Fin24

Foreign investment in SA dives in 2010

2011-07-26 18:22

Johannesburg - South Africa's share of foreign direct investment (FDI) fell 70% in 2010 from the previous year, according to a United Nations Conference on Trade and Development report released on Tuesday.

South Africa "saw its inflows fall by over 70% to $1.6bn, a level amounting to only one-sixth of the peak recorded in the country in 2008", according to the World Investment Report 2011.

However, Prof Stephen Gelb of the University of Johannesburg cautioned that FDI did not give "the full story", as foreign flows were not just about money.

"It's about the entry into the economy of a bundle of resources," he told reporters.

These included money, skills, business models, management capabilities, and new products and process.

"This is much more important for long-term growth than US dollars."

It was however difficult to measure these benefits across countries, he said.

South Africa ranked tenth in Africa in 2010 in terms of inflows received, and received just under 3% of the African total of FDI. It had dropped from fourth place in 2009, when it received 9% of total inflows to the continent.

Angola was the top-ranked African country, followed by Egypt, Nigeria and Libya.

South Africa's share of FDI in 2010 put it 69th in the world rankings.

To put this in perspective, Chile received $15bn and ranked 19th. Indonesia received $13bn and ranked 20th, Gelb said.

The FDI performance index - which looks at the share of FDI inflows making up gross domestic product (GDP) - puts South Africa 128th in the world, far behind the 85th place it achieved in 2009.

Burkina Faso was ahead of South Africa at 127th, and Italy was in 126th place.

Gelb expected South Africa's performance to improve this year.

"2010 performance for South Africa was possibly an aberration... we're likely to do much better."

According to data from the SA Reserve Bank, South Africa received $707m in FDI in the first quarter of 2011. This was almost half the $1.6bn in FDI received in the whole of 2010.

It was not only South Africa that did badly. Africa's FDI performance in 2010 was "not great", Gelb said.

"Africa did not share in the rise in FDI inflows experienced by other developing economies."

The continent's FDI inflows for 2010 fell 9% from 2009, to $55bn.

In 2010, Africa received 10% of the developing economy inflows and 4% of world inflows.

This compared to 2009 when Africa received 12% of developing economy inflows and five percent of world inflows.

Overall, developing economies did well, attracting 52% of FDI inflows which was the first time they had taken the lion's share from developed countries.

In another global first, emerging economies made up 10 of the top 20 recipients of FDI inflows, with China and Hong Kong leading the way, followed by Brazil.

Outward flows of FDI from developing economies also increased to about one-third of the global total. This was a big increase from 16% in 2009.

"In addition to strong performance in attracting foreign direct investment, developing countries became much more important in terms of sources of FDI flows into other economies," said Gelb.

Most of this was south-south investment, with 70% of the FDI flowing between developing economies.

Global foreign direct investment had not returned to pre-financial crisis levels, although it had shown some recovery.

It rose 5% to $1.24 trillion in 2010, but was still 37% below its 2007 peak.

According to the report, barring any economic shocks, FDI should recover to pre-crisis levels in the next two years.

Comments
  • Met - 2011-07-26 18:43

    This tells you what the world REALLY thinks of SA

  • Redwine - 2011-07-26 18:44

    Pravin Gorden what say ye?

  • Mano - 2011-07-26 18:49

    Political climate for the last 4 years or so a huge factor.

  • Frankly_Every1 - 2011-07-26 18:50

    ViVa Malema !!!

  • d54 - 2011-07-26 18:52

    Now if only the politicians and trade unions could understand just what this means. Too much to hope for I’m afraid.

  • Mad Dog - 2011-07-26 18:53

    The Malema/Zuma Effect! It took a team effort to screw the country! Lets screw Malema/Zuma and the anc in the next elections, a team effort to get South Africa back on track to prosperity and a corruption-free society!

  • gizzy - 2011-07-26 18:54

    Could it be the nationalisation calls that are scaring off investors? Or juju's big mouth? Or a sheep herder as a president?

  • Cynic - 2011-07-26 18:56

    Can someone please explain to my why, then, is the Rand so strong!!!

      Swaar - 2011-07-26 21:32

      uhm.... Because this article about FDI has nothing to do with the value of the rand....its been pretty much operating in the same band for the last few years...

      wozakiwi - 2011-07-26 21:59

      But the Rand is NOT strong!!!!!

      TamaraSays - 2011-07-27 00:23

      The dollar is weak. The Euro is weak. The Rand isn't necessarily strong. It's stronger than before, relatively speaking, but if and when the rest of the world gets their heads back in the game, it'll go through the floor again.

      wozakiwi - 2011-07-27 03:20

      It's certainly weekening against the Kiwi.

  • canuck13 - 2011-07-26 18:57

    Its called ANCYLnomics...

  • GS - 2011-07-26 18:59

    Why would anyone invest in SA with the all the options available out there. 1. Cost of labour is up there with many more developed countries. 2. Labour laws are biased towards the employee. 3. No direct incentives for foreign companies like tax breaks. 4. Communications infrustructure is way below the average for developing countries. 5. The chance your business will be expropriated. 6. Difficult to repatriate your capital. If SA want to compete globally, Gov needs to wake up and take a good look at the competition.

  • MBruno - 2011-07-26 19:16

    That's hardly surprising. Who would invest in South Africa when key figures within the state president's own party talk daily about nationalization of assets without compensation ? And, to make matter worse, the president himself does nothing to reprimand them for their comments !

  • Met - 2011-07-26 19:16

    This tells you what the world REALLY thins of SA

  • Tolerant - 2011-07-26 19:18

    What happened in the years that followed 2008? This was the year Malema was first elected.

      Swaar - 2011-07-26 21:33

      and before he started sprouting bullsh*t all over the place. Makes sense. But don't expect you to understand it. Carry on....

  • jetman - 2011-07-26 19:22

    Wonder why?

      Nuck Choris - 2011-07-27 06:56

      its foreign to me

  • Ederik - 2011-07-26 19:22

    Thank you Julias Malema for helping to distroy this country!

  • Born To Fish - 2011-07-26 19:25

    Viva Julius Viva!!!!!!!!!!!

  • clark - 2011-07-26 19:40

    - And the Anc could'nt give a damn - they'll allow Julema to carry on mouthing off and chase foreign investment away. The Rand is in for a big shock.

      Jamesons - 2011-07-27 07:21

      Lets nationalize the Rand.

  • Clone - 2011-07-26 19:48

    If I understand the gist, I can summarise by saying that very few people, organisations and countries wish to invest their money in Africa any more and South African declines more than most. I need time to try to understand this. Is there anything to eat meanwhile?

      Creeky - 2011-07-26 23:27

      Passes the POP CORN!!

  • grant9 - 2011-07-26 20:02

    With Juju around I'm surprised anybody wants to invest in SA.

  • 50something - 2011-07-26 20:54

    USD do count, and as long as the idiots in charge of this land (and those who think they are in charge i.e. Malema) is carrying on with nasionalisation of businesses and for as long as you are not sending clear messages to foreign investors about your intend, they will send you the message, loud and clear. They will vote with their feet. Catch a wake up Mr President

      Rajty - 2011-07-27 07:22

      Since when is Malema is charge, and who has been nationalising business...or is this just the voices in your head. Have they defined the rationale for foreign investment e.g. tapping into resources etc....what amazes me is how quickly people jump to conclusions when they have very little fact in front of them....go do your research before you mouth off

  • Benzo - 2011-07-26 22:17

    The other sider of the coin: the less FDI, the less you owe the world, the more you stay boss in your own home. How much FDI do you have in your own home?? Wait till the FDI comes around to present the bill!!

      Fred - 2011-07-26 22:44

      Just to put you into the picture .... the less your FDI the quicker the economy contracts and jobs are lost. Is this what you want? In fact with the way the government is handling malema & co we shouldn't be suprised that potential investors are going elsewhere. If you look at the figures you can see that there is plenty of money being invested, but not in South Africa. We need to get rid of malema, crime and violence to get investors back.

  • Roman Moroni - 2011-07-27 02:01

    However, Prof Stephen Gelb of the University of Johannesburg cautioned that FDI did not give "the full story", as foreign flows were not just about money. "It's about the entry into the economy of a bundle of resources," he told reporters. These included money, skills, business models, management capabilities, and new products and process. So let's see: Money - down Skills - brain drain, so falling like a lead balloon. Business models - don't know - so bebefit of the doubt to SA?? Management Capabilities - brain drain, so falling... New products and process - don't know, benefit of the doubt thingy again? Overall it doesn't look too good Prof. Where's that breyani?

  • Colin - 2011-07-27 12:40

    I've sold all my SA mining stocks and invested them in companies with projects in other parts of Africa. None of the companies are listed on the JSE. The reason? Malema. Institutional investors are also happy to put money into African projects, but not South African ones. The reason is exactly the same.

  • concerned - 2011-08-10 16:35

    Please forward to "Einstein" Malema,cc. J.Z. & ALL UNIONS concerned!!!!! WAKE UP & SMELL THE ROSES!! or lack of>

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