Gateway to Africa reforms extended to Brics nations

Wednesday, February 27, 2013

Cape Town – Foreign companies that are based in South Africa and that are keen on investing in countries outside of Africa – including in Bric (Brazil, Russia, India and China) members, will be able to benefit from relaxed cross-border financial regulations and tax requirements, the Minister of Finance Pravin Gordhan announced today.

In the Budget Speech Gordhan said the outward investment reforms that apply as part of the Gateway to Africa reforms will also apply to those companies seeking to invest in countries outside of Africa, including Bric countries.

These reforms include the relaxation of cross-border financial regulations and tax requirements on companies and making it easier for banks and other financial institutions to invest and operate in other countries.

Gordhan said Africa now accounts for 18 percent of South Africa’s exports – including nearly a quarter of its manufactured exports.

He said over the past five years the Reserve Bank has approved over 1 000 large investments into 36 African countries.

South Africa is also helping to fund several development projects in the region, with the Development Bank of SA (DBSA) accelerating investment into neighbouring countries particularly in the field of electricity generation and transmission and roads.

Added to this the Industrial Development Corporation (IDC) last year funded 41 projects in 17 countries to the tune of R6.2 billion.

Most of these projects were in industrial infrastructure, agro-processing and tourism.

Eskom is now considering investing in several regional generation and transmission projects, Gordhan said.

Gordhan said there is a proposal to pool Brics member countries foreign exchange reserves with the idea of using this to support one another in times of balance of payments or currency crisis.

Brazil, Russia, India, China and South Africa - the grouping of emerging economies - collectively hold reserves of $4.5 trillion.

He said work is underway to create a trade and development insurance risk pool, with the aim of setting up a sustainable and alternative insurance and reinsurance networks for Brics members. –