Emerging Market Profiles: Living and Working in South Africa

By Pat DeDonato Oct 17, 2014
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The Republic of South Africa is located at the southern tip of the African continent. A multi-ethnic society encompassing a wide variety of cultures, languages and religions, it is a frequent destination for international assignees. Yet it remains a challenging location for international assignments with education/schooling and security issues highlighted as particular challenges.

Housing

There 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, 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 home they like. This is especially the case for properties in gated communities. 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. Assignees relocating with pets may limit their choice of temporary accommodation as most landlords do not allow animals.

A typical lease length for unfurnished houses is one to two years and for apartments it is usually a minimum of three months. Most landlords will accept an early termination/diplomatic break clause for long-term leases, but generally the shorter the lease, the shorter the break clause period will be.

In Johannesburg, apartments are available in the north, west and eastern suburbs, although one- to two-bed options are more readily available than three or four bedrooms. In some expatriate neighborhoods there is a reduced supply of four-bedroom houses when compared to other property-types. Apartments may be rented furnished or unfurnished, but houses tend to be rented unfurnished, with furnished options low in availability.

Due to property sales prices, locals in Cape Town are choosing to rent rather than buy. As such, assignees must compete with locals (as well as other expatriates) for good quality housing and therefore need to be flexible in their property choices. In the furnished sector, two- to three bedroom-houses and apartments are more available than larger properties.

Secure Housing

Owing 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 (250 to 500 rand per month) to link a property’s alarm system to an armed response unit. Dependent on the length of the rental lease, assignees may be able to negotiate security upgrades, but these should be requested before a contract is signed and may incur extra costs.

Housing Quality

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. Dampness 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 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 dampness, we record it in the lease and ensure that the landlord fixes the problem prior to lease commencement.

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.

As a minimum, it is recommended that expatriate housing have an alarm system linked to a security monitoring company. Should the property be free standing, then a significantly higher standard of security measures needs to be put in place, including electric fences, perimeter beams, CCTV cameras and burglar bars.

South Africa has a high annual rental increase compared to the U.S. and Europe, with current increases reaching between six percent and 10 percent. 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 rental rate increases.

To ensure enough time for the property to be professionally cleaned and the agreed security measures put in place, it is recommended that assignees do not move into a property over a weekend or the day after the previous tenant has vacated. With this in mind, assignees should be prepared to stay in a hotel or temporary accommodation for a short while and the organization should ensure an appropriate allowance is provided.

Schooling

Private schools in South Africa are of a very high standard, following the British curriculum. However, places are limited (especially for lower grades) and long waiting lists mean that international schools are often the only option. Although they charge considerably higher fees than a private school, the American International Schools of Johannesburg and Cape Town both have a high mobility of students and can usually accommodate children.

International schools are primarily American, British, French and German and each follow their respective curriculums.

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 it is recommended that a high budget is set for tuition fees.

Like most aspects of relocation, advance planning is key.

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

Security

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

There are two main risks for assignees while residing in South Africa: house break-ins and car hijacking. Property break-ins have fallen among the expatriate population as they largely reside in gated communities where property alarm systems are linked to armed response units. Car hijackings have also declined with sophisticated tracking systems in cars. To minimize risk when traveling, assignees should keep vehicle doors locked, windows closed and valuable items such as laptops and handbags, in the trunk of the vehicle.

It is important that you are realistic with assignees with regards to the potential dangers, but at the same time, nonalarmist. It is recommended that employers:

  • Ensure assignees attend a pre-move visit to allay security perceptions and concerns.
  • Have a well-developed security policy and a local “go to” person for security related matters.
  • 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.
  • 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. This 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 should be conducted by the organization’s approved in-house security firm and can cost around U.S. $750.

Transportation

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. Once they have a vehicle, the assignee will need to register it with their local licensing department in South Africa and obtain a traffic register number.

Many 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. South Africa can sometimes experience stormy weather and assignees should be mindful of this when driving, as roads can often become flooded by heavy rainfall.

Obtaining the financing 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 three-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.

Immigration

Assignees need to apply at a consulate, in person, in their home location. This cannot be managed by a third party on their behalf, e.g., an immigration service provider. The time it takes to apply for a visa can vary, with some assignees waiting up to four months. Foreign nationals in South Africa cannot open a bank account, sign a lease or clear goods through customs until they have a work visa. This requires a good deal of documentation that may vary depending on the host country.

The Intra-company Transfer Work Visa has been extended to four years and does not usually take more than 30 days to acquire, however, gaining extensions for existing permits can be challenging, with some taking four months or more to process. In some cases, these delays have meant that applicants have had to leave South Africa and re-enter once the visa is renewed, which can be disruptive to organizations, the assignee and their family.

Children require a school place and a study permit. This 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.

Foreign nationals who stay in South Africa after their visas have run out are now subject to bans on re-entering the country (previously overstays were subject to fines). The length of the ban will depend on the length of the overstay, e.g., an assignee who overstays for 30 days or less will be banned from South Africa for 12 months.

Given that an assignee cannot open a bank account or sign a lease without a work permit (now called Work Visa) the application process should be started as soon as an assignment is scheduled.

The re-entry ban for visa overstays has the potential to impact a company’s relocation program and therefore visa expiration dates should be closely monitored, with extension applications planned well in advanced.

Cultural Issues

The 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 among assignees if they are not made aware of them.

Meetings. When meeting with business associates for the first time, it is important that participants get to know one another. Assignees should not expect to conduct business negotiations at an initial meeting.

Decisions. Although 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 counterproductive.

Teamwork. Generally South Africans work well together in teams. Group harmony is important, with strong social bonds formed between co-workers. However, there 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, for example.

Do not assume people will automatically work well together. Sensitivity and local knowledge is imperative to achieving success in a South African business environment.

Relationships and hospitality. A lot of emphasis is placed on developing good, working relationships among 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.

Timescales. Like many African societies, some South Africans have a relaxed attitude to timescales and deadlines, both in business and their personal life. Deadlines are seen more as guidelines than actual deadlines, which can be frustrating to assignees used to a faster paced work environment. If an assignee has a deadline critical to work commitments, they should clearly specify this.

Given the racial divisions in some areas of South Africa, assignees should get to know about the country’s economic and political history prior to arrival.

Cross-cultural training for assignees is also recommended prior to moving to the country.

Pat DeDonato is senior vice president of supply chain management at Cartus, a provider of global relocation solutions serving half of the Fortune 50, in more than 165 countries, helping clients with their mobility, outsourcing, consulting, and language and intercultural training needs.

Copyright 2014 © Cartus. All rights reserved.

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