When business owners in the UK look to expand their commercial footprint into overseas markets, many start by exploring opportunities in countries where English is both the official language and is spoken by the majority of the population.
Of the 26 sovereign states in the world – other than the UK – where English is spoken by the majority of its residents, a relatively small number have the economic maturity to justify setting up business there.
South Africa, however, is an exception.
While starting a business in another country is bound to present challenges when it comes to getting to grips with different laws, tax systems and marketing your products or services, the South African government is trying to boost investment in the country by cutting some of the red tape overseas business owners used to encounter when setting up an operation there.
Two types of visas
But it does say that UK business owners need one of two types of visas to establish a fully-fledged operation in South Africa.
Business visas are for individuals seeking to invest in a business or an existing start-up and who will be working within the business.
Business visa holders need to typically invest ZAR 5 million (about £240,000) into the South African operation and own more than 25% of the business.
Not only that, anyone applying for a business visa must provide a comprehensive business plan.
The independent financial skills permit, on the other hand, does not restrict your business to a certain economic activity. In short, the holder of the independent permit is free to make their own decision as to whether they invest in a South African operation, run a business, work or even retire. This means they do not have to submit a business plan with their application.
However, to successfully apply for a financially independent permit, UK business owners will need to prove a net worth of the equivalent of ZAR 12 million (about £580,000) but these funds do not need to be brought into South Africa.
Do I need to employ local people?
Yes. There is a requirement that at least 60% of employees in your South African operation are South African citizens or have permanent residency in the country. If you hold a business visa, your staff must be employed on a permanent basis, although this requirement is waived for holders of an independent financial permit.
How to cut the red tape
Before you face the expense of applying for any type of South African visa and setting up a physical office in South Africa, a growing number of UK business owners are gauging the potential success of an overseas operation by installing a virtual South Africa landline.
A local number will give customers the impression that your company is based in their region, although you will be answering calls made to it from your choice of location. This could be a UK-based office or even a mobile.
However, a virtual South Africa landline will give you access to a market of over 50 million people and allow you to judge whether to take your plans to expand overseas further.
If you then decide that you could make a success of your business in South Africa, you will then need to seek professional advice from companies with experience of South African business law