Red tape cut for companies doing business on continent

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IOL pic feb27 pravin gordhan budget speech 2014 Reuters Finance Minister Pravin Gordhan delivers his 2014 Budget speech in Parliament in Cape Town on February 26, 2014. South Africa cut this year's growth forecast to 2.7 percent, saying deep challenges persisted after a 2009 recession. Picture: Mike Hutchings

Restrictions on companies doing business in the rest of Africa would be relaxed to encourage trade and investment with a region that was expected to grow more than 6 percent this year, Pravin Gordhan announced yesterday.

The government was taking steps to create “a simplified tax and foreign exchange framework for companies that trade with Africa”, the finance minister said in his Budget speech.

South Africa invests about R36 billion a year into the rest of the continent, which accounted for 29 percent of its exports last year, official data show.

A concession announced last year that enabled JSE-listed companies to create a holding company to house their African and offshore operations would be extended to other firms. Limits on the amounts that listed companies could invest in Africa without prior approval would be increased from R750 million to R2 billion, or a maximum of 25 percent of their market value, National Treasury deputy director-general Ismail Momoniat said.

The Treasury said unlisted technology, media, telecommunications and other research and development companies would be allowed to list offshore, provided they remained incorporated, managed and controlled from South Africa. The companies would be required to have a secondary listing in South Africa within two years of listing offshore. – Bloomberg

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