KPMG Launches 2016 Africa Incentive Survey
31st March 2016; KPMG has published its inaugural Africa Incentive Survey (2016) , which contains useful information for business across 28 countries on the continent, representing 81 percent of Africa’s USD 2.4 trillion GDP and home to three-quarters of Africa’s 1.2 billion population.
This Survey can be regarded as a guide that will help both local and foreign investors understand the landscape of incentives offered by African countries. The Survey was recently launched at the KPMG Pan African Tax Conversation that took place earlier this month in Cape Town.
All countries surveyed offer a range of enhanced tax incentives, ranging from accelerated allowances for capital expenditure, special allowances for investments in certain industry sectors (such as manufacturing, infrastructure, tourism) as well as tax holidays ranging from 3 to 10 years.
At least 21 of the 28 countries surveyed offer incentives relating to Special Economic Zones, which appears to be a feature of industrial development initiatives in African countries. More than a third of the 28 countries surveyed offer incentives related to traditional manufacturing, with South Africa, Nigeria and Morocco being notably the only three countries in Africa that offer cash grants in addition to tax incentives, all of which require prior approval by government agencies.
Trevor Hoole, Chief Executive, KPMG in Southern Africa says that the release of the Africa Incentive Survey is a clear indication of how Africa is rising. “I believe that the Survey is an invaluable guide and if you’re looking to understand the various incentives available in Africa, this is the perfect roadmap for you,” says Hoole.
Mohammed Jada (Head: R&D Tax and Incentives, KPMG Africa desk) notes that the countries participating in the survey achieved a 9% average growth in their GDP for the period 2012 to 2014, whilst their populations have grown by 43.2 million to just under 870 million people (source http://data.worldbank.org/country ).
He notes that “there is a growing trend of trade regionalism in the world and within Africa, to enter into more bilateral and multilateral trade agreements globally. The proposed Tripartite Free Trade Area (TFTA), which would cover 26 (out of 54) African countries is aimed at creating the biggest free-trade area on the African continent.
“This may be our answer to the range of Free Trade Agreements that have been concluded within Asia, the EU and most recently the Trans Pacific Partnership (TPP) involving the USA and 12 countries across the Pacific Rim”, says Jada, who also notes that “the potential for Africa to capitalise on trade within the continent is not to be missed, given the growing size of the population in Africa (about 18% of the world’s population)”
The TFTA will result in consolidating the three significant trade blocks: the East African Community (EAC), the Southern African Development Community (SADC) and the Common Market for Eastern and Southern Africa (COMESA).
The Survey has a wealth of information for any investor in Africa and contains useful summary tables for quick reference, with detailed information provided on incentives offered by each country participating in the survey as well as valuable local “Good to Know” facts from the KPMG network of tax professionals across Africa.