Dorac again.
Also stumbled on afrihost, another is
http://www.digitaldomainz.com
There is an initial registration fee then the yearly fee, both sit at about R100 for co.za . The money probably goes to the ISP (domain registrar) but im sure they have to pay someone who has to pay someone untill it gets to some non-profit organisation
The small isp's are hoping you will use other services they offer like setting up dns records, hosting space and email, so they might dangle a free domain with some terms and conditions.