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Washington, DC - South Africa climbed two spots to become the 13th most attractive destination for foreign direct investment (FDI) globally, according to global management consulting firm A.T. Kearney's 2014 Foreign Direct Investment Confidence Index (FDICI), released on Tuesday.
It takes an in-depth view of forward-looking investment sentiment among senior executives surveyed from 300 of the world’s leading corporations.
The US maintains its first place position from last year followed by China and Canada.
The findings bode well, not only for the US, but for the global economy, according to A.T. Kearny. Nearly four out of five respondents are more optimistic about the global economy than they were a year ago.
Since its inception, the study has consistently pointed toward top global choices for foreign direct investment, with the top 10 most attractive FDI destinations receiving a majority share of global FDI inflows roughly one year after the survey.
"Corporations sitting on massive cash reserves are increasingly confident that they can parlay these into productive investments with attractive returns.”
Each region has an interesting unfolding story seen through the lens of the FDI Confidence Index, with many of the winners riding on stability after the ongoing post-recession economic turbulence.
Despite unresolved deficits in the Eurozone, 11 European countries still rank in the top 25, some entering the ranking for the first time.
Russia (last year’s number 11) fell off the top 25 ranking, despite the fact that the survey was fielded prior to the current political situation in Ukraine.
Africa managed to increase FDI flows by 12% to $ 47.6bn in FDI. Its growth was driven partly by investment in extractive industries, but manufacturing and services are also seeing increased interest.
South Africa received $4.5bn FDI in 2012 after a bounce of $5.8bn in 2011.
“We expect to continue to see increased FDI flows to Africa overall. Energy related companies, retail companies and infrastructure and transport providers for example are all committed to invest in the continent," said Wim Plaizier, managing partner at A.T. Kearney Africa.
"The Renewable Energy Independent Power Provider Programme in South Africa has played a major role in driving investment. While each deal in itself may not be particularly large, these moves are all positive signs of the increased confidence of the global investor community.”
He said it is critical for governments and investors alike, to respond to this increased investor confidence by putting in place the right levers to capitalise on the many opportunities and drive further job creation and social and economic development.
The A.T. Kearney report concludes that opportunities abound for investors who know where to look, aided by strategic foresighting and scenario-based planning to understand where the potential lies and who are prepared to react to different eventualities.
“We feel confident that despite a slow and uneven economic recovery, executives who make FDI decisions are regaining a sense of measured confidence,” said Erik Peterson, A.T. Kearney partner and a co-author of the study.
“We’re pleased that this year’s study portrays a more optimistic picture globally.”
