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South Africa

On March 11, South Africa further liberalized exchange controls. Most of the changes were effective on announcement.

On application, South African companies may now transfer up to R50 million (US$10 million) abroad to non-Southern African Development Community (SADC) countries to finance approved direct investments. The limit has been raised for each project to R250 million for SADC countries other than Nambia, Swaziland and Lesotho, all three of which are already free from direct investment limitations.

Qualifying institutional investors may invest up to 15% of their total assets in foreign assets. The limit used to be 10%. Subject to the above limitation, the portion of the new in-flow of 1997 funds that may be invested offshore in 1998 has been raised to 5%. For 1997, the limit was 3% of 1996 funds. In addition, an extra 10% of 1997 net in-flows may be invested in listed securities in other SADC countries, up from an extra 2% in 1997 in respect of 1996 funds.

Outward investment limitations applying to South African resident private individuals have been raised from R200,000 to R400,000. The non-resident ownership level at which foreign controlled entities become subject to local borrowing limits has also been raised from 50% to 75%.

In addition, to facilitate the integration of capital markets in the SADC region, dual listing of companies will be permitted on the Johannesburg Stock Exchange and other SADC stock exchanges, subject to certain limitations. The Reserve Bank has indicated that consideration will be given to the issue of SADC depository receipts in South Africa for companies listed in other SADC countries.

The full text of the Reserve Bank's statement liberalizing exchange controls is available from the author on request.

Michael R Littenberg

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