FOREIGN DIRECT INVESTMENT PLAYS A CONSIDERABLE ROLE IN DEVELOPING SOUTH AFRICA’S ECONOMY

FOREIGN DIRECT INVESTMENT PLAYS A CONSIDERABLE ROLE IN DEVELOPING SOUTH AFRICA’S ECONOMY

 Foreign Director Investment (FDI) from the developing world predominantly goes to South Africa, North Africa and oil-exporting countries. As one of the faster growing regions Africa experienced a significant growth in Greenfield FDI in 2014. This was said by Mr Timothy Dladla, the Director of Economic Research and Policy Coordination at the Department of Trade and Industry (the dti). He was speaking seminar hosted by the department on the State of FDI in South Africa.

“There has also 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. From January 2003 to July 2015 a total of 1 344 FDI projects were recorded. These projects represent a total capital investment of US$71.2 in the same period. During the period, a total of 189 724 jobs were also created.  The sectors that attracted FDI were software and information technology services; business services; financial services communications; and industrial machinery, equipment and tools,” said Dladla.

According to Dladla, the FDI inflow to South Africa was registered at US$3.31 billion from January 2015 to July 2015 and 5 037 jobs created.

“Global investment flows remain constrained due to fragile economic conditions since the global financial crisis. FDI inflows from Sub-Saharan Africa to South Africa recorded US$2.08 billion in Capex and created 4 647 jobs between January 2003 and July 2015,” he alluded.

Dladla added that the United Kingdom, United States of America, Germany, Australia and India were key FDI sources for South Africa.

“Interestingly, India is now in the top five sources of FDI CAPEX in the period Jan 2003 to July 2015, the only BRIC country and the only developing country,” he explained.

The top five destination countries for FDI outflows from South Africa include the United Kingdom, Nigeria, Ghana, Zambia and Unites States. The top five sectors and jobs created are metals, coal, oil and natural gas, food and tobacco, consumer products and communication.

Acting Head of Investment Promotion and Inter-Departmental Clearing House at the dti, Mr Yunus Hoosen said the investment pipeline into South Africa remains robust. He said that South Africa attracted R43bn in FDI in the previous financial year. He explained that due to the cyclical nature of investment it should be expected that both inward and outward investment stock may vary from year to year.

“Over a protracted period of time, South Africa has maintained its position as the top FDI destination in Africa as well as a prolific investor on the African continent. Recent data indicate that this trend is continuing based on the 2014/2015 investment pipeline and the impact of various government programmes across the South African economy,” he added.