South Africa Investing Heavily In Africa

South Africa Investing Heavily In Africa

South Africa originated more new foreign direct investment projects in Africa in 2012 than any other country in the world, according to a report in Mail & Guardian.

South African investment projects increased in Africa by almost 536 percent in the past 10 years, according to a 2013 report by FDI Intelligence, a company that provides insights and advice on cross-border investment, the report said.

Ernst & Young’s 2013 Attractiveness Survey found that South Africa has created almost 46,000 jobs through foreign direct investment in Africa since 2003.

While 2012 showed the second-biggest decline in global foreign direct investment since the recession began, South African FDI projects increased by 23 percent in 2012 according to the FDI Intelligence report.

Last year South Africa had 75 projects representing more than 12 percent of the rest of Africa’s FDI totaling $1.4-billion, according to Charlie Pistorius, an analyst at Ernst & Young’s Africa Business Center.

By comparison, India, the U.S., U.K., Canada and China committed more capital than South Africa to the rest of Africa during 2012, “But these countries had far less project activity,” Pistorius said. “For instance, India’s capital amount was more than four times more, but for only 35 projects; and Canada’s 12 projects and China’s 28 projects saw capital allocations of $2.8-billion and $2.2-billion respectively.”

Most investments are happening in financial and business services and communication, Pistorius said in the Mail & Guardian report. These are followed by consumer products such as beverages, food and tobacco, and then resource-related projects.

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The corporate private sector is undertaking far more new project investments into Africa than state-owned counterparts, he said. These include telecommunications, led by MTN; financial services including banks such as Standard Bank, First Rand, Sanlam and Liberty Life, and retailers such as Shoprite, Pick n Pay, Woolworths and Massmart.

Shoprite is the first South African retailer to open its doors in the Democratic Republic of Congo, according to Mail & Guardian. Shoprite has 131 stores in 16 African countries excluding South Africa, employing 11,000 people.

Standard Bank has the biggest banking footprint in Africa, with operations in 17 countries, the report says.

In 2012, Absa paid $1.8 billion for the Africa business of parent company, Barclays, which does business in 12 countries including Kenya, Ghana and Uganda.

First Rand bought Merchant Bank of Ghana. Nedbank owns 20 percent of Ecobank, which cost $200-million-plus but gave Nedbank access to 35 African countries, the Mail & Guardian reports.

Nigeria is South Africa’s top destination for foreign direct investment, followed by Ghana, Namibia, Zambia Angola, Kenya and Mozambique, Pistorius said in the report.

While each of the markets has its own merits, they also all boast “an attractive and growing demographic dividend and consumer dynamic,” he said in Mail & Guardian.