KNOWLEDGE BASE

INTERNATIONAL INVESTMENT

Investing in Africa

OVERVIEW

Africa is the world's second largest continent with over 800 million inhabitants living in 54 countries.

It is by far the world's poorest inhabited continent but, more significantly, is poorer now than 25 years ago.

The vast majority of African nations are Republics (following the French / American Models) and operate under some form of Presidential system.

Although some countries, most notably the Republic of South Africa are enjoying rapid growth, the majority of Africa as a region is developing more slowly than the rest of the world. This is due to the legacy of Colonialism, Military Dictators and corruption, Civic unrest and war, debt and low investment, decaying infrastructure and poor social services, famine, national disasters and harsh environments, but against this backdrop Africa possesses great potential primarily because of its huge natural resources and the ingenuity of its people.

The International business community and most multi-national corporations operating businesses in Africa have been reaping significant dividends from their investments and in many cases the rates of return have been higher than from those in other regions.

During 2005, inward investment into South Africa was greater than the combined aggregate totals of the preceding five year period totalling R57 Billion rand.

The fundamental problems associated with investing in Africa are well known and are unlikely to change in the short term. However, it is important to note that most countries have sophisticated OECD Model Double Taxation treaties and with the exception of 4 countries, apply withholding taxes on the payment of dividends to foreign shareholders. It is therefore important that when considering an investment careful consideration should be given to double tax treaties and to the choice of jurisdiction and corporate vehicle through which to undertake such an investment.

OCRA Worldwide has 20 years experience in advising clients on how best to structure inward investment into Africa and should you therefore require any assistance please do not hesitate to contact a Director or Senior Manager at our Mauritius, London, Isle of Man offices.

Read about Utilising Mauritius Companies to structure investments into Africa

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