Reforms Make South Africa Ripe for Investment; EMERGING MARKETS South Africa Is Fast Coming of Age. Jeremy Butler, Director of KPMG's New and Emerging Markets Group Based in Birmingham, Looks at Their Private Equity Industry

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Byline: Jeremy Butler

Despite the fact that South Africa is classed as an emerging economy, it nevertheless has a highly developed economic infrastructure and, according to a 2007 Word Bank report, is ranked as 35th in the world for ease of doing business - putting it ahead of Russia (37th), China (83rd) and Brazil (122nd).

Since the political reforms of 1994, South Africa's economy has undergone considerable structural transformation, with the implementation of macro-economic policies aimed at promoting domestic competitiveness, growth and employment and increasing the economy's outward orientation.

President Thabo Mbeki has made it clear that foreign investment is welcome in South Africa and Government policy supports this sentiment with key economic reform giving rise to a high level of economic stability. For example, taxes have been reduced, tariffs lowered, the fiscal deficit brought under control and exchange controls relaxed.

In addition, South Africa offers a progressive legal framework. Legislation pertaining to commerce and labour are well developed, while laws relating to competition policy, copyright, patents, trademarks and disputes conform to international norms and conventions.

South Africa's financial systems are also well regulated, foreign banks are well represented, electronic banking facilities are extensive (internet banking is a key growth area within the sector) and the Johannesburg Stock Exchange (JSE) is the nineteenth largest exchange in the world by market capitalisation according to the World Federation of Exchanges.

The South African private equity industry compares favourably with that in many other economies and the country is increasingly being considered as an investment destination by the international community. …