FDI in South Africa

Overview by Globlatrade.net:

FDI in Figures

Being largely a free-market economy, South Africa encourages foreign investment in both private and public sectors. Factors attracting FDI into the country include: transparent regulatory framework, large population, access to raw materials and political stability.

According to the UNCTAD World Investment Report, the potential apeal for foreign investment in South Africa is strong compared with other countries in the world, but performances are poor in terms of FDI attraction. Since the global financial crisis which affected the world at the end of 2008 - beginning 2009, South Africa is suffering from the lack of foreing investor interest and the net capital export is higher than the income.

Foreign Direct Investment 200720082009
FDI Inward Flow (million USD) 5,6959,0065,696
FDI Stock (million USD) 110,41568,007125,085
Performance Index*, Ranking on 141 Economies 1138079
Potential Index**, Ranking on 141 Economies 6772-
Number of Greenfield Investments*** 56116108
FDI Inwards (in % of GFCF****) 9.914.54.0
FDI Stock (in % of GDP) 38.624.644.0

Source: UNCTAD

Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.


FDI Inflows By Countries and Industry

Main Investing Countries 2008, in %
United Kingdom 54.1
United States 7.5
Germany 7.4
The Netherlands 5.1
Switzerland 4.6
China 4.2
Japan 2.7
Malaysia 2.0
Main Invested Sectors 2008, in %
Manufacturing 32.4
Mining 30.9
Financial and insurance services, real estate and business services 28.8
Trade, catering, hotel industry 4.9
Transport, storage and communication 2.5

Source: South African Reserve Bank, Quarterly Bulletin September 2010

Form of Company Preferred By Foreign Investors
Private Limited
Form of Establishment Preferred By Foreign Investors
Simple process of establishment, do not require to have statutory general body meetings like public companies, and do not have to submit their annual financial statements with the Registrar.
Main Foreign Companies
Global companies in South Africa
Sources of Statistics
Department of trade and industry
South African Reserve Bank
Business Map

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Why You Should Choose to Invest in South Africa

Strong Points
South Africa has high market potential, developed infrastructures and a reasonably competitive domestic economy. The country has put into place economic reforms, which have led to macro-economic stability, tax and customs reduction. It also has a large and active stock exchange.
South Africa has shifted from its traditional industries to production and financial services which are the main contributors to the GDP. Tourism and the retail sector have great potential.
Weak Points
South Africa has a certain amount of weaknesses: High rate of criminal violence and corruption, a highly regulated labour market and poor or unclear regulations in some of the key sectors like telecommunications. These factors contribute negatively to foreign investment.
Government Measures to Motivate or Restrict FDI
Nearly all the business sectors are open to foreign investors. No government approval is required, and there are almost no restrictions on the form or the extent of foreign investment. Other measures taken by the government are simple tax rules, investment incentives, a better regulatory policy on competition, protection of intellectual rights. We can quote :
- The Foreign Investment Grant up to 15% of the value of new machinery and equipment;
- The Skills Support Program which provides up to 50% of training costs and 30% of workers salaries;
- The Strategic Industrial Project program which offers tax allowances; and
- The Small and Medium Enterprise Development Program which offers tax free grants.


With 23.5% unemployment, Jacob Zuma recognising that the recession had delayed economic recovery and the private sector's capacity to create new opportunities, announced the remittance of some 303 million dollars in order to help company heads and employees who were in trouble due to the crisis.

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