South Africa Country Commercial Guide
Learn about the market conditions, opportunities, regulations, and business conditions in South Africa, prepared by at U.S. Embassies worldwide by Commerce Department, State Department and other U.S. agencies’ professionals.
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Investment Climate Statement
Last published date:

The U.S. Department of State’s Investment Climate Statements help U.S. companies make informed business decisions by providing up-to-date information on the investment climates of more than 170 countries and economies. They are prepared by our embassies and consulates around the world and analyze each economy’s openness to foreign investment. Topics include:
 

  • Openness to, and Restrictions upon, Foreign Investment, 
  • Investment and Taxation Treaties,
  • Legal Regime,
  • Industrial Policies,
  • Protection of Property Rights,
  • Financial Sector,
  • State-owned Enterprises,
  • Corruption,
  • Labor Policies and Practices,
  • Political and Security Environment, and
  • U.S. International Development Finance Corporation (DFC) and Other Investment Insurance or Development Finance Programs


Each statement provides a starting point for U.S. firms and offers a point of contact at the relevant U.S. embassy or consulate abroad.

These reports are also a resource for foreign governments to create business environments that ensure fair treatment for the United States and our companies and investors. 

To access the full Investment Climate Statement, visit the U.S. Department of State Investment Climate Statements website.

Executive Summary - South Africa 

South Africa is the most advanced and industrialized economy in Sub-Saharan Africa. Key enablers of the investment climate include:

  • relatively stable institutions,
  • an independent judiciary and robust legal sector that respects the rule of law,
  • a free press, a mature financial and services sector, and experienced local partners enabling U.S. investment.

South Africa remains a hub for regional investment. Key factors attracting U.S. investment include:

South Africa’s deep and well-regulated capital markets,

  • its position as a regional hub for trade and investment across Southern Africa,
  • its comparative strengths in some industrialized and manufacturing sectors, and
  • the strength of its legal system.

However, South Africa continues to suffer the effects of a “lost decade” in which economic growth stagnated, largely due to corruption and economic mismanagement, and a slow economic rebound after COVID-19 amid endemic logistics and energy crises. Other challenges include:

  • policy uncertainty,
  • lack of regulatory oversight and enforcement,
  • a tight fiscal position,
  • corruption,
  • violent crime,
  • lack of basic infrastructure and government service delivery, and
  • shortages of skilled labor.

Following national elections in May 2024, in which no party earned a majority of the vote, South Africa formed a ten-party coalition government in July 2024 referred to as the Government of National Unity (GNU). While the parties of the GNU contain a range of political views, the GNU government set goals to:

  • rebuild economic growth,
  • increase public investment, and
  • address the government’s persistent failures in logistics and service delivery.

Consequently, the stability of the GNU has been a key driver of positive investor sentiment. The enactment of policies and laws that threaten property rights and failure of the GNU, one year into its term, to implement market-driven economic reforms remain a top concern for businesses and investors.

In December 2024, President Cyril Ramaphosa signed the Expropriation Act of 2024 into law. The Act replaces the Expropriation Act of 1975 (enacted during the apartheid era) to create a single framework for state expropriation of property. The new law provides for a “just and equitable” compensation standard outlined in the Constitution, in lieu of expropriation based on market-rate compensation. The Act provides for circumstances where land may be expropriated without compensation, referred to as “nil compensation” under the law. The procedural uncertainty around the new expropriation powers, along with incendiary rhetoric by certain political parties encouraging illegal expropriation of land and farm violence, threaten the security of property rights for landowners and investors.

Laws, policies, and reforms seek “economic transformation” to accelerate the participation of and opportunities for South Africans disadvantaged under apartheid. U.S. companies and investors have noted challenges in navigating the implementation and regulatory impacts of such policies, particularly to obtain government contracts or conclude mergers and acquisitions. 

Other Government of South Africa initiatives to accelerate transformation include labor laws that require proportional representation in workplaces and prescriptive government procurement requirements such as equity ownership and employment thresholds for South Africans categorized as historically disadvantaged. The Government of South Africa also aims to promote greater industrialization and localization, often employing tariffs and other trade measures that support domestic industry at the expense of U.S. exporters.

On October 24, 2025, the Financial Action Task Force (FATF) removed South Africa from its list, acknowledging significant improvements in the country’s Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) measures. The decision is expected to reduce perceived market risk, ease cross-border payments, and strengthen overall business confidence.

South Africa depends on aging coal-fired power plants to provide more than 70 percent of its electricity. Decades of deferred maintenance, corruption, sabotage, and physical theft of infrastructure resulted in severe scheduled nationwide rolling blackouts, known locally as load shedding. Electricity demand reduction, driven by an estimated 6 GW of behind-the-meter solar installations, and a marked improvement in the performance of state-owned utility Eskom’s coal fleet enabled a 10-month reprieve from load shedding throughout much of 2024. 

However, in the first three months of 2025, Eskom had to implement load shedding four times due to unplanned breakdowns in the coal fleet and depleted emergency hydro and diesel reserves. The government has published draft regulations to allow private sector participation in transmission grid projects, with the aim to release tenders for seven corridors by the end of 2025.

To access the South Africa ICS, visit the U.S. Department of Department of State’s Investment Climate Statement website.

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