South Africa ranked No. 1 for foreign direct investment, best economic potential, and best business friendliness in a Top 10 report by fDi Magazine, a London Financial Times publication, according to a report in MediaClubSouthAfrica.
The rankings earned South Africa the title, “Country of the Future.”
Morocco ranked second in Africa for foreign direct investment, with Mauritius in third place, followed by Egypt, Kenya, Ghana, Nigeria, Botswana, Tunisia and Namibia.
South Africa attracts about a fifth of all FDI into Africa, more than double that of Morocco, the report said. In 2012, that amounted to $4.6 billion, with almost 14,000 jobs created. Johannesburg, the commercial heart of the country in Gauteng province, was the top FDI destination in Africa in 2012.
This means South Africa now ranks as the 16th top FDI destination country in the world, according to fDi Markets.
Since the global economic crisis of 2008, FDI globally has dropped 20 percent. In 2012, the figure improved slightly, settling around 14.3 percent.
Africa fared better than other world regions, with FDI on the continent down 7.9 percent in 2012. However, in the first five months of 2013, FDI in Africa fell, leveling out at about the same as global averages, down 27 percent, compared to 28 percent for the rest of the world.
Unrest, corruption and severe income disparities persist in Africa, though an emerging middle class with increased disposable income, a marked improvement in governance and the availability of natural resources present attractive opportunities for investors, the report said. “Despite a slight decline of 3.9 percent in 2012, South Africa increased its market share of global FDI, which further increased in the first five months of 2013 as the country attracted 1.37 percent of global greenfield investment projects.”
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South Africa’s 2012 FDI decline of 3.9 percent compared favorably to its Brics partners – Brazil, Russia, India and China – which experienced an average 20.7 percent decline.
In addition, South Africa has attracted more research and development investment than any other African country, the magazine said, and it accounts for the largest number of patents registered on the continent.
Of the 54 African countries, 26 have now achieved middle-income status, with countries like South Africa, Morocco and Mauritius leading the pack, African Development Bank reports.
“South Africa has sustained democracy for close to 20 years and with it, higher growth rates, solid employment creation and improvement in social and economic services for most people,” said Neva Makgetla, South Africa’s Department of Economic Development. With democracy comes a commitment to real, if gradual, change, she said. If the country lives up to that commitment it will establish a “positive investment climate or a cohesive and peaceful society,” she said.
Kenya also did well in the top 10, climbing from 10th position in 2011-2012 to fifth place this year. It is an innovative country that strives to diversify its economy, the report said. Kenya’s use of M-Pesa mobile phone payments, for example, encouraged new investment opportunities.