Doing business in South Africa

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South Africa is one of the most developed economies in Africa and is known as the ‘Gateway to Africa’ for investors due to its comparative sophistication, ease of doing business, continental expertise and ability to act as a base of critical services for doing business on the rest of the continent.

South Africa’s GDP has recovered to its pre-pandemic levels, but the strength of the recovery has been hindered by multiple structural constraints, including ongoing power shortages and logistics issues. The recovery in employment continued in 2023 but the pace of job creation has not kept up with the growing labour force, resulting in a rising number of unemployed people.

South Africa has taken considerable strides to improve the well-being of its citizens since its transition to democracy in the mid-1990s, but progress has stagnated in the last decade.

The majority of the 62 million population is black African (81.4%), representing many different tribes such as the Zulu and Xhosa. In addition, 7.3% are white (Afrikaners of Dutch origin or of British descent), 8.2% are coloured – a term used in South Africa, including on the national census for persons of mixed-race ancestry, and 2.7% are Indian/Asian.

While English is widely spoken, it is only one of twelve official languages of the country. Most white South Africans are bilingual, s,peaking English and Afrikaans, which is closely related to Dutch. Black South Africans speak their own native tongue and are likely to have a working knowledge of English and Afrikaans.

Religious beliefs in South Africa include Christianity; Islam; traditional African religions; Hinduism; Buddhism; Bahaism; Judaism as well as Atheism, and Agnosticism.

South Africa has been famously referred to as the “Rainbow Nation” because it is made up of so many diverse cultures and religions.  "Rainbow nation" is a term coined by Archbishop Desmond Tutu to describe post-apartheid South Africa after South Africa's first democratic election in 1994. The term was intended to encapsulate the unity of multiculturalism and the coming-together of people of many different nations, in a country once identified with the strict division of white and black under the Apartheid regime.

Core Cultural Values

Contained within South Africa's borders are Zulu, Xhosa, Pedi, Tswana, Ndebele, Khoisan, Hindu, Muslim, and Afrikaner people to name but a few.  All these people are united by calling South Africa home, and therefore their lives all contribute to forming a part of the country’s heritage, identity, and culture. The following insights depend on the ethnic background of your counterparts.

In general, South Africans value time although this is not quite universal in the country. Generally, they pay high respect to time boundaries that they themselves have set. Because of this, they are known to adhere to schedules despite any conflicting circumstance.

When deadlines are not met, managers will opt to increase work hours rather than adjust the timeline for a particular project.

In Cape Town, there is a more relaxed approach to time. Here, schedules are flexible and somewhat vague. In cities like Johannesburg, on the other hand, business is fast paced. There is a clear desire to meet deadlines at the soonest possible time.

While most South Africans avoid confrontation, levels of directness may vary greatly. The two large white groups (Afrikaners mostly of Dutch or other European heritage) and those of British descent, often tend to be more direct and may be blunt. They do not find it difficult to say ‘no’ if they dislike a request or proposal. Afrikaners value straightforwardness and honesty more highly than tact or diplomacy.

In general, Black South Africans tend to be more indirect than the other groups. Instead of ‘no,’ they may give seemingly ambiguous answers such as ‘I am not sure’ or ‘this will require further investigation’. Alternatively, a respondent may tactfully ignore your question. Extended silence likely communicates a negative message. This doesn’t mean they are hesitant to act, rather that they are considering their response and may not want to give an answer immediately.

Traditional South African business tended towards the accumulation of power and decision-making in the hands of a few senior managers – leaders who addressed their staff with familiarity and heartiness. Post-apartheid, things have started to change.

Black Economic Empowerment (BEE) is a policy of the South African government which aims to facilitate broader participation in the economy by black people. A form of affirmative action, it is intended especially to redress the inequalities created by apartheid.

Furthermore, the influence of the myriad of multinational companies in the country means that hierarchies are breaking down somewhat and younger middle-managers are looking to become more proactively involved in decision-making. However, the decision maker is usually a senior executive who will consider the best interest of the group or organisation.

If decisions are made at lower levels, they often require top management approval, which can be time-consuming. South African managers often consult with others and carefully consider their inputs. This process can take a long time and requires patience. Most modern South African businesses apply the democratic management style. However, the more traditional managers are still autocratic by nature.

South African leaders are strong in the global leadership characteristics of creating trust, setting vision, using good judgment, and building an environment that fosters well-being, among others. A cultural aspect that may differentiate South African leaders from those in other parts of the globe is their interpersonal sensitivity. They tend to excel in interpersonal skills and show genuine interest in their team members’ well-being and their relationships.

Meetings usually start with some polite small talk, which may be extensive. A sense of humour and good manners are appreciated. People rarely discuss their private life during meetings, and you should not inquire about their family or marital status. The overall meeting atmosphere is usually quite formal, especially early in the business relationship.

South Africans are generally good, patient listeners.

Negotiation approaches vary. Afrikaners can be quite competitive but are generally clear, analytical, and may be unwilling to agree with compromises unless it is their only option to keep the negotiation from getting stuck. There is little deviousness or coded speech.

Black and British South Africans are more expressive in their speech but view negotiating as a joint problem-solving process. The latter are often willing to compromise as necessary to reach agreement, while Black South Africans may be inclined to leverage relationships to resolve disagreements. As a rule, all will consider the longer-term benefits of a deal.

In general, avoid all aggressive business tactics in South Africa. Though Afrikaners may occasionally appear assertive, this usually only reflects their direct and straight-forward style rather than any tactical behaviour. Responding in kind is rarely productive.

South Africans are usually willing to take some risk but will approach this with caution. If you need them to support a high-risk decision, you will need to find ways for them to be more comfortable with it, for example, outlining contingency plans, areas of additional support, or guarantees. Additionally, storytelling is deeply ingrained in South African culture, so use narrative to inspire and motivate teams for a shared vision to be able to drive change.