Top 10 Sources And Destinations For South African Foreign Direct Investment

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Written by Dana Sanchez

Despite the global financial crisis and no longer being Africa’s largest economy, South Africa is still the No. 1 destination in Africa for foreign direct investment with no indication that will change, says the country’s Department of Trade and Industry.

Investors have been attracted in recent years by government efforts to shore up infrastructure, with a handful of large-scale long-term capital investment programs including the 2012 National Infrastructure Plan. The government promised to spend $38 billion on new and upgraded infrastructure in transportation, energy, water, sanitation, health and education over 15-years.

South Africa accounted for 24 percent of all foreign direct investment projects over the past seven years, receiving as much as the next three FDI leaders combined — Nigeria, Angola and Kenya — according to EY, Oxford Business Group reported in November.

South Africa also ranks high globally, rising two places to become the 13th most attractive foreign direct investment destination in the world, attracting $10 billion in FDI in 2013, according to the AT Kearney FDI confidence index.

South Africa is increasingly prolific as an investor elsewhere in Africa, says Timothy Dladla, director of economic research at South Africa’s Department of Trade and Industry. He spoke at a seminar held by the department on the state of foreign direct investment in South Africa, CapeBusinessNews reports.

“Global investment flows remain constrained due to fragile economic conditions since the global financial crisis,” Dladla said. “There has … been a rise in intra-African trade which has mostly been driven by the growth in competitiveness of African investors as they acquire larger quantities of complementary assets, expand their production scale and improve their brand appearance.”

Over the past five years, South Africa received twice as many FDI projects as any other African country, according to EY’s 2015 Africa attractiveness survey. Investors are attracted by diverse economy, solid infrastructure, and ease of doing business, the report said.

South Africa registered $3.31 billion in foreign direct investment inflow from January 2015 to July 2015, Dladla said.

 

India is the only BRICS country and the only developing country in the top five sources of foreign direct investment to South Africa between January 2003 and July 2015.

The top sectors and job creators through foreign direct investment include communication, metals, coal, oil and natural gas, food and tobacco and consumer products.

The investment pipeline into South Africa remains robust, said Yunus Hoosen, acting head of investment promotion at the Department of Trade and Industry. South Africa attracted 43 billion rand ($3.16 billion) in foreign direct investment in the last financial year, Hoosen said. Due to the cyclical nature of investment, he said it’s it’s expected that both inward and outward investment stock may vary from year to year.

“What assisted South Africa’s attractiveness was the independent power program that the country has launched,” said Dumi Jere, head of strategy for Africatalysts, in 2014.

The country’s Renewable Energy Independent Power Producer Procurement Programme was initiated in 2011.

Based on the 2014-2015 investment pipeline and the impact of government programs across the South African economy, the trend is continuing for South Africa to maintain its position as the top FDI destination in Africa, Hoosen said.

Here are the top 10 sources And destinations for South African foreign direct investment.

Sources: EY’s 2015 Africa attractiveness surveyOxfordBusinessGroupCapeBusinessNews.