5 Key Risk Factors Driving Investor Decisions In South Africa In 2016

Written by Kevin Mwanza

South Africa’s economy, the second largest on the continent, has come under heavy headwinds in the last year or so, with many sectors facing uncertain times.

A weakening rand due to a fall in metal prices on the international market and China’s economic slowdown are some of the factors affecting the most industrialized African nation.

These factors and others have affected the way foreign investors looking to or with investments in the country are making their decisions this year.

Some like Barclays have decided to cut their losses and exit the market, while others like Starbucks are looking to set up more shops there.

While announcing its plan to sell down its stake in Barclays Africa, an entity it jointly owns with South Africa’s Absa, London-based Barclays cited tough operating environment in the country as one of the reason why its board of directors reached the decision.

In its RiskMap 2016 [pdf], global risk analysis firm Control Risk has come up with some of the top risks facing investors in South Africa. Most of the risks are gloomy and paint a picture of a stagnating economy and uncertain political future.

Despite all these, Control Risk still see South Africa as a good place to do business and far much better than its regional counterparts.

According to them these are the factors companies looking to invest in South Africa should consider: