The US state department has released an overview of SA’s economy that makes no mention of “white genocide” claims made by President Donald Trump when he met President Cyril Ramaphosa earlier this year in a fiery meeting in Washington.
However, 2025 Investment Climate Statements: SA, published on Friday flags the uncertainty created by land expropriation laws and other race based-laws, saying these were making it difficult for US companies operating in the country.
The state department’s report also flags SA’s competition regime, saying international and domestic investors have raised concerns that the Competition Commission has taken an increasingly social-activist approach by prioritising public interest criteria over other more traditional antitrust and monopoly criteria.
The public interest provisions required merger reviews to consider the effect of a merger on promoting greater ownership by historically disadvantaged persons, the report said. “US companies and investors have raised concerns that the commission’s approach has led to more ambiguous, expensive and lengthy review processes.”
SA’s new expropriation legislation provided for the “just and equitable” compensation standard outlined in the constitution, in lieu of expropriation based on market-rate compensation. “The act provides for circumstances where land may be expropriated without compensation, referred to as ‘nil compensation’ under the law,” the investment climate statement reads.
“The procedural uncertainty around the new expropriation powers, along with incendiary rhetoric by certain political parties encouraging illegal expropriation of land and farm violence, threaten the security of property rights for landowners and investors.
“Laws, policies and reforms seek ‘economic transformation’ to accelerate the participation of and opportunities for South Africans disadvantaged under apartheid. US companies and investors have noted challenges in navigating the implementation and regulatory impacts of such policies, particularly to obtain government contracts or conclude mergers & acquisitions.”
The report noted that SA’s independent judiciary, rule of law, free press and “mature” financial and services sector, together with deep and well-regulated capital markets, were key enablers to investment. It also acknowledged that foreign nationals may purchase and own immovable property in SA without any restrictions since they are generally subject to the same laws as South African nationals.
But it flagged corruption, violent crime, deteriorating basic infrastructure and shortages of skilled labour as barriers to investment.
One of the laws flagged by the state department is the limitation on foreign ownership and control of commercial broadcasting services. The Electronic Communications Act of 2005 provides that a foreign investor may not hold more than 20% of a commercial broadcasting licensee.
The statement said alternative equity equivalent investment programmes (EEIP) seemed to be the preferred route by US investors.
“Several US companies, particularly in the technology sector, have successfully concluded EEIP transactions. However, some companies note concerns about the length of the application process and uncertainty regarding terms of investment to finalise an EEIP,” the statement said.
“US companies also have advocated for expanded usage of EEIPs in sectors that do not currently accept alternative investment equivalents to ownership criteria.”
Network infrastructure operators and communications service providers require 30% ownership by historically disadvantaged groups for a licence.
Communications minister Solly Malatsi in May gazetted a policy directive on the role of EEIP in the information and communication technology sector “as a mechanism to accelerate broadband access”.
The move was seen as paving the way for Elon Musk’s Starlink to get a licence to operate in the country, but Malatsi said this was not the case.
Starlink’s proposed equity equivalent investment will see its technology deployed to far-flung hospitals and police stations in rural areas, and connect up to 5,000 rural schools to the internet.
Trump in February signed an executive order to address “serious human rights violations”, which his administration said were occurring in SA, alleging that land was confiscated from white farmers without compensation. The order claimed the recent Expropriation Act enabled SA’s government to seize the agricultural property of minority descendants of settler groups without compensation. The US implemented a refugee programme for SA’s “disfavoured minorities” as a result.
Ramaphosa was at pains to tell Trump in their Oval Office meeting in May that there was no seizure of land in SA and white farmers were not being persecuted.
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