investors.  The incentives are outlined in the Income Tax Act, the Customs Act, and the Value Added Tax Act.  In the 2018-2019 national budget, a number of incentives were implemented to attract investors to Mauritius.  These include: (i) reduced corporate tax rate of three percent for companies engaged in global trading activities; (ii) investment tax credit of five percent over three years on the cost of new plant and machinery excluding motor vehicles; (iii) five year tax holiday for Mauritian companies collaborating with the Mauritius Africa Fund with respect to investment in the development of infrastructure in Special Economic Zones, and; (iv) five year tax holiday on income derived from smart parking solutions or other green initiatives.

Mauritius offers prospective investors a low-tax jurisdiction and a number of other fiscal incentives, including the following:  (i) flat corporate and income tax rate of 15 percent; (ii) 100 percent foreign ownership permitted; (iii) no minimum foreign capital required; (iv) no tax on dividends or capital gains; (v) free repatriation of profits, dividends, and capital; (vi) accelerated depreciation on acquisition of plant, machinery, and equipment; (vii) exemption from customs duty on imported equipment; and (viii) access to an extensive network of double taxation avoidance treaties.

Additionally, the government has established a Property Development Scheme (PDS) to attract high net worth non-citizens who want to acquire residences in Mauritius.  Buyers of a residential unit valued over USD 500,000 in certain projects are eligible to apply for a residence permit in Mauritius. The residential unit can be leased or rented out by the owner.  More details on the PDS and other investment schemes are available via the following link:  .

The Regulatory Sandbox License (RSL), announced in the 2016-2017 national budget, is intended to promote innovation by eliminating barriers to investment in cutting-edge technology.  An RSL gives an investor fast-track authorization to conduct business activity in a sector even if there is not yet a legal or regulatory framework in place for the sector. Further details on the RSL can be accessed via the following link:  .

Foreign Trade Zones/Free Ports/Trade Facilitation

The Mauritius Freeport, a free trade zone, was established in 1992 and is a customs-free zone for goods destined for re-export.  The Freeport has grown dramatically in its 26 year history: developed space has increased from 5,000 square meters in 1993 to over 300,000 square meters in 2018.  The government’s objective is to promote the country as a regional warehousing, distribution, marketing, and logistics center for eastern and southern Africa and the Indian Ocean rim.  Through its membership in COMESA, SADC, and the IOC, Mauritius offers preferential access to a market of over 600 million consumers, representing an import potential of USD 100 billion.  Companies operating in the Freeport are exempt from corporate tax. Foreign-owned firms operating in the Freeport have the same investment incentives and opportunities as local entities.

Activities carried out in the Freeport include warehousing and storage, breaking bulk, sorting, grading, cleaning and mixing, labeling, packing, repacking and repackaging, minor processing and light assembly, manufacturing activity, ship building, repairs and maintenance of ships, aircrafts and heavy-duty equipment, storage, maintenance and repairs of empty containers, export-oriented seaport and airport based activities, freight forwarding services, quality control and inspection services, and vault activity for storing precious stones and metals, works of art, and the like.  Approximately 3,800 people are employed at the Freeport.

Trade through the Freeport has increased in recent years.  In 2013, trade was valued at 23 billion rupees (approximately USD 730 million at 2013 exchange rates) and volume was recorded at 347,000 tons of goods; in 2018 trade value increased to 44 billion rupees (approximately USD 1.3 billion) and volume increased to 542,000 tons.  Top trading partners for import in 2018 were the United Kingdom, India, Taiwan, and China. Top trading partners for export for 2018 were Reunion (France), South Africa, and Madagascar. Top goods traded through the Freeport include liquefied petroleum gas (LPG), fish, ethanol, plastic preform, footwear, soap and detergents, noodles, beer, and soft drinks.

Performance and Data Localization Requirements

The GoM does not impose local employment requirements on foreign investors.  A foreign national can apply for an Occupation Permit (OP), which is a combined work and residence permit, subject to certain conditions such as minimum investment, salary, and/or business turnover.  The OP allows foreign nationals to work and reside in Mauritius under three specific categories, namely: (i) investor, (ii) professional, or (iii) self-employed. Also, foreign nationals above the age of 50 years may choose to retire in Mauritius under a Residence Permit (RP).  An OP or an RP is issued for a maximum period of three years and the permit holder may submit a new application upon expiry of the permit. Dependents of an OP or RP holder may also apply for residence permits for a duration not exceeding that of the OP or RP holder. Details on the minimum investment, salary, and turnover amounts required to qualify for an OP or RP are available via the following link:  .

The Data Protection Act (DPA) 2017 is the law that governs the protection of personal data in Mauritius.  The Government of Mauritius established the Data Protection Office (  ) in 2009.  The Data Protection Commissioner is responsible for upholding the rights of individuals set forth in the DPA and for enforcing the obligations imposed on data controllers and processors.  In 2016, Mauritius ratified the Council of Europe’s Convention for Protection of Individuals with regard to Automatic Processing of Personal Data (Convention 108). Mauritius is the second non-European country and the first African country to sign the convention.  The agreement gives individuals the right to protection of their personal data.

Mauritian data protection law tracks the European Union’s Regulation on the Protection of Natural Persons with regards to the Processing of Personal Data and on the Free Movement of such Data, commonly known as the General Data Protection Regulation.  Mauritius’ DPA applies only when processing of personal data is concerned. Failure to comply with Section 28 of the DPA, which establishes the lawful purposes for which personal data may be processed, can result in a fine and up to five years imprisonment.  Section 29 sets requirements for processing special categories of data, such as ethnic origin, political adherence, and mental health condition.

There are no enforcement procedures for investment performance requirements.

5. Protection of Property Rights

Real Property

Real property rights are respected in Mauritius.  A non-citizen can hold, purchase, or acquire immovable property under the Non-Citizens (Property Restriction) Act, subject to the government’s approval.  Ownership of property is memorialized with the registration of the title deed with the Registrar-General and payment of the registration duty. The recording system of mortgages and liens is reliable.  Traditional use rights are not an issue in Mauritius as there were no indigenous peoples present at the time of European colonization. According to the World Bank’s 2019 Doing Business Report, Mauritius ranks 35th out of 190 countries for the ease of registering property.

Intellectual Property Rights

Intellectual property rights (IPR) in Mauritius are protected by two pieces of legislation, namely the Patents, Industrial Designs and Trade Marks Act of 2002 and the Copyrights Act of 2014.  The government plans to adopt a new Industrial Property Bill expanding protections and covering all aspects of intellectual property. In addition to patents, trademarks, and industrial designs, the Bill is intended to protect plant breeders’ rights, geographical indications, and layout designs of integrated circuits and utility models, which are not covered by existing legislation.  In his 2016-17 Budget Speech, the Minister of Finance announced that the government would adhere to the Patent Cooperation Treaty, Hague Convention, and Madrid Protocol to facilitate the registration of patents, trademarks, and industrial designs. The new Bill includes provisions that would incorporate international standards such as those articulated in the Madrid Protocol into Mauritian law.

In 2017, the Copyright Act was amended to redefine and better safeguard the interests of copyright owners and to put in place a new regulatory framework for the Mauritius Society of Authors (MASA).  MASA is responsible for collection of copyright fees and for administering the economic rights of copyright owners. Amendments to the Copyright Act can be accessed on the Supreme Court website:  .

Mauritius is a member of the World Intellectual Property Organization (WIPO) and party to the Paris and Bern Conventions for the protection of intellectual property and the Universal Copyright Convention.  Trademark and patent laws comply with the World Trade Organization (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). A trademark is initially registered for 10 years and may be renewed for successive periods of 10 years.  A patent is granted for 20 years and cannot be renewed.

While IP legislation in Mauritius is consistent with international norms, enforcement is relatively weak.  According to a leading IP law firm, police will normally only take action against IPR infringements in cases where the IPR owner has an official representative in Mauritius because the courts require a representative to testify that the products seized are counterfeit.

The Customs Department of the Mauritius Revenue Authority is the primary agency responsible for safeguarding Mauritian borders against counterfeit goods and piracy.  The Customs Department requires owners or authorized users of patents, industrial designs, collective marks, marks or copyrights to apply in writing to the Director General to suspend clearance of goods suspected of infringing IPR.  Once an application is approved, it remains valid for two years. There are no administrative costs to pay for an application. An application can also be filed as a preventive measure. Further details on the documents required to apply can be obtained on this link:  .

Customs may act upon its own initiative to suspend clearance if there is evidence of IPR infringement.  Customs will then contact the owner or authorized user for follow-up actions. Owners of IPR are recommended to join the Interface Public Members (IPM:  ), which allows Customs officers to access operational data input by right owners concerning their products, thus facilitating the identification of counterfeit goods.

The Customs Department keeps a record of counterfeit goods seized.  Customs has authority to seize and destroy counterfeit goods. In 2017, the Customs Department carried out seizures of a total of 64,667goods valued at USD 123,850.  The infringing party is responsible for paying for the storage and/or destruction of the counterfeit goods.

Mauritius is not included in the U.S. Trade Representative (USTR) Special 301 Report or the Notorious Markets List.

For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at  .

Embassy Contact for IPR

Smita Bheenick
Economic/Commercial Section
U.S. Embassy Port Louis, Mauritius
Tel: +230 202 4430; Fax: +230 208 9534

Some IPR Law Firms in Mauritius*

Sanjeev Ghurburrun
Director, Geroudis
River Court, St Denis Street
Port Louis, Mauritius
Tel: +230 210 3838; Fax: + 230 210 3912

Marc Hein
Chairman, Juristconsult Chambers
Level 12 Nexteracom Tower II, Ebene Cyber City
Ebene, Mauritius
Tel: +230 465 0020; Fax: +230 465 0021

Michael Hough
CEO, Eversheds Sutherland
Suite 310, 3rd Floor Barkly Wharf, Le Caudan Waterfront
Port Louis, Mauritius
Tel: +230 5726 3941; Fax: +230 211 0780

*Law firms listed for convenience and should not be taken to imply U.S. Government endorsement.

6. Financial Sector

Capital Markets and Portfolio Investment

The GoM welcomes foreign portfolio investment.  The Stock Exchange of Mauritius (SEM) was opened to foreign investors following the lifting of foreign exchange controls in 1994.  Foreign investors do not need approval to trade shares, except for when doing so would result in their holding more than 15 percent in a sugar company, a rule detailed in the Securities (Investment by Foreign Investors) Rules 2013.  Incentives to foreign investors include free repatriation of revenue from the sale of shares and exemption from tax on dividends and capital gains.

The SEM currently operates two markets:  the Official Market and the Development and Enterprise Market (DEM).  As of December 2018, the shares of 60 companies (local, global business and foreign companies) were listed on the Official Market, representing a market capitalization of USD 10.2 billion.  Unique in Africa, the SEM can list, trade, and settle equity and debt products in U.S. dollars, Euros, Pounds Sterling, South African Rand, as well as Mauritian Rupees. A variety of new asset classes of securities such as global funds, depositary receipts, mineral companies, and specialist securities including exchange-traded funds and structured products have also been introduced on the SEM.  The DEM was launched in 2006 and the shares of 43 companies are currently listed on this market with a market capitalization of USD 1.8 billion. Foreign investors accounted for 30 percent of trading volume on the exchange for the financial year 2017-2018. Standard & Poor’s, Morgan Stanley, Dow Jones, and FTSE have included the Mauritius stock market in a number of their stock indices. Since 2005, the SEM has been a member of the World Federation of Exchanges.  The SEM is also a partner exchange of the Sustainable Stock Exchanges Initiative. In 2018, in line with its strategy to digitalize its investor services, SEM launched the mySEM mobile application.

The government respects IMF Article VIII by refraining from restrictions on payments and transfers for current international transactions.  A variety of credit instruments is available to local and foreign investors through the banking system.

Money and Banking System

Mauritius has a sophisticated banking sector.  As of March 2019, 20 banks are licensed to undertake banking business, of which five are local banks, nine are foreign-owned subsidiaries, one is a joint venture, four are branches of foreign banks, and one is licensed as a private bank.  One bank conducts Islamic banking exclusively. Further details can be obtained on the following link:  .  According to data from the Global Partnership for Financial Inclusion, 90 percent of Mauritians aged 15 and above have a bank account.

According to the Banking Act of 2004, all banks are free to conduct business in all currencies.  There are also eight non-bank deposit-taking institutions, as well as 12 moneychangers and foreign exchange dealers.  There are no official government restrictions on foreigners opening bank accounts in Mauritius, but banks may require letters of reference or proof of residence for their due diligence.  The Bank of Mauritius, the country’s central bank, carries out the supervision and regulation of banks as well as non-bank financial institutions authorized to accept deposits. The Bank of Mauritius has endorsed the Core Principles for Effective Banking Supervision as set out by the Basel Committee on Banking Supervision.

The banking system is dominated by two long-established domestic entities:  the Mauritius Commercial Bank (MCB) and the State Bank of Mauritius (SBM), which together constitute about 60 percent of the total domestic market.  Maubank, the third largest bank in the country, became operational in 2016 following a merger between the Mauritius Post & Cooperative Bank and the National Commercial Bank.  The Bank of China started operations in Mauritius in 2016. Other foreign banks present in Mauritius include HSBC, Barclays Bank, Bank of Baroda, Habib Bank, BCP Bank (Mauritius), Standard Bank, Standard Chartered Bank, State Bank of India, and Investec Bank.  As of July 2018, commercial banks’ total assets amounted to USD 38.3 billion.

According to the Bank of Mauritius 2018 Annual Report, the domestic financial system in Mauritius remains resilient.  Banks are profitable, liquid and well-capitalized. Asset quality of banks is good with low rates of non-performing loans.  This was reflected in the non-performing loans to total loans ratio, which fell from 7.0 percent in June 2017 to 6.5 percent in June 2018.  In July 2017, the Banking Act was amended to double the minimum capital requirement from 5.8 million to 11.2 million U.S. dollars. Banks must implement this provision by June 30, 2019.  The Central Bank began reporting the liquidity coverage ratio in 2017 to improve the liquidity profile of banks and their ability to withstand potential liquidity disruptions.

Most major banks in Mauritius have correspondent banking relationships with large banks overseas.  In recent years, according to industry experts, no banks have lost correspondent banking relationships and none report being in jeopardy of doing so as of April 2019.  The 2018 Mutual Evaluation Report for Mauritius conducted by the Eastern and Southern Africa Anti-Money Laundering Group identified areas for improvement in the Central Bank’s AML/CFT supervisory and regulatory framework.  These include: an improved AML/CFT risk-based framework; separation of prudential and AML/CFT supervisory frameworks; and improvements in legislation, enforcement, and administrative sanctions for breaches of AML/CFT compliance by licensees.  The Central Bank reports that it has started the implementation of an action plan to address these issues:  .  In January 2019, the Central Bank signed a memorandum of cooperation with the Mauritius Police Force on financial crimes and illicit activities relating to the financial services sector.

In November 2017, the First Deputy Governor of the Bank of Mauritius announced that the bank had established internal and inter-bank committees on fintech and distributed ledger (blockchain) technologies.  The committees are tasked with studying opportunities related to fintech and proposing an innovation-friendly regulatory framework.

In February 2018, the Fintech and Innovation-driven Financial Services (FIFS) Regulatory Committee held its first meeting at the Financial Services Commission (FSC – the regulator for the non-bank financial services sector) to assess the current regulatory set up with respect to FIFS Regulations in Mauritius, and to identify priority areas within the regulatory space of fintech activities.  As announced in the 2018-2019 budget speech, a National Regulatory Sandbox License Committee has been set up to assess all fintech applications requiring a sandbox license. (A sandbox license offers an investor the possibility of conducting a business activity for which there exists no legal framework.) Effective March 2019, the Financial Services Commission permits businesses that provide custodial services for digital assets.

Foreign Exchange and Remittances

Foreign Exchange

The government of Mauritius abolished foreign exchange controls in 1994.  Consequently, no approval is required for converting, transferring, or repatriating profits, dividends, or capital gains earned by a foreign investor in Mauritius.  Funds associated with any form of investment can be freely converted into any world currency.

The exchange rate is generally market-determined, though the Bank of Mauritius, the central bank, occasionally intervenes.  Between January 2018 and December 2018, the Mauritian Rupee appreciated against the U.S. Dollar by 3.8 percent, but depreciated against the Pound Sterling and Euro by 3.1 percent and 5.0 percent respectively.

Remittance Policies

There are no time or quantity limits on remittance of capital, profits, dividends, and capital gains earned by a foreign investor in Mauritius.  Mauritius has a well-developed and modern banking system. There is no legal parallel market in Mauritius for investment remittances. The Embassy is unaware of any proposed changes by the government to its investment remittance policies.

Sovereign Wealth Funds

The government of Mauritius does not have a Sovereign Wealth Fund.

7. State-Owned Enterprises

The government’s stated policy is to act as a facilitator to business, leaving production to the private sector.  The government, however, still controls key services directly or through parastatal companies in the power and water, television broadcasting, and postal service sectors.

The government holds controlling shares in the State Bank of Mauritius, Air Mauritius (the national airline), and Mauritius Telecom.  These state-controlled companies have Boards of Directors on which seats are allocated to senior government officials. The government nominates the chairperson and CEO of each of these companies.

The government also invests in a wide variety of Mauritian businesses through its investment arm, the State Investment Corporation.  The government is also the owner of Maubank Ltd and the National Insurance Company.

Two parastatal entities are involved in the importation of agricultural products:  the Agricultural Marketing Board (AMB) and the State Trading Corporation (STC). The AMB’s role is to ensure that the supply of certain basic food products is constant and their prices remain affordable.  The STC is the only authorized importer of petroleum products, liquefied petroleum gas, and flour. SOEs purchase from or supply goods and services to private sector and foreign firms through tenders.

Audited accounts of SOEs are published in their annual reports.  Mauritius is part of the OECD network on corporate governance of state-owned enterprises in southern Africa.

Privatization Program

The government has no specific privatization program.  In 2017, however, as part of its broader water reform efforts, the government agreed to a World Bank recommendation to appoint a private operator to maintain and operate the country’s potable water distribution system.  Under the World Bank’s proposed public-private partnership, the Central Water Authority (CWA) would continue to own distribution and supply assets and will be responsible for business planning, setting tariffs, capital expenditure, and monitoring and enforcing the private operator’s performance.  In March 2018, despite protest by trade unions and consumer associations, the Minister of Energy and Public Utilities reiterated his intention to engage by the end of the year a private operator as a strategic partner to take over the water distribution services of the CWA. To date, this has not materialized.  The government says it plans to sell control of Maubank, into which it has injected about 173 million U.S. dollars following its decision to nationalize the bank in 2015.

8. Responsible Business Conduct

The National Committee for Corporate Governance (NCCG) was established under Section 63 of the Financial Reporting Act (2004) and is the coordinating body responsible for all matters pertaining to corporate governance in Mauritius.  The purpose of the Committee is to: (a) establish principles and practices of corporate governance; (b) promote the highest standards of corporate governance; (c) promote public awareness about corporate governance principles and practices; and (d) act as the national coordinating body responsible for all matters pertaining to corporate governance.  The latest Code of Corporate Governance for Mauritius (2016) was launched on February 13, 2017, and can be accessed here:  .  The Financial Reporting Council (FRC), also set up under the Financial Reporting Act (2004), aims to advocate for the provision of high-quality reporting of financial and non-financial information by public interest entities and to improve the quality of accountancy and audit service.

The Ministry of Financial Services, Good Governance and Institutional Reforms was established following the December 2014 elections.  Its mandate is to provide guidance and support for enforcement of good governance and the eradication of corruption. The Mauritius Institute of Directors (MIoD) is an independent, private sector-led organization that also promotes high standards and best practices of corporate governance, with additional information available on its website:

In 2017, the government set up a National Corporate Social Responsibility (CSR) Foundation, which operates under the aegis of the Ministry of Social Integration and Economic Empowerment.  The National CSR Foundation is managed by a Council consisting of members from the private and public sectors, civil society, and academia. Under the Finance Act of 2016, each year every company is expected to set up a CSR Fund equivalent to two per cent of its chargeable income of the preceding year.  In 2017 and 2018, companies were required to remit at least 50 percent of their CSR Funds to the tax authorities for the benefit of the National CSR Foundation. The required contribution increased in 2019 to 75 percent. The National CSR Foundation is supposed to channel the money to NGO projects falling under priority areas identified by the government.  These priority areas are poverty alleviation, educational support, social housing, family protection, people with severe disabilities, and victims of substance abuse. Further details can be found on the National CSR Foundation website:  .

9. Corruption

The prevalence of corruption in Mauritius is low by regional standards, but graft and nepotism nevertheless remain concerns and are increasingly a source of public frustration.  Several high profile cases involving corruption reinforce the perception that corruption exists at the highest political levels, despite the fact that Mauritian law provides for criminal penalties for corruption by officials.  A former prime minister was arrested in 2015 on allegations of money laundering while a minister of the current government had to step down in 2016 on allegations of bribery. In March 2017, allegations surfaced concerning possible political interference in the Financial Services Commission’s issuance of an investment banking license to Angolan billionaire Alvaro Sobrinho, who is being investigated for alleged corruption in Portugal.  In March 2018, the President of Mauritius resigned after press reported that she bought apparel, jewelry, and a laptop computer with a credit card provided by an NGO financed by the same Angolan businessman.

Investors should know that while the constitution and law require arrest warrants to be based on sufficient evidence and issued by a magistrate, police may detain an individual for up to 21 days under a “provisional charge” based on a reasonable suspicion, with the concurrence of a magistrate.  Two French businessmen have claimed that in February 2015 authorities held them against their will.

In 2002, the government adopted the Prevention of Corruption Act, which led to the establishment of an Independent Commission Against Corruption (ICAC).  ICAC has the power to investigate corruption and money laundering offenses and can also seize the proceeds of corruption and money laundering. The Director of ICAC is nominated by the Prime Minister.  The Good Governance and Integrity Reporting Act of 2015 was announced as a measure to recover “unexplained wealth” and came into force in early 2016. Critics of the act dislike its presumption of guilt, requiring the accused to demonstrate a lawful source of questionable assets, as well as the application of the law retroactively for seven years.

Mauritius is the 54th least corrupt nation out of 175 countries, according to the 2017 Corruption Perceptions Index reported by Transparency International, down for the second consecutive year from 45th in 2015 and 50th in 2016.  However, Mauritius retains its first rank in overall governance in Africa for the eleventh consecutive year, according to the 2017 Mo Ibrahim Index of African Governance.

Although Mauritius’ generally positive reputation for transparency and accountability has been hurt by some high-profile scandals, U.S. investors, in conversations with Embassy personnel, have not identified corruption as an obstacle to investment in the country.

Resources to Report Corruption

Navin Beekharry
Independent Commission Against Corruption
Reduit Triangle, Moka, Mauritius
+230 402 6600

Contact at “watchdog” organization:

Rajen Bablee
Transparency Mauritius
4th Floor, FonSing Building, 12 Edith Cavell Street, Port Louis, Mauritius
+ 230 213 0796

10. Political and Security Environment

Mauritius has a long tradition of political and social stability.  Civil unrest and political violence are uncommon. Free and fair national elections are held every five years with the last general elections held in December 2014.  Those most recent elections took place without incident. In January 2017, the former Prime Minister stepped down and his son, whom he had appointed Minister of Finance, replaced him as Prime Minister in accordance with the Constitution.

Crime rates are low but petty and violent crime can occur.  Visitors should keep track of their belongings at all times due to the potential for pick pocketing and purse snatching, especially in crowded and tourist areas.  Visitors should also avoid walking alone, particularly on isolated beaches and at night and should avoid demonstrations.

11. Labor Policies and Practices

According to the Mauritian government, total employment stood at 543,700 in 2018, down from 545,100 in 2017.  The unemployment rate decreased from 7.1 percent in 2017 to 6.9 percent in 2018, with a high concentration of joblessness among youth and women.  The youth unemployment rate was 22 percent. The 38,100 unemployed people included 39 percent male and 61 percent female.

The labor market remains restricted by structural issues like rising unemployment among graduates and low-skilled workers and a high number of female unemployed.  It is further characterized by persistent mismatch between qualifications of the unemployed and the skills required in an increasingly services-oriented economy. Government labor market programs aimed at building human capital have been extended, with policies to develop skills of the unemployed focusing on apprenticeships and placements.  The 2018-19 national budget maintained the National Skills Development Program for technical training for another year and introduced the SME Employment Scheme, which allows SMEs to employ youth without salary costs to the company (the salary is paid by the government). Additionally, the Employment Rights (Working From Home) Regulations 2019  were enacted in March 2019.  This legislation empowers workers to request the right to work from home either on a full- or part-time basis.

In 2017, the National Assembly passed the National Employment Act.  The object of the Act was to repeal the Employment and Training Act and enact a more modern legislative framework in order to address the needs of the labor market.  It provides the labor market with information on supply and demand of skills, job seekers, and training institutions; promotes placement and training of job seekers, including young persons and persons with disabilities; and promotes labor migration and home-based work.

Effective 2018, the government introduced a minimum wage of 9,000 Mauritian Rupees (approximately USD 255) per month for all workers in the country.  This has impacted the salaries of over 100,000 low-pay workers.

The Employment Rights Act and the Employment Relations Act came into force in February 2009 with the main objectives of revising and consolidating existing labor and industrial relations laws, liberalizing the labor market, and enhancing the effectiveness of collective bargaining.  The legislation also provided for the introduction of a Workfare Program under which laid-off workers benefit from government financial assistance for up to twelve months and have opportunities for training to increase their employability. In April 2019, the Non-Citizens (Employment Restriction) Regulations were amended and non-citizen spouses of Mauritian citizens are no longer exempted from the regulations.  They now need to apply for work and occupation permits.

Trade unions are independent of government and employers.  Mauritius has an active trade union movement, representing about 25 percent of the workforce, and labor-management relations are generally positive.  A list of trade unions is available on the following link:  .  The last major strike affecting the economy took place in 1979.  The government generally seeks to avoid strikes through a system that promotes settlement through negotiation or arbitration by the Employment Relations Tribunal and the National Remuneration Board.

Workers’ rights are protected under the Employment Rights Act 2008.  Mauritius participates actively in the annual International Labor Organization (ILO) conference in Geneva, Switzerland, and adheres to ILO core conventions protecting workers’ rights.

12. OPIC and Other Investment Insurance Programs

Mauritius is eligible for the full range of OPIC investment insurance programs, and OPIC currently has an investment incentive agreement with Mauritius.  Mauritius is also a member of the World Bank’s Multilateral Investment Guarantee Agency. Countries with significant government-financed investment in Mauritius include India, France, and China.

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy

Host Country Statistical Source* USG or International Statistical Source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount
Host Country Gross Domestic Product (GDP) ($M USD) 2017 $13,155 2017 $13,266   
Foreign Direct Investment Host Country Statistical Source* USG or International Statistical Source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) N/A 2017 $10,424 BEA data available at  
Host country’s FDI in the United States ($M USD, stock positions) N/A 2017 $441 BEA data available at  
Total inbound stock of FDI as % host GDP N/A 2017 41.8% UNCTAD data available at  

* Source for Host Country Data:  National Accounts 2017, Statistics Mauritius,  

Table 3: Sources and Destination of FDI

Direct Investment From/in Counterpart Economy Data (2017)
From Top Five Sources/To Top Five Destinations (US Dollars, Millions)
Inward Direct Investment Outward Direct Investment
Total Inward $333,281 100% Total Outward $268,454 100%
United States $64,261 19% India $99,798 37%
Cayman Islands $52,738 16% Singapore $18,491 7%
Singapore $27,738 8% Cayman Islands $9,118 3%
India $23,724 7% United Kingdom $8,783 3%
South Africa $18,603 6% South Africa $7,754 3%
“0” reflects amounts rounded to +/- USD 500,000.

Table 4: Sources of Portfolio Investment

Portfolio Investment Assets (June 2018)
Top Five Partners (Millions, US Dollars)
Total Equity Securities Total Debt Securities
All Countries $141,198 100% All Countries $119,273 100% All Countries $21,925 100%
India $99,956 71% India $94,542 79% United Kingdom $10,435 48%
United Kingdom $11,706 8% Hong Kong $3,315 3% India $5,414 25%
United States $4,815 3% Singapore $3,273 3% United States $2,298 10%
Hong Kong $3,490 2% Cayman Islands $2,993 3% Luxembourg $370 2%
Singapore $3,420 2% United States $2,517 2% South Africa $308 1%

14. Contact for More Information

Smita Bheenick
Economic and Commercial Specialist
+230 202 4430


Executive Summary

Namibia is a stable, democratic country, and the Government of the Republic of Namibia is committed to stimulating economic growth and employment through foreign investment.  The Ministry of Industrialization, Trade, and Small and Medium Enterprise Development (MITSMED) is the governmental authority primarily responsible for carrying out the provisions of the Foreign Investment Act of 1990 (FIA).  On August 31, 2016, Namibia promulgated and gazetted the Namibia Investment Promotion Act (NIPA). However, this act has not been enforced due to substantive legal concerns raised by the private sector. Therefore, the FIA remains the guiding legislation on investment in Namibia.

The FIA calls for equal treatment of foreign investors and Namibian firms, including the possibility of fair compensation in the event of expropriation, international arbitration of disputes between investors and the government, the right to remit profits, and access to foreign exchange.

The government emphasizes the need for investors to partner with Namibian-owned companies and/or have a majority of local employees in order to operate in the country.

Namibia’s judiciary is widely regarded as independent.

There are large Chinese foreign investments in Namibia, particularly in the uranium mining sector.  South Africa has considerable investments in the diamond mining and banking sectors, while India has investment in zinc.  Foreign investors from the U.K, Netherlands, the United States, and other countries have expressed interest in oil exploration off the Namibian coast.  European and Chinese companies are investing in the fisheries sector.

Namibia has a relatively small domestic market, high transport costs, relatively high energy prices, and a limited skilled labor pool.  These disadvantages are offset by the main factors facilitating Namibia’s inward Foreign Direct Investment (FDI): political stability, a favorable macroeconomic environment, an independent judicial system, protection of property and contractual rights, good quality of physical and ICT infrastructure, and easy access to South Africa.  Namibia also has access to the Southern African Customs Union (SACU), the Southern African Development Community’s (SADC) Free Trade Area, and markets in Europe.

As a post-apartheid country and having one of the highest rates of inequality in the world, Namibia continues to look for ways to address historic economic imbalances.  Proposed legislation, the New Equitable Economic Empowerment Framework bill, will look to create economic and business opportunities for disadvantaged groups including in areas of ownership, management, human resource development, and value addition.  The bill is expected to be tabled in Parliament in 2019.

The NIPA, although it is not yet in force, includes in Section 14 (c) a provision that the Minister responsible for investment must consider “…the net benefit to Namibia, taking into account the contribution of the investment to the implementation of programs and policies aimed at redressing social and economic imbalances in Namibia, including gender-based imbalances.”

Table 1

Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2018 52 of 180
World Bank’s Doing Business Report “Ease of Doing Business” 2019 107 of 190
Global Innovation Index 2018 93 of 126 
U.S. FDI in partner country ($M USD, stock positions) 2017 -$77
World Bank GNI per capita 2017 $4,570 

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Toward Foreign Direct Investment

The Namibian government welcomes and encourages foreign investment to help develop the national economy and benefit its population.  The FIA guarantees equal treatment for foreign investors and Namibian firms, including the possibility of fair compensation in the event of expropriation, international arbitration of disputes between investors and the government, the right to remit profits, and access to foreign exchange.  Investment and tax incentives are also available for the manufacturing sector. The government prioritizes investment retention and maintains ongoing dialogue with investors including through investment conferences.

The Namibia Investment Center (NIC), housed at the Ministry of Industrialization, Trade, and Small and Medium Enterprise Development (MITSMED), serves as Namibia’s official investment promotion and facilitation office.  Often the first point of contact for potential investors, the NIC is designed to offer comprehensive services from the initial inquiry stage through to operational stages. The NIC also provides general information packages and advice on investment opportunities, incentives, and procedures.  The NIC is tasked with assisting investors in minimizing bureaucratic red tape, including obtaining work visas for foreign investors, by coordinating with government ministries as well as regulatory bodies.

Limits on Foreign Control and Right to Private Ownership and Establishment

Foreign and domestic entities may establish and own business enterprises and engage in all forms of remunerative activities.  The Ministry of Home Affairs and Immigration grants renewable and non-renewable temporary employment permits for a period of up to 12 months for skills not locally or readily available.  However, work permits and long-term residence permits are subject to bureaucratic hurdles. Complaints about delays in renewing visas and work permits are common.

Foreigners must pay a 10 percent non-resident shareholder tax on dividends.  There are no capital gains or marketable securities taxes, although certain capital gains are taxed as normal income.  As a member of the Common Monetary Area, the Namibian dollar (NAD) is pegged at parity with the South African rand.

There are no mandatory limits on foreign ownership.  Government procurements usually require a variable percentage of local ownership.

Other Investment Policy Reviews

The Namibian government has not undergone any investment policy review in the past three years through the OECD, WTO, or UNCTAD.

Business Facilitation

In 2014, the Namibian government established the Business and Intellectual Property Authority (BIPA) to improve service delivery and ensure effective administration of business and intellectual property rights (IPRs) registration.  BIPA serves as a one-stop-center for all business and IPR registrations and related matters. It also provides general advisory services and information on business registration and IPRs. Website:  

According to the Business and Intellectual Property Authority Act of 2016, the functions of BIPA include:

  • regulate and administer the registration of business and industrial property under the applicable legislation;
  • consolidate the offices involved in the registration and administration of business and intellectual property;
  • maintain information concerning business and intellectual property; and
  • facilitate the flow of relevant information between BIPA and the business community, users of business and intellectual property, general public, and other regulatory authorities and government institutions.

Business in Namibia may be conducted in the form of a public or private company, branch of a foreign company, closed corporation, partnership, joint venture, or sole trader.  Companies are regulated under the 2004 Companies Act, which covers both domestic companies and those incorporated outside Namibia but trading through local branches. To operate in Namibia, businesses must also register with the relevant local authorities, the Workmen’s Compensation Commission, and the Social Security Commission.

Most investors find it helpful to have a local presence or a local partner in order to do business in Namibia, although this is not a legal requirement.  Companies usually establish business relationships before tender opportunities are announced. The World Bank’s Doing Business 2018 report notes that it takes 10 steps and an average of 66 days to start a business in Namibia.  Some accounting and law firms provide business registration services.

Outward Investment

Incentives are mainly aimed at stimulating manufacturing, attracting foreign investment to Namibia, and promoting exports.  To take advantage of the incentives, companies must be registered with MITSMED and the Ministry of Finance. Tax and non-tax incentives are accessible to both existing and new manufacturers.  The NIC maintains a list of investment incentives on its website:  

Namibia has an Export Processing Zone (EPZ) regime that offers favorable conditions for companies wishing to manufacture and export products.  The EPZ scheme is due to be phased out, possibly in 2019, and replaced by Special Economic Zones, although no proposals have been made as to what the new format would include.  New applications are still being accepted under the existing EPZ regime. In 2019, there were 19 EPZ companies in operation, most of which were closely linked to minerals beneficiation, including Namzinc (which produces Special High Grade zinc at the Skorpion zinc mine), Namibia Custom Smelters (which produces blister copper from imported copper concentrates), and a variety of diamond cutting and polishing operations (which cut and polish locally and internationally sourced rough diamonds).

2. Bilateral Investment Agreements and Taxation Treaties

Namibia has ratified Bilateral Investment Treaties (BITs) with Austria, Finland, France, Germany, Italy, Malaysia, the Netherlands, Spain, and Switzerland.  Angola, Cuba, China, the Russian Federation, and Vietnam have signed investment agreements with Namibia, but the agreements are not in force. There is no bilateral investment agreement between the United States and Namibia.  In 2008, SACU (of which Namibia is a member) signed a Trade, Investment, and Development Cooperation Agreement (TIDCA) with the United States.

Namibia has double taxation agreements with Botswana, France, Germany, India, Malaysia, Mauritius, Romania, the Russian Federation, South Africa, Sweden, and the United Kingdom.  There is no taxation treaty between Namibia and the United States.

4. Industrial Policies

Investment Incentives

Incentives are mainly aimed at stimulating manufacturing, attracting foreign investment to Namibia, and promoting exports.  To take advantage of the incentives, companies must be registered with MITSMED and the Ministry of Finance. Tax and non-tax incentives are accessible to both existing and new manufacturers.  MITSMED has produced a brochure on Special Incentives for Manufacturers and Exporters that is available from the Namibia Investment Centre (NIC).

The Namibian Government aims to stimulate economic growth and employment and to establish Namibia as a gateway location in Southern African region.  To this end, the government has introduced numerous incentives that are largely concentrated on stimulating manufacturing in Namibia and prompting exports into the region and to the rest of the world.  General tax regulations that are indicative of the government’s commitment are:

  • Non–resident Shareholders’ Tax is only 10 percent;
  • Dividends accruing to Namibian companies or resident shareholders are tax-exempt;
  • Plant, machinery and equipment can be fully written off over a period of three years;
  • Buildings of non-manufacturing operations can be written off, 20 percent in the first year and the balance at 4 percent over the ensuing 20 years;
  • Import or purchase of manufacturing machinery and equipment is exempted from Value Added Tax (VAT); and,
  • Preferential market access to EU, USA, and other markets for manufacturers is provided.

The government does issue guarantees, but reluctantly.  Joint financing for foreign direct investment is occasionally implemented through the Namibia Development Corporation or another, sector-relevant state-owned enterprise.

Foreign Trade Zones/Free Ports/Trade Facilitation

Namibia has an Export Processing Zone (EPZ) regime that offers favorable conditions for companies wishing to manufacture and export products.  The government of Namibia has announced plans to repeal the EPZ Act and replace it with Special Economic Zones. Existing EPZ users will be accommodated, and new applications are still accepted under the current regime.  The government has not yet tabled a proposal for the Special Economic Zones.

There are 19 EPZ companies in operation, most of which were closely linked to minerals beneficiation, including Namzinc (which produces Special High Grade zinc at the Skorpion zinc mine), Namibia Custom Smelters (which produces blister copper from imported copper concentrates), and a variety of diamond cutting and polishing operations (which cut and polish locally and internationally sourced rough diamonds).

To make manufacturing in Namibia more competitive, government has introduced a further package of tax and non-tax special incentives, applicable to both existing and new manufacturing enterprises, exporters, and EPZ enterprises.  Companies operating under the EPZ regime are free to locate their operations anywhere in Namibia. Through the Offshore Development Company (ODC), EPZ enterprises also have access to factory facilities rented at economical rates.

Namibia offers one of the most favorable EPZ regimes of the region.  Normally, Namibian companies pay corporate income tax, general and additional sales duties, as well as stamps and transfer duties.  The EPZ companies do not pay any of these taxes and duties. Only personal income tax on employees’ income are paid, and there is a Non- Resident Shareholders’ Tax of 10 percent when dividends are exported.  Currency conversion is guaranteed, and financial transactions (the transfer of dividends, profits and dis-investment) may be undertaken by banks without the involvement of the Central Bank. The EPZ companies may not, however, borrow money in the domestic money market.

The EPZ incentives are:

  • Corporate tax holiday
  • Exemption from import duties on imported intermediate and capital goods
  • Exemption from sales tax, stamp and transfer duties on goods and services required for EPZ activities
  • Reduction in foreign exchange controls
  • Guarantee of free repatriation of capital and profits
  • Permission for EPZ investors to hold foreign currency accounts locally
  • Access to streamlined regulatory service (‘one-stop-shop’)
  • Refund of up to 75 percent of costs of pre-approved training of Namibian citizens
  • No strike or lock-outs allowed in EPZs
  • Provision of factory facilities for rent at economical rates

Performance and Data Localization Requirements

The government actively encourages partnerships with historically disadvantaged Namibians. The Equity Commission requires all firms to develop an affirmative action plan for management positions and to report annually on its implementation.  Namibia’s Affirmative Action Act strives to create equal employment opportunities, improve conditions for the historically disadvantaged, and eliminate discrimination. The Equity Commission facilitates training programs, provides technical and other assistance, and offers expert advice, information, and guidance on implementing affirmative action in the work place.

In certain industries, the government has employed specific techniques to increase Namibian participation.  In the fishing sector, for example, companies pay lower quota fees if they operate Namibian-flagged vessels based in Namibia with crews that are predominantly Namibian.

Investors often complain about the lengthy and administratively burdensome process of obtaining work permits in Namibia.  Although the government cites the country’s high unemployment rate as its motivation for a strict policy on work permits, Namibia’s labor force does not yet meet many of the skills needed to fill jobs that foreigners currently hold.

The Namibian government does not have “forced localization” requirements for data storage.  Domestic content is encouraged. State owned enterprises are including local ownership/participation requirements in procurement actions.

Economic empowerment legislation for previously disadvantaged groups, called the New Equitable Economic Empowerment Framework, is under consideration in the legislature.  A bill is expected to be introduced in 2019 and is expected to contain provisions relating to ownership, management, value addition, human resource capacity building, job creation, and corporate social responsibility.

5. Protection of Property Rights

Real Property

The Namibian Constitution guarantees all persons the right to acquire, own and dispose of all forms of property throughout Namibia, but also allows Parliament to make laws concerning expropriation of property (see Expropriation and Compensation Section) and to regulate the right of foreign nationals to own or buy property in Namibia.  There are no restrictions on the establishment of private businesses, size of investment, sources of funds, marketing of products, source of technology, or training in Namibia. All deeds of sales are registered with the Deeds Office. Property is usually purchased through real estate agents and most banks provide credit through mortgages.  The Namibian Constitution prohibits expropriation without just compensation.

Intellectual Property Rights

Namibia is a party to the World Intellectual Property Organization (WIPO) Convention, the Berne Convention for the Protection of Literary and Artistic Works, and the Paris Convention for the Protection of Industrial Property.  Namibia is also a party to the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks and the Patent Cooperation Treaty. Namibia is a signatory to the WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty.

The responsibility for intellectual property rights (IPR) protection is divided among three government ministries.  The Ministry of Industrialisation, Trade, and SME Development (MITSMED) oversees industrial property and is responsible for the registration of companies, private corporations, patents, trademarks and designs through its Business and Intellectual Property Authority (BIPA).  The Ministry of Information and Communication Technology (MICT) manages copyright protection, while the Ministry of Environment and Tourism (MET) protects indigenous plant varieties and any associated traditional knowledge of these plants.

Two copyright organizations, the Namibian Society of Composers and Authors of Music (NASCAM) and the Namibian Reproduction Rights Organization (NAMRRO), are the driving forces behind the government’s anti-piracy campaigns.  NASCAM administers IPR for authors, composers and publishers of music. NAMRRO protects all other IPR including literary, artistic, broadcasting, satellite, traditional knowledge, and folklore.

Namibia is not included in the United States Trade Representative (USTR) Special 301 Report or Notorious Markets List.

For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at  

6. Financial Sector

Capital Markets and Portfolio Investment

There is a free flow of financial resources within Namibia and throughout the Common Monetary Area (CMA) countries of the South African Customs Union (SACU), which include Namibia, Botswana, Swaziland, South Africa, and Lesotho.  Capital flows with the rest of the world are relatively free, subject to the South African currency exchange rate. The Namibia Financial Institutions Supervisory Authority (NAMFISA) registers portfolio managers and supervises the actions of the Namibian Stock Exchange (NSX) and other non-banking financial institutions.

Although the NSX is the second-largest stock exchange in Africa, this ranking is largely because many South African firms listed on the Johannesburg exchange are also listed (dual listed) on the NSX.  By law, Namibia’s government pension fund and other Namibian funds are required to allocate a certain percentage of their holdings to Namibian investments. Namibia has a world-class banking system that offers all the services needed by a large company.  Foreign investors are able to get credit on local market terms.

There are no laws or practices by private firms in Namibia to prohibit foreign investment, participation, or control; nor are there any laws or practices by private firms or government precluding foreign participation in industry standards-setting consortia.

Money and Banking System

Namibia’s central bank, the Bank of Namibia (BON), regulates the banking sector.  Namibia has a highly sophisticated and developed commercial banking sector that is comparable with the best in Africa.  There are eight commercial banks: Standard Bank, Nedbank Namibia, Bank Windhoek, FNB Namibia, Trustco Bank, Letshego Bank Limited, Banco BIC, and Banco Atlantico.  Bank Windhoek and Trustco Bank are the only locally-owned banks, and Trustco Bank specializes in micro-finance. Standard Bank, Nedbank, and FNB are South African subsidiaries, Banco BIC and Banco Atlantico are Angolan.  A significant proportion of bank loans come in the form of bonds or mortgages to individuals. There is little or no investment banking activity.

The Development Bank of Namibia (DBN) and Agribank are Namibian government-owned banks with a mandate for development project financing.  Agribank’s mandate is specifically in the agriculture sector.

While there are no restrictions on foreigners’ ability to open bank accounts, a non-resident must open a “non-resident” account at a Namibian commercial bank to facilitate loan repayments. This account would normally be funded from abroad or from rentals received on the property purchased, subject to the bank holding the account being provided with a copy of any rental. Non-residents who are in possession of a valid Namibian work permit/permanent residency are considered to be residents for the duration of their work permit and are therefore not subject to borrowing restrictions placed on non-residents without the necessary permits.

The BON does not recognize cryptocurrencies, such as Bitcoin, as legal tender in Namibia.  The BON is reluctant to allow the implementation of blockchain technologies in banking transactions.

Foreign Exchange and Remittances

Foreign Exchange Policies

The Namibian dollar is pegged at parity to the South African rand, and rand are accepted as legal tender in Namibia.  The FIA offers investors meeting certain eligibility criteria the opportunity to obtain a Certificate of Status Investment (CSI).  A “status investor” is entitled to:

  • Preferential access to foreign exchange to repay foreign debt, pay royalties and similar charges, and remit branch profits and dividends;
  • Preferential access to foreign currency in order to repatriate proceeds from the sale of an enterprise to a Namibian resident;
  • Exemption from regulations which might restrict certain business or categories of business to Namibian participation;
  • Right to international arbitration in the event of a dispute with the government; and
  • Payment of just compensation without undue delay and in freely convertible currency in the event of expropriation.

Remittance Policies

According to World Bank Development Indicators, remittances to Namibia have been consistently less than 0.15 percent of GDP for at least the last decade.  The majority of remittances are processed through commercial banks. There have been no plans to change investment remittance policies in recent times.

Sovereign Wealth Funds

Namibia does not have a Sovereign Wealth Fund (SWF).  The Government Institution Pension Fund (GIPF) provides retirement and benefits for employees in the service of the Namibian government as well as institutions established by an act of the Namibian Parliament.

7. State-Owned Enterprises

While Namibian companies are generally open to foreign investment, government-owned enterprises have generally been closed to all investors (Namibian and foreign), with the exception of joint ventures discussed below.  More than 90 State Owned Enterprises (SOEs, also known as parastatals) include a wide variety of commercial companies, financial institutions, regulatory bodies, educational institutions, boards, and agencies. Generally, employment at SOEs is highly sought after because their remuneration packages are not bound by public service constraints.  Parastatals provide most essential services, such as telecommunications, transport, water, and electricity. The following are the most prominent SOEs:

  • Air Namibia (air carrier)
  • Namibia Airports Company (airport management company)
  • Namibia Institute of Pathology (medical laboratories)
  • Namibia Wildlife Resorts (tourism)
  • Namport (maritime port authority)
  • Nampost (postal and courier services)
  • Namwater (water sanitation and provisioning)
  • Roads Contractor Company
  • Telecom Namibia (primarily fixed-line) and MTC (mobile communications)
  • TransNamib (rail company)
  • NamPower (electricity generation and transmission)
  • Namcor (national petroleum company)
  • Epangelo (mining)

The government owns numerous other enterprises, from media ventures to a fishing company. Parastatals own assets worth approximately 40 percent of GDP and most receive subsidies from the government.  Some SOEs have been perennially unprofitable and have only managed to stay solvent with government subsidies. In industries where private companies compete with SOEs (e.g., tourism and fishing), SOEs are sometimes perceived to receive favorable concessions from the government.  Foreign investors have participated in joint ventures with the government in a number of sectors, including mobile telecommunications and mining. In 2015, the Namibian President created a new Ministry of Public Enterprises intended to improve the management and performance of SOEs.  Legislation to shift oversight of commercial SOEs from line ministries to the Ministry of Public Enterprises was finalized in 2019.

Privatization Program

Namibia does not have a privatization program.

8. Responsible Business Conduct

Most large firms, including SOEs, have well defined (and publicized) social responsibility programs that provide assistance in areas such as education, health, environmental management, sports, and SME development.  Many firms include Black Economic Empowerment (BEE) programs within their larger Corporate Social Responsibility (CSR) programs. Firms operating in the mining sector – Namibia’s most important industry – generally have visible CSR programs that focus on education, community resource management, environmental sustainability, health, and BEE.  Many Namibian firms have HIV/AIDS workplace programs to educate their employees about how to prevent contracting and spreading the virus/disease. Some firms also provide anti-retroviral treatment programs beyond what may be covered through government and private insurance systems.

9. Corruption

The Anti-Corruption Act of 2003 created an Anti-Corruption Commission (ACC), which began operations in 2006.  The ACC attempts to complement civil society’s anti-corruption programs and support existing institutions such as the Ombudsman’s Office and the Office of the Attorney General.  Anti-corruption legislation is in place to combat public corruption. In a nationwide survey commissioned by the ACC and released in 2016, corruption was listed at the third-most important development challenge facing Namibia (6 percent, after unemployment at 37 percent and poverty at 30 percent).  78 percent of survey respondents rated corruption as “very high” in Namibia. The highest result comes from those in rural areas,

Namibia has signed and ratified the UN Convention against Corruption and the African Union’s African Convention on Preventing and Combating Corruption.  Namibia has also signed the Southern African Development Community’s Protocol against Corruption.

Resources to Report Corruption

Paulus Noa
Namibia Anti Corruption Commission
Corner of Montblanc & Groot Tiras Street, Windhoek

10. Political and Security Environment

Namibia is a stable multiparty and multiracial democracy.  The protection of human rights is enshrined in the Namibian Constitution, and the government generally respects those rights. Political violence is rare and damage to commercial projects and/or installations as a result of political violence is considered unlikely.  The State Department’s Country Report on Human Rights for Namibia provides additional information.

11. Labor Policies and Practices

Namibian law allows for the formation of independent trade unions to protect workers’ rights and to promote sound labor relations and fair employment practices.  The law provides for the right to form and join independent unions, conduct legal strikes, and bargain collectively; however, the law prohibits workers in certain sectors, such as the police, military, and correctional facilities, from joining unions.  Except for workers in services designated as essential services, such as public health and safety, workers may strike once mandatory conciliation procedures are exhausted and 48 hours’ notice is given to the employer and labor commissioner. Workers may take strike actions only in disputes involving specific worker interests, such as pay raises.

Namibia has ratified all of the International Labor Organization’s fundamental conventions. Businesses operating within export processing zones are required to adhere to the Labor Act.

The 2007 Labor Act contained a provision that prohibited the hiring of temporary or contract workers (“labor hire”), but the provision was ruled unconstitutional by the Supreme Court. The Labor Amendment Act of 2012 introduced strict regulations with respect to the use of temporary workers, according to which temporary workers must generally receive equal compensation and benefits as non-temporary workers.

Child labor in Namibia may occur in certain sectors, such as domestic work, but its occurrence and prevalence is difficult to verify.  Although Namibia has ratified all key international conventions concerning child labor, there continue to be gaps in Namibia’s domestic legal framework.

There is a shortage of specialized skilled labor in Namibia.  Employers often cite labor productivity and the shortage of skilled labor as the biggest obstacles to business growth.  The 2017-18 Global Competitiveness Report ranked Namibia 90th out of 137 economies. An inadequately educated workforce, access to financing, and inefficient government bureaucracy are listed in the report as the most problematic factors for doing business.

The government offers manufacturing companies special tax deductions of up to 25 percent if they provide technical training to employees.  The government will also reimburse companies for costs directly related to employee training under approved conditions.

As of April 1, 2014, the Namibian government implemented a Vocational Education and Training (VET) levy to facilitate and encourage vocational education and training.  The levy, which is payable to the Namibia Training Authority (NTA), is imposed on every employer with an annual payroll of at least NAD 1,000,000 (approximately USD 70,000), at the rate of one percent of the employer’s total annual payroll.  The NTA will collect and administer the levy and will use the funds to provide financial and technical assistance to employers, vocational training providers, employees, students, and other bodies to promote vocational education and training.  In addition, companies can get a rebate from NTA of up to fifty percent of training costs for their employees.

12. OPIC and Other Investment Insurance Programs

The United States has had an Investment Incentive Agreement with Namibia since 1990.  Under the agreement, the Overseas Private Investment Corporation (OPIC) is the USG entity that provides political risk insurance and credit facilities to qualified U.S. investors in Namibia. Namibia is also a member of the World Bank’s Multilateral Investment Guarantee Agency (MIGA).

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy

Host Country Statistical Source* USG or International Statistical Source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount
Host Country Gross Domestic Product (GDP) ($M USD) 2016 $11,300 2017 $13,200   
Foreign Direct Investment Host Country Statistical Source* USG or International Statistical Source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) 2016 -$52 2017 -$77 BEA data available at   
Host country’s FDI in the United States ($M USD, stock positions) 2016 0 2017 0 BEA data available at   
Total inbound stock of FDI as % host GDP 2016 46.4% 2017 43.5% UNCTAD data available at  

*Namibia Statistics Agency

Table 3: Sources and Destination of FDI (2017)

Direct Investment From/in Counterpart Economy Data
From Top Five Sources/To Top Five Destinations (US Dollars, Millions)
Inward Direct Investment Outward Direct Investment
Total Inward $8,219 100% Data not available
South Africa $2,201 27%
India $618 8%
Mauritius $400 5%
United Kingdom $317 4%
Canada $303 4%
“0” reflects amounts rounded to +/- USD 500,000.

Table 4: Sources of Portfolio Investment

Data not available.

14. Contact for More Information

Caroline Dow
Economic/Commercial Officer
14 Lossen Street, Windhoek, Namibia

South Africa

Executive Summary

South Africa boasts the most advanced, broad-based economy on the African continent.  The investment climate is fortified by stable institutions, an independent judiciary and vibrant legal sector committed to upholding the rule of law, a free press and investigative reporting, a mature financial and services sector, good infrastructure, and a broad selection of experienced local partners.  South Africa encourages investment that develops manufacturing of goods for export.

South Africa is still fighting its way back from a “lost decade” in which economic growth stagnated, largely as a consequence of corruption and economic mismanagement during the term of its former president.  Since assuming office in February 2018, South Africa’s new president, Cyril Ramaphosa, has committed to improving the investment climate. The early steps he has taken are encouraging, but the challenges are enormous.  At a minimum, South Africa will need to strengthen economic growth and stabilize public finances in order to reverse the credit downgrades by two of the three global ratings agencies. Other challenges include: creating policy certainty; reinforcing regulatory oversight; making state-owned enterprises (SOEs) profitable rather than recipients of government bail-outs; weeding out widespread corruption; reducing violent crime; tackling labor unrest; improving basic infrastructure and government service delivery; creating more jobs while reducing the size of the state (unemployment is over 27 percent); and increasing the supply of appropriately-skilled labor.

In dealing with the legacy of apartheid, South African laws, policies, and reforms seek to produce economic transformation to increase the participation of and opportunities for historically disadvantaged South Africans.  The government views its role as the primary driver of development and aims to promote greater industrialization. Government initiatives to accelerate transformation have included tightening labor laws to achieve proportional racial, gender, and disability representation in workplaces, and ascriptive requirements for government procurement such as equity stakes for historically disadvantaged South Africans and localization requirements.  Following the adoption of a resolution calling for land expropriation without compensation at the December 2017 conference of the African National Congress, investors are watching closely how the government will implement land reform initiatives and what Parliament will decide as a result of its review of the constitution on this issue.

Despite these uncertainties and some important structural economic challenges, South Africa is a destination conducive to U.S. investment; the dynamic business community is highly market-oriented and the driver of economic growth.  President Ramaphosa aims to attract USD 100 billion in investment over the next five years. South Africa offers ample opportunities and continues to attract investors seeking a comparatively low-risk location in Africa from which to access the continent with the fastest growing consumer market in the world.

Table 1: Key Metrics and Rankings

Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2018 73 of 180 
World Bank’s Doing Business Report 2019 82 of 190
Global Innovation Index 2018 58 of 126 
U.S. FDI in partner country ($M USD, stock positions) 2017 $7,334 
World Bank GNI per capita 2017 $5,430 

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

The government of South Africa is generally open to foreign investment as a means to drive economic growth, improve international competitiveness, and access foreign markets.  Merger and acquisition activity is more sensitive and requires advance work to answer potential stakeholder concerns. The 2018 Competition Amendment Bill, which was signed into law on February 13, 2019, introduced a mechanism for South Africa to review foreign direct investments and mergers and acquisitions by a foreign acquiring firm on the basis of protecting national security interests (see section on Laws and Regulations on Foreign Direct Investment below).  Virtually all business sectors are open to foreign investment. Certain sectors require government approval for foreign participation, including energy, mining, banking, insurance, and defense.

The Department of Trade and Industry’s (the dti) Trade and Investment South Africa (TISA) division provides assistance to foreign investors.  In the past year, they opened provincial One-Stop Shops that provide investment support for foreign direct investment (FDI), with offices in Johannesburg, Cape Town, and Durban, and a national One Stop Shop located at the dti in Pretoria and online at percent20SA percent3AOnestopshop  .  An additional one-stop shop has opened at Dube Trade Port, which is a special economic zone aerotropolis linked to the King Shaka International Airport in Durban.  The dti actively courts manufacturing industries in which research indicates the foreign country has a comparative advantage. It also favors manufacturing that it hopes will be labor intensive and where suppliers can be developed from local industries.  The dti has traditionally focused on manufacturing industries over services industries, despite a strong service-oriented economy in South Africa. TISA offers information on sectors and industries, consultation on the regulatory environment, facilitation for investment missions, links to joint venture partners, information on incentive packages, assistance with work permits, and logistical support for relocation.  The dti publishes the “Investor’s Handbook” on its website:  

While the government of South Africa supports investment in principle and takes active steps to attract FDI, investors and market analysts are concerned that its commitment to assist foreign investors is insufficient in practice.  Some felt that the national-level government lacked a sense of urgency to support investment deals. Several investors reported trouble accessing senior decision makers. South Africa scrutinizes merger- and acquisition-related foreign direct investment for its impact on jobs, local industry, and retaining South African ownership of key sectors.  Private sector representatives and other interested parties were concerned about the politicization of South Africa’s posture towards this type of investment. Despite South Africa’s general openness to investment, actions by some South African Government ministries, populist statements by some politicians, and rhetoric in certain political circles show a lack of appreciation for the importance of FDI to South Africa’s growth and prosperity and a lack of concern about the negative impact domestic policies may have on the investment climate.  Ministries often do not consult adequately with stakeholders before implementing laws and regulations or fail to incorporate stakeholder concerns if consultations occur. On the positive side, the President, assisted by his appointment of four investment envoys, and his new cabinet are working to restore a positive investment climate and appear to be making progress as they engage in senior level overseas roadshows to attract investment.

Limits on Foreign Control and Right to Private Ownership and Establishment

Currently there is no limitation on foreign private ownership. South Africa’s transformation efforts – the re-integration of historically disadvantaged South Africans into the economy – has led to policies that could disadvantage foreign and some locally owned companies.  In 2017, the Broad-Based Black Socio-Economic Empowerment Charter proposed for the South African mining and minerals industry required an increase to 30 percent ownership by black South Africans, but was mired in the courts as industry challenged it. The Charter was retracted for revision and a new version was proposed in 2018. The Broad-Based Black Economic Empowerment Act of 2013 (B-BBEE), and associated codes of good practice, requires levels of company ownership and participation by Black South Africans to get bidding preferences on government tenders and contracts. The dti created an alternative equity equivalence (EE) program for multinational or foreign owned companies to allow them to score on the ownership requirements under the law, but many view the terms as onerous and restrictive.  Currently eight multinationals, most in the technology sector, participate in this program, most in the technology sector.

Other Investment Policy Reviews

The World Trade Organization carried out in 2015 a Trade Policy Review for the Southern African Customs Union, in which South Africa accounts for over 90 percent of overall GDP.  Neither the OECD nor the UN Conference on Trade and Development (UNCTAD) has conducted investment policy reviews for South Africa.

Business Facilitation

According to the World Bank’s Doing Business report, South Africa’s rank in ease of doing business in 2019 was unchanged from 2018 at 82nd of 190.  It ranks 134th for starting a business, taking an average of forty days to complete the process. South Africa ranks 143rd of 190 countries on trading across borders.

In 2017, the dti launched a national InvestSA One Stop Shop (OSS) to simplify administrative procedures and guidelines for foreign companies wishing to invest in South Africa.  The dti, in conjunction with provincial governments, opened physical OSS locations in Cape Town, Durban, and Johannesburg. These physical locations bring together key government entities dealing with issues including policy and regulation, permits and licensing, infrastructure, finance, and incentives, with a view to reducing lengthy bureaucratic procedures, reducing bottlenecks, and providing post-investment services.  The virtual OSS web site is: percent20SA percent3AOnestopshop  .

The Companies and Intellectual Property Commission (CIPC), a body of the dti, is responsible for business registrations and publishes a step-by-step process for registering a company.  This process can be done on its website (  ), through a self-service terminal, or through a collaborating private bank.  New business registrants also need to register through the South African Revenue Service (SARS) to get an income tax reference number for turnover tax (small companies), corporate tax, employer contributions for PAYE (income tax), and skills development levy (applicable to most companies).  The smallest informal companies may not be required to register with CIPC, but must register with the tax authorities. Companies also need to register with the Department of Labour (DoL) –   – to contribute to the Unemployment Insurance Fund (UIF) and a compensation fund for occupational injuries.  The DoL registration takes the longest (up to 30 days), but can be done concurrently with other registrations.

Outward Investment

South Africa does not incentivize outward investments.  South Africa’s stock foreign direct investments in the United States in 2017 totaled USD 4.1 billion (latest figures available), an almost 40 percent increase from 2016.  The largest outward direct investment of a South African company is a gas liquefaction plant in the State of Louisiana by Johannesburg Stock Exchange (JSE) and NASDAQ dual-listed petrochemical company SASOL.  There are some restrictions on outward investment, such as a R1 billion (USD 83 million) limit per year on outward flows per company. Larger investments must be approved by the South African Reserve Bank and at least 10 percent of the foreign target entities voting rights must be obtained through the investment.

2. Bilateral Investment Agreements and Taxation Treaties

Of South Africa’s 49 signed bilateral investment treaties (BITs), 35 never entered into force or were terminated.  According to UNCTAD, fourteen agreements are still in force including with Russia, China, Cuba, and Iran. The 2015 “Protection of Investment Act” replaces lapsed BITs and stipulates that “Existing investments that were made under such treaties will continue to be protected for the period and terms stipulated in the treaties.  Any investments made after the termination of a treaty, but before promulgation of this Act, will be governed by the general South African law.” It also provides that “the government may consent to international arbitration in respect of investments covered by the Act, subject to the exhaustion of domestic remedies.” Such “arbitration will be conducted between the Republic and the home state of the applicable investor.”  South Africa is not engaged in new BIT negotiations.

South Africa is a member of the Southern Africa Customs Union (SACU) which has a common external tariff and tariff-free trade between its five members (South Africa, Botswana, Lesotho, Namibia, and Eswatini, formerly known as Swaziland).  South Africa is generally restricted from negotiating trade agreements by itself because SACU is the competent authority. Nevertheless, South Africa has free trade agreements with the Southern African Development Community (SADC) including its 12 members; the Trade, Development and Cooperation Agreement (TDCA) between South Africa and the European Union (EU); EFTA-SACU Free Trade Agreement between SACU and the European Free Trade Association (EFTA) – Iceland, Liechtenstein, Norway, and Switzerland; and the Economic Partnership Agreement (EPA) between the SADC EPA States (South Africa, Botswana, Namibia, Eswatini, Lesotho, and Mozambique) and the EU and its Member States.  These agreements mainly cover trade in goods and provide preferential market access, though article 52 of the 1999 EU-TDCA covers investment promotion and protection.  South Africa, through SACU, is currently negotiating a “rollover” EPA with the United Kingdom (UK) similar to its EPA with the EU in an effort to curb any trade disruptions when the UK exits the EU.  Progress in reaching an agreement is mired in negotiations over rules of origin, cumulation, and sanitary and phytosanitary matters. 

South Africa is a signatory to the SADC-EAC-COMESA Tripartite FTA which includes 26 countries with a combined GDP of USD 860 billion and a combined population of approximately 590 million people.  This agreement primarily covers trade in goods. South Africa ratified the African Continental Free Trade Agreement in 2018. It joins 21 other African countries, reaching the threshold needed to bring the agreement into force, once these countries submit their ratification instruments to the African Union.  Implementation of the agreement still requires signatories to present offers on tariff lines and services, and agree to rules of origin among other outstanding issues.

The United States and South Africa signed a Trade and Investment Framework Agreement (TIFA) in 1999.  The last TIFA discussions were held in 2015. The United States and SACU negotiated a Trade, Investment and Development Cooperation Agreement (TIDCA) in 2008.

The first U.S.-South Africa bilateral tax treaty eliminated double taxation and entered into force in 1998.  In 2014, a new bilateral tax treaty was signed to implement the U.S. Foreign Asset Tax Compliance Act (FATCA).

As part of a broad set of tax increases, in 2018 the government raised, for the first time since 1993, the value added tax (VAT) by one percentage point to 15 percent.  Other fiscal measures intended to raise government revenues, such as no upward adjustments to personal income tax brackets to account for inflation, higher alcohol and tobacco excise duties, and an extra 29 cents per liter for gasoline and 30 cents per liter for diesel in fuel levies – are meant to generate an additional R15-billion (USD 1.1 billion) for the national coffers.  The tax increases come alongside government expenditure cuts primarily in government payroll compensation. Taken together, these interventions aim to stabilize public finances by 2023. According to Finance Minister Tito Mboweni, “It will not be easy. There are no quick fixes. But our nation is ready for renewal. We are ready to plant the seeds of our future.”

The South African Revenue Service (SARS) began collecting the health promotion levy – previously known as the sugar-sweetened beverages tax – in April 2018, almost one year after it was initially due to come into effect.  In February 2019, the Minister of Finance announced a five percent increase to this tax from 2.1 rand cents to 2.21 rand cents (USUSD 0.0015 to USD 0.0016) per gram of sugar content that exceeds 4 grams per 100 ml.  The tax, which applies to both domestic and international products, is meant to encourage the reduction in the consumption of sugar-sweetened beverages to deal with obesity and the epidemic of non-communicable diseases such as diabetes, which is cited as the second leading cause of death, after tuberculosis, among South Africans.  The Treasury argued that taxes on foods high in sugar can be an important element in a strategy to address diet-related diseases.

The South African Revenue Service will impose a carbon emissions tax from June 2019, based on an initial levy of R120 per ton of carbon dioxide equivalent (CO2e) of greenhouse gas emissions above certain tax-free allowances.

4. Industrial Policies

Investment Incentives

South Africa offers various investment incentives targeted at specific sectors or types of business activities. The dti has a number of incentive programs ranging from tax allowances to support in the automotive sector and helping innovation and technology companies to film and television production.

12I Tax Allowance: is designed to support new industrial projects that utilize only new and unused manufacturing assets and expansions or upgrades of existing industrial projects. The incentive offers support for both capital investment and training.  

Agro-Processing Support Scheme (APSS): aims to stimulate investment by South African agro-processing/beneficiation (agri-business) enterprises.  

Aquaculture Development and Enhancement Programme (ADEP): is available to South African registered entities engaged in primary, secondary, and ancillary aquaculture activities in both marine and freshwater classified under SIC 132 (fish hatcheries and fish farms) and SIC 301 and 3012 (production, processing and preserving of aquaculture fish).  

Automotive Investment Scheme (AIS): designed to grow and develop the automotive sector through investment in new and/ or replacement models and components that will increase plant production volumes, sustain employment and/ or strengthen the automotive value chain.  

Medium and Heavy Commercial Vehicles Automotive Investment Scheme (MHCV-AIS): is designed to grow and develop the automotive sector through investment in new and/or replacement models and components that will increase plant production volumes, sustain employment and/or strengthen the automotive value chain.  

People-carrier Automotive Investment Scheme (P-AIS): provides a non-taxable cash grant of between 20 percent and 35 percent of the value of qualifying investment in productive assets approved by the dti.  

Business Process Services (BPS): aims to attract investment and create employment opportunities in South Africa through offshoring activities.  

Capital Projects Feasibility Programme (CPFP): is a cost-sharing grant that contributes to the cost of feasibility studies likely to lead to projects that will increase local exports and stimulate the market for South African capital goods and services.  

Cluster Development Programme (CDP): aims to promote industrialization, sustainable economic growth and job creation needs of South Africa through cluster development and industrial parks.  

Critical Infrastructure Programme (CIP): aims to leverage investment by supporting infrastructure that is deemed to be critical, thus lowering the cost of doing business.  

Clothing and Textile Competitiveness Improvement Programme (CTCIP): aims to build capacity among manufacturers and in other areas of the apparel value chain in South Africa, to enable them to effectively supply their customers and compete on a global scale.  

Export Marketing and Investment Assistance (EMIA): develops export markets for South African products and services and recruits new foreign direct investment into the country. The purpose of the scheme is to partially compensate exporters for costs incurred with respect to activities aimed at developing an export market for South African product and services and to recruit new foreign direct investment into South Africa.  

Foreign Film and Television Production and Post-Production Incentive: to attract foreign-based film productions to shoot on location in South Africa and conduct post-production activities.  

Innovation and Technology Funding instruments: click on the link to see a graphic of the various funding instruments the government has made available.  

Manufacturing Competitiveness Enhancement Programme (MCEP): aims to encourage manufacturers to upgrade their production facilities in a manner that sustains employment and maximizes value-addition in the short to medium term.  Participants can also apply for incentives for energy efficiency and green economy incentives.  

Production Incentive (PI): forms part of the Clothing and Textile Competitiveness Program, and forms part of the customized sector program for the clothing, textiles, footwear, leather and leather goods industries.  

Sector-Specific Assistance Scheme (SSAS): is a reimbursable cost-sharing incentive scheme which grants financial support to organizations that support the development of industry sectors and those that contribute to the growth of South African exports.  

Shared Economic Infrastructure Facility (SEIF)contact the Department of Small Business Development on +27 861 843 384 (select option 2) or E-Mail: for more information.  

Support Programme for Industrial Innovation (SPII): is designed to promote technology development in South Africa’s industry, through the provision of financial assistance for the development of innovative products and/or processes. SPII is focused on the development phase, which begins when basic research concludes and ends at the point when a pre-production prototype has been produced.  

Strategic Partnership Programme (SPP)The SPP aims to develop and enhance the capacity of small and medium-sized enterprises to provide manufacturing and service support to large private sector enterprises.  

Workplace Challenge Programme (WPC): managed by Productivity South Africa, WPC aims to encourage and support negotiated workplace change towards enhancing productivity and world-class competitiveness, best operating practices, continuous improvement, lean manufacturing, while resulting in job creation.  

Foreign Trade Zones/Free Ports/Trade Facilitation

South Africa designated its first Industrial Development Zone (IDZ) in 2001. IDZs offer duty-free import of production-related materials and zero VAT on materials sourced from South Africa, along with the right to sell in South Africa upon payment of normal import duties on finished goods.  Expedited services and other logistical arrangements may be provided for small to medium-sized enterprises or for new foreign direct investment. Co-funding for infrastructure development is available from the dti. There are no exemptions from other laws or regulations, such as environmental and labor laws.  The Manufacturing Development Board licenses IDZ enterprises in collaboration with the South African Revenue Service (SARS), which handles IDZ customs matters. IDZ operators may be public, private, or a combination of both. There are currently five IDZs in South Africa: Coega IDZ, Richards Bay IDZ, Dube Trade Port, East London IDZ, and Saldanha Bay IDZ.  For more detailed information on IDZs in South Africa please see:  

In February 2014, the dti introduced a new Special Economic Zones (SEZs) Bill focused on industrial development. The SEZs encompass the IDZs but also provide scope for economic activity beyond export-driven industry to include innovation centers and regional development.  There are five SEZ in South Africa: Atlantis SEZ, Nkomazi SEZ, Maliti-A-Phofung SEZ, Musina/Makhado SEZ, and OR Tambo SEZ. The broader SEZ incentives strategy allows for 15 percent Corporate Tax as opposed to the current 28 percent, Building Tax Allowance, Employment Tax Incentive, Customs Controlled Area (VAT exemption and duty free), and Accelerated 12i Tax Allowance.

Performance and Data Localization Requirements

Employment and Investor Requirements

Foreign investors who establish a business or who invest in existing businesses in South Africa must show within twelve months of establishing the business that at least 60 percent of the total permanent staff are South African citizens or permanent residents.

The Broad-Based Black Economic Empowerment (B-BBEE) program measures employment equity, management control, and ownership by historically disadvantaged South Africans for companies which do business with the government or bid on government tenders.  Companies may consider the B-BBEE scores of their sub-contractors and suppliers, as their scores can sometimes contribute to or detract from the contracting company’s B-BBEE score.

A business visa is required for foreign investors who will establish a business or who will invest in an existing business in South Africa.  They are required to invest a prescribed financial capital contribution equivalent to R2.5million (USD 178 thousand) and have at least R5 million (USD 356 thousand) in cash and capital available.  These capital requirements may be reduced or waived if the investment qualifies under one of the following types of industries/businesses: information and communication technology; clothing and textile manufacturing; chemicals and bio-technology; agro-processing; metals and minerals refinement; automotive manufacturing; tourism; and crafts.

The documentation required for obtaining a business visa is onerous and includes, among other requirements, a letter of recommendation from the Department of Trade and Industry regarding the feasibility of the business and its contribution to the national interest, and various certificates issued by a chartered or professional South African accountant.

U.S. citizens have complained that the processes to apply for and renew visas and work permits are lengthy, confusing, and difficult.  Requirements frequently change mid-process, and there is little to no feedback about why an application might be considered incomplete or denied.  Many U.S. citizens use facilitation services to help navigate these processes.

Goods, Technology, and Data Treatment

The government does not require the use of domestic content in goods or technology.  The transfer of personal information about a subject to a third party who is in a foreign country is prohibited unless certain conditions are met.  These conditions are outlined in the Protection of Personal Information (PoPI) Act, which the government enacted in 2013 to regulate how personal information may be processed.  The conditions relate to: accountability, processing limitations, purpose specification, information quality, openness, security safeguards, and data subject participation. PoPI also created an Information Regulator (IR) to draft regulations and enforce them; the five member body that comprises the IR was established in 2018.  The IR released regulations on personal information processing in December 2018, but government was not clear if the one year grace period to begin implementation started from the date the regulations were published or from the date the IR is fully operational.

Investment Performance Requirements

There are no performance requirements on investments.

5. Protection of Property Rights

Real Property

The South African legal system protects and facilitates the acquisition and disposition of all property rights (e.g., land, buildings, and mortgages).  Deeds must be registered at the Deeds Office. Banks usually register mortgages as security when providing finance for the purchase of property.

South Africa ranks 106th of 190 countries in registering property according to the 2019 World Bank Doing Business report.

Intellectual Property Rights

South Africa has a strong legal structure and enforcement of intellectual property rights through civil and criminal procedures.  Criminal procedures are generally lengthy, so the customary route is through civil enforcement.  There are concerns about counterfeit consumer goods, illegal commercial photocopying, and software piracy.

Owners of patents and trademarks may license them locally, but when a patent license entails the payment of royalties to a non-resident licensor, the Department of Trade and Industry (the dti) must approve the royalty agreement.  Patents are granted for twenty years – usually with no option to renew. Trademarks are valid for an initial period of ten years, renewable for ten-year periods. The holder of a patent or trademark must pay an annual fee to preserve ownership rights.  All agreements relating to payment for the right to use know-how, patents, trademarks, copyrights, or other similar property are subject to approval by exchange control authorities in the SARB. A royalty of up to four percent is the standard approval for consumer goods, and up to six percent for intermediate and finished capital goods.

Literary, musical, and artistic works, as well as cinematographic films and sound recordings are eligible for copyright under the Copyright Act of 1978.  New designs may be registered under the Designs Act of 1967, which grants copyrights for five years. The Counterfeit Goods Act of 1997 provides additional protection to owners of trademarks, copyrights, and certain marks under the Merchandise Marks Act of 1941.  The Intellectual Property Laws Amendment Act of 1997 amended the Merchandise Marks Act of 1941, the Performers’ Protection Act of 1967, the Patents Act of 1978, the Copyright Act of 1978, the Trademarks Act of 1993, and the Designs Act of 1993 to bring South African intellectual property legislation fully into line with the WTO’s Trade-Related Aspects of Intellectual Property Rights Agreement (TRIPS).  Further Amendments to the Patents Act of 1978 also brought South Africa into line with TRIPS, to which South Africa became a party in 1999, and implemented the Patent Cooperation Treaty. The private sector and law enforcement cooperate extensively to stop the flow of counterfeit goods into the marketplace, and the private sector believes that South Africa has made significant progress in this regard since 2001.   Statistics on seizures are not available.

In an effort to modernize outdated copyright law to incorporate “digital age” advances, the dti introduced the latest draft of the Copyright Amendment Bill in May 2017.  The South African Parliament and the National Council of Provinces approved the Copyright Amendment Bill in March 2019 and sent the bill to the president for signature. As of mid-May 2019, the bill had not been signed.  Among the issues of concern to some private sector stakeholders is the introduction of the U.S. model of “fair use” for copyright exemptions without prescribing industry-specific circumstances where fair use will apply, creating uncertainty about copyrights enforcement.  Other concerns that stakeholders have include a clause which allows the Minister of Trade and Industry to set royalty rates for visual artistic works and impose compulsory contractual terms. The bill also limits the assignment of copyright to 25 years before it reverts back to the author.

The Performers’ Protection Amendment Bill seeks to address issues relating to the payment of royalties to performers; safeguarding the rights of contracting parties; and promotes performers’ moral and economic rights for performances in fixations (recordings).  Similar to the Copyright Amendment Bill, this bill gives the Minister of Trade and Industry authority to determine equitable remuneration for a performer and copyright owner for the direct or indirect use of a work. It also suggests that any agreement between the copyright owner and performer will only last for a period of 25 years and does not determine what happens after 25 years.  The bill also does not stipulate how it will address works with multiple performers, particularly how to resolve potential problems of hold-outs when contracts are renegotiated that could hinder the further exploitation of a work.

The dti released the final Intellectual Property Policy of the Republic of South Africa Phase 1  in June, 2018, that informs the government’s approach to intellectual property and existing laws.  Phase I focuses on the health space, particularly pharmaceuticals. The South African Government, led by the dti, held multiple rounds of public consultations since its introduction and the 2016 release of the IP Consultative Framework.

Among other things, the IP policy framework calls for South Africa to carry out substantive search and examination (SSE) on patent applications and to introduce a pre- and post-grant opposition system.  The dti repeatedly stressed its goal of creating the domestic capacity to understand and review patents, without having to rely on other countries’ examinations. U.S. companies working in South Africa have been generally supportive of the government’s goal; they are concerned, however, that the relatively low number of examiners currently on staff (20) to handle the proposed SSE process and the introduction of a pre-grant opposition system in South Africa could lead to significant delays of products to market.  The South African Government is working with international partners (including USPTO and the European Union) to provide accelerated training of their patent reviewers while also recruiting new staff.

The new IP policy framework also raises concerns around the threat of separate patentability criteria for medicines and a more liberalized compulsory licensing regime.  Stakeholders are calling for more concrete assurances that the use of compulsory licensing provisions will be as a last resort and applied in a manner consistent with WTO rules.  Industry sources report they are not aware of a single case of South Africa issuing a compulsory license.

South Africa is currently in the process of implementing the Madrid Protocol.  CIPC has completed drafting legislative amendments after consultations with stakeholders and the World Intellectual Property Organization (WIPO) on the implementation process in South Africa.  WIPO has conducted a number of missions to South Africa on this matter, the latest of which was in February 2018. South Africa has also engaged with national IP offices with similar trade mark legislation, such as New Zealand.

Resources for Rights Holders

Economic Officer covering IP issues:

Juan Manuel Cammarano
Trade and Investment Officer
+27(0)12 431-4343

For additional information about South Africa’s treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at  .  A list of attorneys for various South African districts can be found on the U.S. Mission Citizen Services page:

6. Financial Sector

Capital Markets and Portfolio Investment

South Africa recognizes the importance of foreign capital in financing persistent current account and budget deficits and openly courts foreign portfolio investment.  Authorities regularly meet with investors and encourage open discussion between investors and a wide range of private and public-sector stakeholders. The government enhanced efforts to attract and retain foreign investors.  President Cyril Ramaphosa hosted an investment conference in October 2018 and attended the World Economic Forum in Davos in January 2019 to promote South Africa as an investment destination. South Africa suffered a two-quarter technical recession in 2018 with economic growth registering only 0.8 percent for the entire year.

South Africa’s financial market is regarded as one of the most sophisticated among emerging markets.  A sound legal and regulatory framework governs financial institutions and transactions.

The fully independent South African Reserve Bank (SARB) regulates a wide range of commercial, retail and investment banking services according to international best practices, such as Basel III, and participates in international forums such as the Financial Stability Board and G-20 Finance Ministers and Central Bank Governors.  There are calls to “nationalize” the privately-held SARB, which would not change its constitutional mandate to maintain price stability. The Johannesburg Stock Exchange (JSE) serves as the front-line regulator for listed firms, but is supervised in these regulatory duties by the Financial Services Board (FSB). The FSB also oversees other non-banking financial services, including other collective investment schemes, retirement funds and a diversified insurance industry.  The South African government has committed to tabling a Twin Peaks regulatory architecture to provide a clear demarcation of supervisory responsibilities and consumer accountability and to consolidate banking and non-banking regulation in 2017.

South Africa has access to deep pools of capital from local and foreign investors which provide sufficient scope for entry and exit of large positions.  Financial sector assets amount to almost three times GDP, and the JSE is the largest on the continent with capitalization of approximately USD 900 billion and approximately 400 companies listed on the main, alternative and other smaller boards.  Non-bank financial institutions (NBFI) hold about two thirds of financial assets.  The liquidity and depth provided by NBFIs make these markets attractive to foreign investors, who hold more than a third of equities and government bonds, including sizeable positions in local-currency bonds. A well-developed derivative market and a currency that is widely traded as a proxy for emerging market risk allows investors considerable scope to hedge positions with interest rate and foreign exchange derivatives.

The SARB’s exchange control policies permit authorized currency dealers, normally one of the large commercial banks, to buy and borrow foreign currency freely on behalf of domestic and foreign clients.  The size of transactions is not limited, but dealers must report all transactions to SARB, regardless of size.  Non-residents may purchase securities without restriction and freely transfer capital in and out of South Africa.  Local individual and institutional investors are limited to holding 25 percent of their capital outside of South Africa. Given the recent exchange rate fluctuations, this requirement has entailed portfolio rebalancing and repatriation to meet the prescribed prudential limits.

Banks, NBFIs, and other financial intermediaries are skilled at assessing risk and allocating credit based on market conditions.  Foreign investors may borrow freely on the local market.  A large range of debt, equity and other credit instruments are available to foreign investors, and a host of well-known foreign and domestic service providers offer accounting, legal and consulting advice.  In recent years, the South African auditing profession has suffered significant reputational damage with the leadership of two large foreign firms being implicated in allegations of aiding and abetting irregular client management practices that were linked to the previous administration, or of delinquent oversight of listed client companies.  South Africa’s WEF competitiveness rating for auditing and reporting fell from number one in the world in 2016, to number 55 in 2018.

Money and Banking System

South African banks are well capitalized and comply with international banking standards. There are 19 registered banks in South Africa and 15 branches of foreign banks. Twenty-nine foreign banks have approved local representative offices. Five banks – Standard, ABSA, First Rand (FNB), Capitec, and Nedbank – dominate the sector, accounting for over 85 percent of the country’s banking assets, which total over USD 390 billion.  The SARB regulates the sector according to the Bank Act of 1990. There are three alternatives for foreign banks to establish local operations, all of which require SARB approval: separate company, branch, or representative office. The criteria for the registration of a foreign bank are the same as for domestic banks. Foreign banks must include additional information, such as holding company approval, a letter of “comfort and understanding” from the holding company, and a letter of no objection from the foreign bank’s home regulatory authority. More information on the banking industry may be obtained from the South African Banking Association at the following website:  .

The Financial Services Board (FSB) governs South Africa’s non-bank financial services industry (see website:  ).  The FSB regulates insurance companies, pension funds, unit trusts (i.e., mutual funds), participation bond schemes, portfolio management, and the financial markets.  The JSE Securities Exchange SA (JSE) is the nineteenth largest exchange in the world measured by market capitalization and enjoys the global reputation of being one of the best regulated.  Market capitalization stood at USD 900 billion as of November 2018, with 388 firms listed. The Bond Exchange of South Africa (BESA) is licensed under the Financial Markets Control Act. Membership includes banks, insurers, investors, stockbrokers, and independent intermediaries.  The exchange consists principally of bonds issued by government, state-owned enterprises, and private corporations. The JSE acquired BESA in 2009. More information on financial markets may be obtained from the JSE (website:  ).  Non-residents are allowed to finance 100 percent of their investment through local borrowing.  A finance ratio of 1:1 also applies to emigrants, the acquisition of residential properties by non-residents, and financial transactions such as portfolio investments, securities lending and hedging by non-residents.

Foreign Exchange and Remittances

Foreign Exchange

The South African Reserve Bank (SARB) Exchange Control Department administers foreign exchange policy.  An authorized foreign exchange dealer, normally one of the large commercial banks, must handle international commercial transactions and report every purchase of foreign exchange, irrespective of the amount.  Generally, there are only limited delays in the conversion and transfer of funds. Due to South Africa’s relatively closed exchange system, no private player, however large, can hedge large quantities of Rand for more than five years.

While non-residents may freely transfer capital in and out of South Africa, transactions must be reported to authorities.  Non-residents may purchase local securities without restriction. To facilitate repatriation of capital and profits, foreign investors should ensure an authorized dealer endorses their share certificates as “non-resident.”  Foreign investors should also be sure to maintain an accurate record of investment.

Remittance Policies

Subsidiaries and branches of foreign companies in South Africa are considered South African entities and are treated legally as South African companies.  As such, they are subject to exchange control by the SARB. South African companies may, as a general rule, freely remit the following to non-residents: repayment of capital investments; dividends and branch profits (provided such transfers are made out of trading profits and are financed without resorting to excessive local borrowing); interest payments (provided the rate is reasonable); and payment of royalties or similar fees for the use of know-how, patents, designs, trademarks or similar property (subject to prior approval of SARB authorities).

While South African companies may invest in other countries, SARB approval/notification is required for investments over R500 million (USD 43.5 million).  South African individuals may freely invest in foreign firms listed on South African stock exchanges. Individual South African taxpayers in good standing may make investments up to a total of R4 million (USD 340,000) in other countries.  As of 2010, South African banks are permitted to commit up to 25 percent of their capital in direct and indirect foreign liabilities. In addition, mutual and other investment funds can invest up to 25 percent of their retail assets in other countries.  Pension plans and insurance funds may invest 25 percent of their retail assets in other countries.

Before accepting or repaying a foreign loan, South African residents must obtain SARB approval.  The SARB must also approve the payment of royalties and license fees to non-residents when no local manufacturing is involved.  When local manufacturing is involved, the dti must approve the payment of royalties related to patents on manufacturing processes and products.  Upon proof of invoice, South African companies may pay fees for foreign management and other services provided such fees are not calculated as a percentage of sales, profits, purchases, or income.

Sovereign Wealth Funds

South Africa does not have a Sovereign Wealth Fund.

7. State-Owned Enterprises

State-owned enterprises (SOEs) play a significant role in the South African economy.  In key sectors such as electricity, transport (air, rail, freight and pipelines), and telecommunications, SOEs play a lead role, often defined by law, although limited competition is allowed in some sectors (e.g., telecommunications and air).  The government’s interest in these sectors often competes with and discourages foreign investment.  South Africa’s overall fixed investment was 19 percent of GDP.  The SOEs share of the investment was 21 percent while private enterprise contributed 63 percent (government spending made up the remainder of 16 percent).  The IMF estimates that the debt of the SOEs would add 13.5 percent to the overall national debt.

The Department of Public Enterprises (DPE) has oversight responsibility in full or in part for seven of the approximately 700 SOEs that exist at the national, provincial and local levels:  Alexkor (diamonds); Denel (military equipment); Eskom (electricity generation, transmission and distribution); South African Express and Mango (budget airlines); South African Airways (national carrier); South African Forestry Company (SAFCOL – (forestry); and Transnet (transportation).   These seven SOEs employ approximately 105,000 people.  For other national-level SOEs, the appropriate cabinet minister acts as shareholder on behalf of the state. The Department of Transport, for example, has oversight of the state-owned South African National Roads Agency (SANRAL), Passenger Rail Agency of South Africa (PRASA), and Airports Company South Africa (ACSA), which operates nine of South Africa’s airports. The Department of Communications has oversight of the South African Broadcasting Corporation (SABC). The National Treasury assumed control of South African Airways (SAA) in 2014 through 2018, but SAA has since returned to the DPE. .

Combined, South Africa’s SOEs that fall under DPE’s authority posted a loss of R15.5 billion (USD 1.3 billion) in the 2017/2018 financial year.  In recent years many have been plagued by mismanagement and corruption, and repeated government bailouts have exposed the public sector’s balance sheet to sizable contingent liabilities.  The election of President Cyril Ramaphosa and appointment of Minister of Public Enterprises Pravin Gordhan signaled a renewed emphasis on improving SOE governance and performance.

The state-owned electricity giant Eskom generates approximately 95 percent of the electricity used in South Africa.  Coal-fired power stations generate approximately 93 percent of Eskom’s electricity.  Eskom’s core business activities are generation, transmission, trading and distribution.  South Africa’s electricity system operates under strain because of low availability factors for base load generation capacity due to maintenance problems.  The electricity grid’s capacity reserve margins frequently fall under two percent, well below international norms.  Beginning in November 2013, Eskom periodically declared “electricity emergencies,” and asked major industrial users to reduce consumption by ten percent for specified periods (usually one to two days).   To meet rising electricity demand, Eskom is building new power stations (including two of the world’s largest coal-fired power stations, but both are years overdue and over budget).  Eskom and independent industry analysts anticipate South Africa’s electricity grid will remain constrained for at least the next several years.  The South African government has implemented a renewable energy independent power producer procurement program (REIPPP) that in the past three years has added 1500Mw of a planned 3900Mw of renewable energy production to the grid and recently signed 27 Independent Power Producer agreements to provide an additional 2,300 MW to the grid.  In February 2018, S&P announced that it “lowered its long-term foreign and local currency issuer credit ratings on South Africa-owned utility ESKOM Holdings SOC Ltd. to ‘CCC+’ from ‘B-‘.

Transnet National Ports Authority (TNPA), the monopoly responsible for South Africa’s ports, charges some of the highest shipping fees in the world.  In March 2014, Transnet announced an average overall tariff increase of 8.5 percent at its ports to finance a USD 240 million modernization effort.  High tariffs on containers subsidize bulk shipments of coal and iron ore, thereby favoring the export of raw materials over finished ones.  According to the South African Ports Regulator, raw materials exporters paid as much as one quarter less than exporters of finished products.  TNPA is a division of Transnet, a state-owned company that manages the country’s port, rail and pipeline networks.  In April 2012, Transnet launched its Market Driven Strategy (MDS), a R336 billion (USD 28 billion) investment program to modernize its port and rail infrastructure.  Transnet’s March 2014 selection of four OEMs to manufacture 1064 locomotives is part of the MDS.  This CAPEX is being 2/3 funded by operating profits with the remainder from the international capital markets.  In 2016, Transnet reported it had invested R124 billion (USD 10.3 billion) in the previous four years in rail, ports, and pipeline infrastructure.  In recent years ratings agencies have downgraded Transnet’s rating to below the investment-grade threshold.  In November 2017 S&P downgraded Transnet’s local currency rating from BBB- to BB+.

Direct aviation links between the United States and South Africa are limited to flights between Atlanta, New York (JFK), and Washington (Dulles) to Johannesburg.  The growth of low-cost carriers in South Africa has reduced domestic airfares, but private carriers are likely to struggle against national carriers without further air liberalization in the region and in Africa.  The launch of the Single African Air Transport Market, which is composed of 23 African Union member states including South Africa, in January 2018 demonstrates the potential for further cooperation on the continent.  In South Africa, the state-owned carrier, South African Airways (SAA), relies on the government for financial assistance to stay afloat and received back-to-back bailouts of R5 billion (USD 357 million) in 2018 alone to repay creditors.  New management at SAA, including a new board and CEO offer some hope that SAA will implement its turnaround plan, but the airline has a long journey to recover from mismanagement and six consecutive years of losses. The new management has requested a R21.7 billion (USD 1.55 billion) bailout from government over three years to turn the company around. During fiscal year 2017/2018, SAA lost R5.7 billion (USD 407 million) bringing the company’s cumulative losses since 2011 to a total of R23 billion (USD 1.65 billion).

The telecommunications sector in South Africa, while advanced for the continent, is hampered by regulatory uncertainty and poor implementation of the digital migration, both of which contribute to the high cost of data.  In 2006, South Africa agreed to meet an International Telecommunication Union deadline to achieve analogue-to-digital migration by June 1, 2015.  As of April 2019, South Africa has initiated but not completed the migration.  Until this process is finalized, South Africa will not be able to allocate the spectrum freed up by the conversion.  Many of the issues stemmed from the confusion and infighting caused by the 2014 split of the Department of Communications into two departments—the Department of Communications (DOC) and the Department of Telecommunications and Postal Services (DTPS). In November 2018, the Ramaphosa administration announced their re-incorporation into a single Department of Communications to take effect after the May 2019 elections.

In October 2016, DTPS released a policy paper addressing the planned course of action to realize the potential of the ICT sector.  The paper advocates for open access requirements that could overhaul how telecommunications firms gain access to and use infrastructure.  It also proposes assigning all high-demand spectrum to a Wireless Open Access Network.  Some stakeholders, including state-owned telecommunications firm Telkom, agree with the general approach.  Others, including the major private sector mobile carriers, feel the interventions would curb investment while doing little to facilitate digital access and inclusion.  In November 2017, DTPS published a draft Electronic Communications Amendment Bill that would implement the ICT White Paper, but the Minister of Communications withdrew the bill in February 2019.  Private industry and civil society had criticized the reach of the bill. The Minister stated that the DoC would consult with relevant stakeholders to re-draft the bill before submitting it to Parliament.

Privatization Program

Although in 2015 and 2016 senior government leaders discussed allowing private-sector investment into some of the more than 700 SOEs and a recently released report of a presidential review commission on SOE that called for rationalization of SOEs, the government has not taken any concrete action to enable this.  The CEO of SAA has stated that a fund-raising plan to sell a stake in SAA to an equity partner will be shelved until the airline can shore up its balance sheet. He announced the restructuring of the national carrier into three segments: international, regional, and domestic, but he has not articulated how that would occur in practice.

Other candidates for unbundling of SOEs / privatization are ESKOM and defense contractor Denel.

8. Responsible Business Conduct

Responsible Business Conduct (RBC), is well-developed in South Africa, and is driven in part by the recognition that the private sector has an important role to play.  The socio-economic development element of B-BBEE has formalized and increased RBC in South Africa, as firms have largely aligned their RBC activities to the element’s performance requirements.  The 2013 amendment’s compliance target is one percent of net profit after tax spent on RBC, and at least 75 percent of the RBC activity must benefit historically disadvantaged South Africans referred to the B-BBEE act as black people, which includes South Africans of black, colored, Chinese and Indian descent.  Most RBC is directed towards non-profit organizations involved in education, social and community development, and health.

The South African mining sector follows the rule of law and encourages adherence to the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Afflicted and High-Risk Areas.  For example South Africa is a founding member of the Kimberley Process Certification Scheme (KPCS), the process established in 2000 to prevent conflict diamonds from entering the mainstream rough diamond market. The Kimberley Process is designed to ensure that diamond purchases do not finance violence by rebel movements and their allies seeking to undermine legitimate governments.

South Africa does not participate in the Extractive Industries Transparency Initiative (EITI). South African mining, labor and security legislation seek to speak to the values as embodied by Voluntary Principles on Security and Human Rights.

South African mining laws and regulations allow for the accounting of all revenues from the extractive sector in the form of mining taxes, royalties, fees, dividends and duties.  The reporting and accounting of all revenues from the extractive sector is done through Parliament by such institutions as the Auditor General and the National Treasury budgetary processes and the results are publicly available. There is a sizeable illicit mining sector in South Africa, mostly in decommissioned gold mines.

9. Corruption

South Africa has a robust anti-corruption framework, but laws are inadequately enforced and accountability in public sectors tends to be low. The law provides for criminal penalties for conviction of official corruption, and the government continued efforts to curb corruption, but officials sometimes engaged in corrupt practices with impunity.

High-level political interference has undermined the ability of the country’s National Prosecuting Authority (NPA) – constitutionally responsible for all prosecutions – to pursue criminal proceedings and enforce accountability.  After an unprecedented consultative process, President Ramaphosa appointed Shamila Batohi as the National Director of Public Prosecutions (NDPP) in December 2018, and he created an Investigative Directorate within her office in March 2019 to focus on the significant number of cases emanating from ongoing corruption investigations.  The Constitutional Court ruled in August 2018 that Zuma’s appointment of Shaun Abrahams as the former NDPP was invalid and ordered President Ramaphosa to replace Abrahams within 90 days. Widely praised by civil society, the court also ordered former NDPP Mxolisi Nxasana to repay a “golden handshake” (an illegal departure bonus) of 10.2 million rand (USD 788,000) he received when Zuma replaced him with Abrahams in 2015.

The Department of Public Service and Administration formally coordinates government initiatives against corruption, and the “Hawks” – South Africa’s Directorate for Priority Crime Investigations – focuses on organized crime, economic crimes, and corruption.  In 2018, the Office of the Public Protector, a constitutionally mandated body designed to investigate government abuse and mismanagement, investigated thousands of cases, some of which involved high-level officials. The public and NGOs considered the Office of the Public Protector independent and effective, despite limited funding.  According to the NPA’s 2017-2018 Annual Report, it recovered 410,000 rand (USD 31,700) from government officials involved in corruption, a 92-percent decrease from the previous year.  Courts convicted 213 government officials of corruption.

The Prevention and Combating of Corrupt Activities Act (PCCA) officially criminalizes corruption in public and private sectors and codifies specific offenses (such as extortion and money laundering), making it easier for courts to enforce the legislation.  Applying to both domestic and foreign organizations doing business in the country, the PCCA covers receiving or offering bribes, influencing witnesses and tampering with evidence in ongoing investigations, obstruction of justice, contracts, procuring and withdrawal of tenders, and conflict of interests, among other areas.  Inconsistently implemented, the PCCA does not include any protectionary measures for whistleblowers.  Complementary acts – such as the Promotion of Access to Information Act and the Public Finance Management Act – calls for increased access to public information and review of government expenditures.

“State capture” – the popular term used to describe systemic corruption of the state’s decision-making processes by private interests – has become synonymous with the administration of former president Jacob Zuma.  In response to widespread calls for accountability, President Cyril Ramaphosa has denounced corruption since assuming office in February 2018. He has vowed to tackle the scourge at all levels of government, including through proposed lifestyle audits of officials to expose bribery, corruption, and public tender irregularities.  He has also launched four separate judicial commissions of inquiry to investigate corruption, fraud, and maladministration, including in the Public Investment Corporation, South African Revenue Service, National Prosecuting Authority, and writ large across the government. These commissions have revealed pervasive networks of criminality across all levels of the municipal, provincial, and national government.  Numerous former senior officials had already testified before the commission; a number of them directly implicated former president Jacob Zuma in corruption cases.

Corruption charges were reinstated against Zuma in 2018 related to a USD 2.5-billion arms deal in the late 1990s.  The Zuma-linked Gupta family, which owns interests in multiple industries from computer services to mining, has also been placed under investigation and its assets frozen while the state investigates allegations of state capture, bribery, and the siphoning off of public funds meant for small-holder farmers.  These and other ongoing efforts are meant to rebuild the public’s trust in government and to foment transparency and predictability in the business environment in order to woo investors.

UN Anticorruption Convention, OECD Convention on Combatting Bribery

South Africa signed the Anticorruption Convention on 9 Dec 2003 and ratified it on 22 Nov 2004.  South Africa also signed the OECD Convention on Combatting Bribery in 2007, with implementing legislation dating from 2004.

South Africa is also a party to the SADC Protocol Against Corruption, which promotes the development of mechanisms needed to prevent, detect, punish and eradicate corruption in the public and private sector.  The protocol also seeks to facilitate and regulate cooperation in matters of corruption amongst Member States and foster development and harmonization of policies and domestic legislation related to corruption.  The Protocol defines ‘acts of corruption,’ preventative measures, jurisdiction of Member States, as well as extradition. 

Resources to Report Corruption

To report corruption to the government:

Advocate Busisiwe Mkhwebane
Public Protector
Office of the Public Protector, South Africa
175 Lunnon Street, Hillcrest Office Park, Pretoria 0083

Anti-Corruption Hotline: +27 80 011 2040 or +27 12 366 7000   or

Or for a non-government agency:

David Lewis
Executive Director
Corruption Watch
87 De Korte Street, Braamfontein/Johannesburg 2001
+27 80 002 3456 or +27 11 242 3900

10. Political and Security Environment

South Africa has a history of politically-motivated violence and civil disturbance.  Violent protests, often by residents in poor communities against the lack of effective government service delivery, are common.  Killings of, and by, mostly low-level political and organized crime rivals take place on a regular basis.  Still, South Africa enjoys strong, democratic political institutions and the overall political environment is stable and secure.

In May 2018, President Cyril Ramaphosa set up an inter-ministerial committee in the security cluster to serve as a national task force on political killings.  The task force includes the Police Minister‚ State Security Minister‚ Justice Minister‚ National Prosecuting Authority, and the National Police Commissioner.  The task force ordered multiple arrests, including of high profile officials, in what appears to be a crackdown on political killings.

There is suspicion that criminal threats have been used to resolve business disputes. There was one known incident in 2018 when two expat employees of a U.S. company managing an ongoing construction project received threats to leave the country.  The threats escalated to mention the expats’ families as targets, and the company evacuated them from South Africa. Subcontractors accused of using substandard construction materials were suspected. There were no reports of physical damage at the project.

Labor unrest in one part of South Africa has caused damage to property and halted operations to a U.S. company operating in an industrial zone.  In this case, the U.S. company was targeted as a single employer by strikes and labor unrest on what was a national bargaining council issue.

11. Labor Policies and Practices

Since 1994, the South African government has replaced apartheid-era labor legislation with policies that emphasize employment security, fair wages, and decent working conditions.  Under the aegis of the National Economic Development and Labor Council (NEDLAC), government, business, and organized labor are to negotiate all labor laws, with the exception of laws pertaining to occupational health and safety.  The South African Constitution and South African laws allows workers to form or join trade unions without previous authorization or excessive requirements. Labor unions that meet a locally negotiated minimum threshold of representation (often, 50 percent plus one union member) are entitled to represent the entire workplace in negotiations with management.  As the majority union or representative union, they may also extract agency fees from non-union members present in the workplace. In some workplaces and job sectors, this financial incentive has encouraged inter-union rivalries, including intimidation and violence, as unions compete for the maximum share of employees in seeking the status of representative union.

In February 2019, South Africa reported a year-on-year unemployment rate increase of 0.4 percentage point to 27.1 percent.  However, labor force participation increased by 0.6 percentage points to 59.4 percent from 58.8 percent in 2018. The youth unemployment (ages 15-24) rate has hovered at or just over 50 percent since 2015.  Approximately 3.2 million (31.1 percent) of the 10.3 million of these South Africans were not in employment, education, or training. On a quarterly basis, employment in the formal sector increased in all industries with the exception of professional employment and skilled agriculture.

There are 205 trade unions registered with the Department of Labor as of February 2019, up from 190 the prior year, but down from the 2002 high of 504.  According to the 2018 Fourth Quarter Labor Force Survey (QLFS) report from Statistics South Africa (StatsSA), 4.04 million workers belonged to a union, an increase of 511,000 from the fourth quarter of 2017.  Department of Labor statistics indicate union density declined from 45.2 percent in 1997 to 24.7 percent in 2014, the most recent data available. Using StatsSA data, however, union density can be calculated: The February 2019 QLFS reported 4.041 million union members and 13.992 million employees, for a union density of 28.9 percent.

The right to strike is protected under South Africa’s constitution and laws.  The law allows workers to strike due to matters of mutual interest, such as wages, benefits, organizational rights disputes, socioeconomic interests of workers, and similar measures. Workers may not strike because of disputes where other legal recourse exists, such as through arbitration. Although the number of workdays lost to strikes jumped from 480,000 in 2017 to 1.95 million in 2018, the figure remains low in comparison to the 2005-2014 period in which every year but one (2008) saw lost workdays total at least 2.3 million.  Long-running strikes in the plastics and mining sector accounted for the 2018 increase. Strikes in 2018 were triggered almost exclusively (96 percent of strikes) by wages and grievances. The health and education sectors saw the most strikes in 2018, followed by miners and municipal sector workers. Due to long-running strikes in the plastics and mining sectors, these industries saw the most work days lost to strikes in 2018.

Layoffs and retrenchments are permitted for economic reasons, but they are subject to a statutory process requiring consultations between employers and labor unions in an effort to reach consensus.

Employers and employees are each required to pay one percent of workers’ wages to the national unemployment fund.  The fund pays benefits based on reverse sliding scale of the prior salary, up to 58 percent of the prior wage, for up to 34 weeks.

There are robust labor dispute resolution institutions in South Africa, including the Commission for Conciliation, Mediation and Arbitration (CCMA), the bargaining councils, and specialized labor courts of both first instance and appellate jurisdiction.

Improved labor stability is essential for South Africa’s economic stability and development and vital to the country’s ability to continue to attract and retain foreign investment.  The government of South Africa does not waive labor laws to attract or retain investment.

Collective bargaining is a cornerstone of the current labor relations framework.  As of February 2019, the South Africa Department of Labor listed 39 private sector bargaining councils through which parties negotiate wages and conditions of employment.  Per the Labor Relations Act, the Minister of Labor must extend agreements reached in bargaining councils to non-parties of the agreement operating in the same sector. Employer federations, particularly those representing small and medium enterprises (SMEs) argue the extension of these agreements – often reached between unions and big business – negatively impacts SMEs that cannot afford to pay higher wages.  In 2018, the average wage settlement resulted in a 7.2 percent wage increase, on average 2.6 percent above the increase in South Africa’s consumer price index and down slightly from the average increase of 7.6 percent in 2017.

Major labor legislation includes:

As of January 1, 2019, South Africa has a national minimum wage of R20/hour, with lower rates for domestic (R16/hour) and agricultural (R 18/hour) workers.  This rate is subject to annual increases as suggested by the 13-member National Minimum Wage Commission and as approved by parliament and signed by the president.

In November 2018, President Ramaphosa signed an amendment to the Basic Conditions of Employment Act which provides benefits to new parents.  Fathers may now claim ten days of paternity leave, whereas adoptive parents and commissioning parents in a surrogate motherhood agreement may now claim ten weeks of leave.  South Africa’s Unemployment Fund funds this leave at the same rate for unemployment claims (see above) and not at the claiming employee’s wage rate.

The Labor Relations Act (LRA), in effect since 1995 with amendments made in 2014, provides fair dismissal guidelines, dispute resolution mechanisms, and retrenchment guidelines stating employers must consider alternatives to retrenchment and must consult all relevant parties when considering possible layoffs.  The Act enshrines the right of workers to strike and of management to lock out striking workers. The Act created the Commission on Conciliation, Mediation, and Arbitration (CCMA), which can conciliate, mediate, and arbitrate in cases of labor disputes, and is required to certify an impasse in bargaining council negotiations before a strike can be called legally.  The CCMA’s caseload currently exceeds what was anticipated; the South African Government provided the CCMA an additional USD 60 million to handle its caseload and any possible increase caused by the 2014 amendments to the LRA. Amendments to the LRA modify the regulation of temporary employment service firms, extend organizational rights to workplaces with a majority of temporary or fixed term contract workers, reduces the maximum period of temporary or fixed term contract employment to three months, establishes joint liability by temporary employment services and their clients for contraventions of employment law, and strengthens other protections for temporary or contract workers.

The Basic Conditions of Employment Act (BCEA), implemented in 1997 and amended in 2014, establishes a 45-hour workweek, standardizes time-and-a-half pay for overtime, and authorizes four months of maternity leave for women. No employer may require or permit an employee to work overtime except by agreement, and overtime may not be more than 10 hours a week. The law stipulates rest periods of 12 consecutive hours daily and 36 hours weekly and must include Sunday. The law allows adjustments to rest periods by mutual agreement. A ministerial determination exempted businesses employing fewer than 10 persons from certain provisions of the law concerning overtime and leave.  Farmers and other employers can apply for variances from the law by showing good cause. The law applies to all workers, including workers in informal sectors, foreign nationals, and migrant workers, but the government did not prioritize labor protections for workers in the informal economy. The law prohibits employment of children under age 15 and prohibits anyone from requiring or permitting a child under age 15 to work. The law allows children under age 15 to work in the performing arts, but only if their employers receive permission from the Department of Labor and agree to follow specific guidelines. Amendments made in 2014 clarify the definitions of employment, employers, and employees to reflect international labor conventions, closing a loophole that previously existed in South African law between the LRA and the BCEA.  The Act gives the Minister of Labor the power to set sectoral minimum wages and annual minimum wage increases for employees not covered by sectoral minimum wage agreements.

The Employment Equity Act of 1998 (EEA), amended in 2014, protects all workers against unfair discrimination on the grounds of race, age, gender, religion, marital status, pregnancy, family responsibility, ethnic or social origin, color, sexual orientation, disability, conscience, belief, political, opinion, culture, language, HIV status, birth, or any other arbitrary ground. The EEA further requires large- and medium-sized companies to prepare employment equity plans to ensure that historically disadvantaged South Africans, such as Blacks, South Asians, and Coloreds, as well as women and disabled persons, are adequately represented in the workforce.  The EEA amendments increase fines for non-compliance with employment equity measures and have a new provision of equal pay for work of equal value. The Act prohibits the use of foreign nationals to meet employers’ affirmative action targets and relaxes the standards for parties in labor disputes to access the CCMA instead of going directly to the Labor Court.

More information regarding South African labor legislation can be found at:  

12. OPIC and Other Investment Insurance Programs

The Overseas Private Investment Corporation (OPIC) has an approximately USD 1.2 billion portfolio in South Africa.  Since a 1993 agreement to facilitate OPIC programs, OPIC has invested in a number of funds supporting sub-Saharan Africa development, including the Africa Catalyst Fund (USD 300 million focused on small- and medium-sized enterprise development), Africa Healthcare Fund (USD 100 million focused on private healthcare delivery businesses), and ECP Africa Fund II, (USD 523 million, focused on telecommunications, oil and gas, power, transportation, agribusiness, media, financial services and manufacturing).  Tailored products to support clean and renewable energy are a particular focus. OPIC opened an office in Johannesburg in 2013 to support investment to key African countries through its financing and risk mitigation instruments. Additional information on OPIC programs that involve South Africa may be found on OPIC’s website:  

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy

Host Country Statistical Source* USG or International Statistical Source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount
Host Country Gross Domestic Product (GDP) ($M USD) 2018 $368,500 2017 $348,872   
Foreign Direct Investment Host Country Statistical Source* USG or International Statistical Source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) 2016 $9,578 2017 $7,334 BEA 
Host country’s FDI in the United States ($M USD, stock positions) 2016 $6,683 2017 $4,117 BEA 
Total inbound stock of FDI as % host GDP 2016 43.1% 2017 47.2% UNCTAD

* Statistics South Africa (STATS SA)

Table 3: Sources and Destination of FDI

Direct Investment from/in Counterpart Economy Data
From Top Five Sources/To Top Five Destinations (US Dollars, Millions)
Inward Direct Investment Outward Direct Investment
Total Inward $156,103 100% Total Outward $276,450 100%
United Kingdom $64,505 41.3% China $165,477 59.9%
Netherlands $28,075 18% United Kingdom $24,334 8.8%
United States $10,459 6.7% Mauritius $11,422 4.1%
Germany $7,623 4.9% Australia $8,840 3.2%
China $7,290 4.7% United States $7,872 2.8%
“0” reflects amounts rounded to +/- USD 500,000.

Table 4: Sources of Portfolio Investment

Portfolio Investment Assets
Top Five Partners (Millions, US Dollars)
Total Equity Securities Total Debt Securities
All Countries $167,005  100% All Countries $157,749 100% All Countries $9,255 100%
United Kingdom $61,226 36.7% United Kingdom $59,434 37.7% United States $2,169 23.4%
Ireland $26,485 15.8% Ireland $24,926 15.8% United Kingdom $1,792 19.4%
United States $20,676 12.4% United States $18,507 11.7% Ireland $1,559 16.8%
Luxembourg $15,761 9.4% Luxembourg $15,153 9.6% Italy $691 7.5%
Bermuda $9,491 5.7% Bermuda $9,491 6.0% Luxembourg $609 6.6%

14. Contact for More Information

Juan Manuel Cammarano
Trade and Investment Officer
877 Pretorius Street
Arcadia, Pretoria 0083
+27 (0)12-431-4343