emerging markets:south africa - … africa was ranked no. 6 in the top projected destinations in...

South Africa was ranked No. 6 in the top projected destinations in Cartus’ 2011 Mobility Challenges in Emerging Markets survey with 9% of respondents citing the country in their companies’ list of ‘Top 3’ emerging markets. Yet South Africa remains a challenging location for international assignments with security issues and immigration currently highlighted as particular challenges.

K E Y C H A L L E N G E A R E A SInput from Cartus’ Destination Service provider working in South Africa indicates the following are key areas and challenges for assignees:

Housing & RentalsEducationSecurity TransportVisa & ImmigrationDoing Business in South Africa: Cultural Issues

S O U T H A F R I C A I N B R I E F• Type of Government: Republic.• Currency: Rand. • Weights and Measures: Metric system.• Climate: Fairly temperate. Summer months are from

November to March, with average temperatures of around 77F. Winters take place from June through to August and can be quite cold, with temperatures at night falling to 50F.

• Time Zone: GMT +2 hours.• Population: 50.5 million.• Languages: 11 official languages including English and

Afrikaans.• There are three capital cities: Cape Town (legislative

capital), Pretoria (administrative capital) and Bloemfontein (judicial capital).

H O U S I N G & R E N TA L SThere is a good supply of furnished apartments and unfurnished houses in South Africa, suitable for temporary and long term accommodation. Furnished houses can be quite scarce on the market, with a higher number available in Johannesburg than in Cape Town. Despite the good supply of housing stock, demand for quality expatriate properties means that assignees still need to act quickly to secure a property that they like. In addition, unlike many countries, in South Africa there is no culture of aggressive negotiating, so a property’s rental asking price is usually achieved by the landlord.

P ro p e r t y P r i c e s : J o h a n n e s b u rg a n d C a p e To w nThe following properties are expatriate-type housing including high security apartments and houses in secure compounds or gated communities. (All rentals in South Africa Rands (ZAR) per calendar month and are typical at the time of publication.)

M A R K E T W A T C HInformation from Cartus on Relocation and International Assignment Trends and Practices.

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S e c u re H o u s i n gOwing to the security challenges in the country, many assignees choose to live in gated communities, which can be quite expensive. This is because, in addition to a property’s rental payments, gated communities often include a ‘Home Owner’s Association Levy’ which covers security arrangements such as guards, access control, electric fencing and cameras. In addition to this cost, some gated communities also require monthly security monitoring fees (US$260 and US$650 per month) to link a property’s alarm system to an armed response unit.

H o u s i n g Q u a l i t y In addition to security, housing quality can sometimes be an issue in South Africa, with our destination service provider citing that around one in 10 properties are not built to the highest standards. Damp and water leaks are the most prevalent challenge to quality, particularly in Johannesburg where heavy storms are commonplace during the summer. To combat this, we avoid known low quality properties and check with agents to find out whether a property has had a history of leaks. Should an assignee still want to select a home that has evidence of leaks or visible damp, we record it in the lease and ensure that the landlord fixes the problem prior to lease commencement.

P ro g r a m A d v i c e• The additional security costs for properties are often

overlooked by companies, but this added expense should always be considered when setting an assignee’s housing allowance. Indeed, it could make a big difference to the quality of property that they can afford. Companies should also be aware that detached properties can sometimes be much more expensive than living in a gated community as extra security may be needed. Detached homes also do not offer the lifestyle and safety benefits of gated communities.

• South Africa has a high annual rental increase compared to the US and Europe, with current increases reaching between 6% and 10%. This may not affect the assignee in their first year, but if their housing allowance is fixed for the duration of their assignment, it will impact their rental payments year on year. With this in mind, consider increasing housing allowances in line with annual rises.

E D U C AT I O NLow place availability and long waiting lists in private schools means that international schools are often the only option. Should availability be particularly challenging, the American International Schools of Johannesburg and Cape Town both have a high mobility of students and can usually accommodate children. Moreover, our destination service provider keeps in regular contact with local international schools and works with a specialist educational consultant, such as Cartus’ supplier, School Choice International (SCI).

International schools are primarily American, French and German each following their respective curriculums. The most popular schools include:

J O H A N N E S B U R G C A P E T O W N P R E T O R I A

American International School of Johannesburg

American International School of Cape Town

Courtney House International School

Deutsche International Schule

British International School

The North American International School

Lycee Jules Verne Deutsche Schule

Ecole Francais du Cap

P ro g r a m A d v i c e• It is important to be absolutely realistic with the assignee

regarding school availability.• Companies typically sponsor the schooling costs of

dependent children as part of the family support and in South Africa, we would recommend you budget high for tuition fees.

• Many Cartus clients get actively involved in local schools in order to form good relationships with them. Some even choose to advocate a member of the company on the school board. It is important to understand though that actions such as these are not to gain preferential treatment, but to form good, working bonds between company and school.

• For group moves, consider investing in a school’s expansion so that they can accommodate the influx of expatriate children moving into the area.

• Like most aspects of relocation, advance planning is key. Once an assignment date has been decided, get in touch with us straight away so that school choices can be determined and searches can begin.

S E C U R I T Y Violent crime is more prevalent in South Africa than in many Western countries, with Johannesburg in particular having high levels of crime by world standards. Indeed, assignees are often alarmed at the level of security required for expatriate living, particularly in detached properties where high walls, electric fencing and guards are often used. However, it is important to convey to the assignee that these are precautionary measures, and that the majority of South African crimes are


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isolated to areas and suburbs away from the typical expatriate neighborhoods.

There are two main risks for assignees whilst residing in South Africa: house break-ins and car hi-jacking. Property break-ins have reduced amongst the expatriate population as they largely reside in gated communities where property alarm systems are linked to armed response units. Car hi-jackings have also declined with sophisticated tracking systems in cars.

P ro g r a m A d v i c e• It is important that you are realistic with assignees with

regards to the potential dangers, but at the same time, non-alarmist.

• We recommend you ensure assignees attend a pre-move visit to allay security perceptions and concerns.

• Ensure you have a well-developed security policy and a local ‘go to’ person for security related matters.

• We advise that you avoid lump sum policies for South African moves because there have been instances where assignees want to save on housing costs, so that they can keep the difference, which can compromise the area that they live in and the security features of their property.

• Should an assignee insist on a detached property, we recommend a full security audit before the lease is finalized. This allows security upgrade negotiations to be included in the lease agreement. Security audits are conducted by the company’s approved in-house security firm and can cost around US$750. Our destination service provider can advise of local security firms, but we always advise that the final choice reside with the company.

• You should also consider providing the assignee and their family with a driver for at least the first two weeks of the assignment, as they get used to their surroundings and become familiar with both the safe and unsafe areas of the particular city that they have moved to.

T R A N S P O RTMany drivers in cities like Johannesburg, adopt quite an aggressive and sometimes dangerous style of driving, which contributes to the reason why South Africa has one of the highest road accident fatality rates in the world. Motorway infrastructure and toll roads are generally in excellent condition, but assignees should be wary of the secondary roads, which can be poorly maintained, not well signed or lit and heavily congested during peak traffic.

Apart from rail links between cities and airports, there is no reliable public transport system, making it essential that the assignee can drive. They will not be able to take a driving test in South Africa, so must have a valid home country license accompanied by an International Driver’s Permit, prior to arrival.

P ro g r a m A d v i c e• As South Africa is not a location for those who cannot drive,

we encourage our clients not to select an assignee for a move unless they have already obtained a driver’s license.

• Obtaining the finance to either lease or purchase a car can be challenging as monthly payments are extremely high. With this in mind, consider providing a lump sum allowance for the purpose of purchasing a vehicle.

• In addition to their expense, car leases are typically issued over a two year term, which is problematic for assignments of a shorter duration. As a solution to this, consider setting up a corporate lease with a local car rental firm. This way, assignees on short term assignments will not have to lease a car in their own name and when the assignment has ended, the car can be given to another employee. Alternatively, you may want to consider providing the assignee with a company car.

V I S A & I M M I G R AT I O NForeign nationals in South Africa cannot open a bank account, sign a lease or clear goods through customs until they have a work permit, which requires a good deal of documentation. This includes a police clearance certificate(s) from every country an assignee has lived in, for more than a year, since they were 18 years old. Work permit applications may be submitted at certain South African missions abroad, before the clearance certificate(s) is obtained, but proof that the assignee has already applied needs to be included in the application. The actual certificate(s) must then be provided within six months of lodgement of the work permit application. In addition, birth certificates are needed for minor applicants and marriage certificates are required for spouses. Medical reports are required for all family members and radiological reports are needed for each family member 12 years and older.

Children require a school place and a study permit, which can be applied for at the same time as the assignee work permit or, if a school place has not been secured yet, once the family has arrived in South Africa. Study permit applications also require proof of medical insurance.

P ro g r a m A d v i c e • Given that an assignee cannot open a bank account or sign a

lease without one, we advise that the work permit application process begins as soon as an assignment is scheduled.

• We recommend that assignees be prepared with all the necessary documentation as early as possible. For further information or queries regarding immigration, you should always consult your immigration provider.

DOING BUSINESS IN SOUTH AFRICA: CULTURAL ISSUESThe African culture has a unique warmth, charm and vibrancy, but it is different to that of the West. Compared to housing and security, cultural differences are much more subtle, but can lead to frustrations amongst assignees if they are not made aware of them.


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E t h n i c a n d R a c i a l D i v i s i o n sThere can be a number of ethnic and racial divisions in the South African workplace, which may sometimes make it challenging to build teams. There are not just white South Africans, but English or Afrikaans and there are not just Black South Africans, but Zulu or Xhosa. Do not assume people will automatically work well together, sensitivity and local knowledge is imperative to achieving success in a South African business environment.

D e c i s i o n s a n d D e a d l i n e sAlthough final decisions are usually made by one person, the decision making process often incorporates everyone and will typically take as long as it needs to. It is important to be patient during this process as pushing for an answer can be counter-productive.

Deadlines can be remarkably fluid in South Africa, often seen as more of a guideline than a set time, so we advise assignees that if a deadline is critical to their work commitments, they should clearly specify this.

R e l a t i o n s h i p s a n d H o s p i t a l i t yA lot of emphasis is placed on developing good, working relationships amongst business contacts and colleagues in South Africa, so make sure assignees dedicate time to doing so. Hospitality is important and it is not uncommon to be invited to dinner at a colleague’s home. Should an assignee receive an invitation, they should always accept and reciprocate where they can.

P ro g r a m A d v i c e• Given the racial divisions in some areas of South Africa,

we recommend assignees get to know about the country’s economic and political history prior to arrival.

• We also recommend cross-cultural training for assignees moving to the country. The policy-type you choose should take the length of the assignment into account as well as the scope of relocation experience that the assignee has. For example, for an assignee on a long term assignment who has relocated before, you may consider a one day cross-cultural session. If it is the assignee’s first assignment, you should consider extending the session to two days.

C I T Y D I F F E R E N C E SJ o h a n n e s b u rg • North East.• Largest population in South Africa. • One of the country’s most Westernised cities with upscale

shopping malls, sophisticated banking and large homes.• Popular expatriate areas of the city are suburbs and gated

communities: o Northern suburbs - Sandton Central, Atholl, Dunkeld,

Hyde Park, Sandhurst, The Parks and Melrose.

o Gated communities - Dainfern, Dainfern Ridge, Cedar Lakes and Fourways Gardens can all be found in the far north of the city and are in close proximity to the American International School.

• Heavy rainstorms in summer months.• Security issues more prevalent in Johannesburg than other

South African cities.

P re t o r i a• North East - 80km from Johannesburg. Residential

developments around both cities means that the two are more or less connected.

• Being so close in proximity means that Pretoria shares the same climate and culture as Johannesburg.

• Popular expatriate areas:o The Centurion Golf Estate, located just 15km from the city

centre.o Silver Lakes in the East.

• Not as many international schools in Pretoria as Cape Town or Johannesburg, but the American International School of Johannesburg is reachable from suburbs such as the Centurion Golf Estate.

• Historically an Afrikaans speaking city, although this is less prevalent today.

C a p e To w n• South West.• Known as the ‘Mother City’, much smaller than Johannesburg.• Very Westernised. • Outdoor activities are more popular here than in other cities,

with beaches and mountains popular amongst residents. • Popular expatriate areas:

o Southern suburbs - Constantia, Bishops Court and Newlands, Claremont and Tokai. (Close to American and British international schools and South African private schools.)

o Gated communities - Steenberg Golf Estate, Silverhurst and Uitsig.

o Atlantic Seaboard – Bantry Bay, Camps Bay, Clifton and Hout Bay.

• Rental prices can be relatively more expensive when compared to other South African cities, depending on which part you choose to live in.

• Windy in the summer and can be very cold during the winter months.

D u r b a n• East coast.• The busiest port in South Africa. • Large Indian population, which is reflected in the local cuisine

and culture.• Not many international schools, but excellent private schools. • Rental prices normally lower than Johannesburg or Cape Town.• Sub-tropical. City can get very humid.

P o r t E l i z a b e t h• South East coast.• Self-labelled the ‘friendly city’, its main industry is based on

motor and railway manufacturing.• City only has a small selection of quality private schools. Top

schools can be found in Grahamstown, more than an hour’s drive away. Should an assignee choose a school in Grahamstown, weekly boarding arrangements may be appropriate.

• The lifestyle in Port Elizabeth is outdoors-based entertainment, with the city’s several golf courses being popular.

• Maritime climate and a winter rainfall area.

P ro g r a m A d v i c eWhen relocating employees to emerging markets, it is important to establish from the outset whether your company wants to achieve cost effectiveness or successful relocation. In most global locations we relocate employees to, there are going to be areas where we can recommend saving initiatives, but when it comes to some emerging market countries, you should ensure cost savings do not prevent the correct level of support from being provided. This is particularly important in places like South Africa, where extra funding is needed to ensure an assignee; lives in a home that meets minimum security requirements, has effective transportation provision, good schooling for their family and the necessary cultural training to be effective in their international assignment.

Cartus thanks our Destination Services Provider Elliot Corporate Relocations for the information provided for this issue of MarketWatch. We also thank Fragomen, Del Rey & Bernsen for their contribution in the Visa & Immigration section and to Country Navigator powered by TMA World – www.tmaworld.com, for their contribution to the Cultural Issues section.

©2012 Cartus Corporation. All Rights Reserved. Cartus and the Cartus logo are pending or registered trademarks of Cartus Corporation.

The information provided in this MarketWatch publication is provided in good faith but is not intended to provide specific advice or to take the place of either written law or regulations. Conditions in many emerging markets change quickly, so Cartus does not guarantee the accuracy or endorse any of the views or opinions given by any third parties and accepts no liability for the data and information included within.

www.cartus.com | [email protected]


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