Tags: South Africa | Land | Lightstone | Multinationals | Jacob Zuma

Owning Land in South Africa Liability for Foreign Business

By Tuesday, 17 February 2015 09:33 AM Current | Bio | Archive

The South African president Jacob Zuma sent mixed signals to foreign investors at his state of the nation last week, Thursday. As a key driver for economic growth he announced a one-stop interdepartmental clearing house would be established to attend to investor complaints and problems.

This would be a step in the right direction if it weren’t in lieu of his comments on the new proposed laws prohibiting foreigners from owning land in South Africa. Foreigners seeking to own land in South Africa would only be allowed to take out a long term lease.

The president’s reasons for the prohibition where much like the rest of his speech, vague and lacking detail. What would happen to existing foreign land owners including multinational companies was unclear.

According to Lightstone data foreign land ownership only accounts for 3 percent of total land owned in South Africa, making it a rather insignificant contribution to land redistribution.

What is clear is that banning foreigners from owning land will make South Africa a less appealing destination for investment and for holiday goers seeking to enjoy their South African home in the summer months.

When considering the viability of bringing business to South Africa, business owners would now have to view land ownership as a liability instead of an asset.

The benefits of this law are yet to be revealed. However, they are unlikely to outweigh the knocks, and other adverse effects, it will have on tourism and foreign investment.

One has to consider the possibility that this law may be used as a means to pass future legislation that would not otherwise hold up on its own. A rather disturbing prospect considering that the president is facing over 700 charges of corruption.

Matthew Klynsmith earned a business administration diploma at CTI in Cape Town, South Africa. He now works at Strategic Options as an associate partner. To read more reports from Matthew Klynsmith, Go Here Now.


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What is clear is that banning foreigners from owning land will make South Africa a less appealing destination for investment.
South Africa, Land, Lightstone, Multinationals, Jacob Zuma
Tuesday, 17 February 2015 09:33 AM
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