South Africa remains one of the most politically stable and rapidly developing nations in Africa. Importing around $117 billion in goods each year, it is a country with a growing appetite for foreign goods, and this is an opportunity for entrepreneurs and big businesses alike.
The top products imported by South Africa include Crude Petroleum, Gold, Refined Petroleum, Cars, and Diamonds. The top markets supplying product into South Africa are China (13%), Germany (7.4%), the United States (6.9%), Saudi Arabia (6.7%) and the United Kingdom (5.5%).
Find a local distributor
As with any emerging market, local expertise is essential if you’re looking to do business within the country. So if you’re looking to start importing commercial products into South Africa, be sure to first build a relationship with a local distributor, and they will then help you navigate the regulations of importing into the country.
If you’re going to tackle the import business on your own, it would still make sense for your organisation to appoint a clearing agent, particularly if it is a small business. Clearing agents are a third party that keeps up to date with current legislation, exchange control, and banking regulations. For a small percentage on disbursement fees, they can provide a cost-effective way for small businesses to import into South Africa. This is especially useful for managing Electronic Data Interchange systems (EDI), that are mandated for clearing goods into South Africa. See going it alone vs. using an agent for importing.
EDI is a system that organises the flow of information from one end of the supply chain to the other. It’s a fully automated process that allows declarations to be accepted at all times, enables quicker retrieval of cargo through the reduction of clearance times, and reduces errors at all points by the removal of manual inputs. Small businesses and startups may well find the value of a clearing agent simply from their expertise in properly utilising EDI.
Southern Africa Customs Union
That said, South Africa has a liberal approach to trade and provides incentives to encourage its economic growth. The first thing to note is that the country is part of the Southern Africa Customs Union, which allows for free exchange of trade between five countries – South Africa, Botswana, Lesotho, Namibia, and Swaziland. South Africa is also a signatory of the World Trade Organisation, following the Harmonised System of import classification, and has free trade agreements with the European Union (EU), Mozambique, and Zimbabwe.
In other words, the country is keen to open its borders for trade. And with that comes a relatively straightforward set of regulations to adhere to:
- If you plan to import goods, you must register with the Commissioner of SARS (South African Revenue Service) as an importer
- Imported goods with a value up to 500 ZAR are exempt from duty and sales tax (VAT)
- South Africa operates on a ‘Free on Board’ or FOB concept, meaning that import duty and taxes payable are usually calculated exclusively on the value of the imported goods. However, some duties are based part in value and part in quantity.
- The average customs duty, excluding agricultural products, is 5.8%
- Apparel, automotive, and some agricultural products have higher tariffs but South Africa’s government has highlighted the intention to lower the rate on these products
- Import tariffs are levied at the first point of entry. This means you’ll need the cash upfront before you can start doing business in the market, otherwise cash flow will become an early headache
- Labels on imported products must be printed in English
As with every economy, South Africa maintains a list of goods that are subject to import control measures. You’ll need to be aware of these measures before you start to import those particular products into the country. You can access the list here.