Fin24

Foreign direct investment to SA plummets

2012-10-24 07:59

Johannesburg - Foreign direct investment flows to South Africa tumbled 43.6% in the first half of 2012 compared to the same period last year, while FDI to the continent as a whole rose by 5%, a United Nations report said on Tuesday.

The decline in FDI to Africa's biggest economy came amid an 8% drop in global FDI inflows due to heightened global economic uncertainty, according to the UN's Global Investment Trends Monitor.

As South Africa battles the worst labour unrest since the end of apartheid, the numbers suggest it will face increased competition for investment from its faster-growing neighbours.

The report said FDI inflows to South Africa fell to $1.7bn in the first six months of 2012 from $3bn in the first half of 2011, reflecting sluggish domestic economic growth as well as a slowdown in developed economies.

"It reflects the situation in the main investors in South Africa (which) are developed countries," said Astrit Sulstarova, an economist at the UN's Conference on Trade and Development (UNCTAD), which produced the report.

Slow economic growth in South Africa could also be influencing investment decisions, Sulstarova added.

The IMF forecasts South African GDP growth of 2.6% this year, and recently cut its 2013 growth forecast to 3% from a July projection of 3.3%, due to its close links to struggling Europe.

The IMF has also trimmed its 2012 forecast for Africa to 5% from 5.4%, but raised its projection for 2013 to 5.7%  from 5.3%.

FDI flows to Africa grew 5.1% to $23.1bn in the first half of 2012 after three consecutive years of decline, the UNCTAD report said, citing a return of investor confidence to North Africa, especially Egypt.

Globally, FDI inflows reached $668bn in the first half of 2012, down 8% from the same period in 2011, due to a decline in inflows to the United States and the BRIC countries - Brazil, Russia, India and China.

However, China was still the world's largest recipient of FDI, with inflows of $59.1bn in the first half.

For the first time, developing countries accounted for half of global FDI inflows, UNCTAD said, with Latin America and the Caribbean attracting greater investment along with Africa.

Flows to Europe as a whole increased by 5.7%, but the European Union experienced a decline of 3.8%.

 

Comments
  • gary.guy.507 - 2012-10-24 08:06

    Oh, was just reading the article by the "Proffesor" Government communicator on how well South Africa was doing ... hmmmm! This article must be wrong!

      Rabbler.Rouser - 2012-10-24 08:14

      The "Proffesor" works for the government. Thats why he is wearing rose tinted spectacles. Besides, he is paid to write that stuff anyway.

      nicholas.graan - 2012-10-24 08:14

      Crises? what crises?

      ianon.ym - 2012-10-24 08:17

      HaHa, the 'Proffesor', he was sitting in the sun outside his Kraal dreaming when he wrote that :)

      fred.murgatroyd - 2012-10-24 08:28

      The proof is in the pudding. BHP Billiton are making massive investments all over the world EXCEPT for South Africa. Makes you think, doesn't it? If you wanted a safe and lucrative investment would you invest here? I think not.

      grootrot.vanzyl - 2012-10-24 08:28

      Zuma will do the calculation as follows: 100 - 43.6 = 56.4. I still have popular vote. [Insert rude word here] the people who think I am doing badly.

      darryn.lahner - 2012-10-24 08:31

      Well done ANC and cadres. You have reduced a once thriving and hopeful nation into a pile of rubble and filth in record time. I suppose we all knew it was going to happen anyways. African cANCer.

      dewalds3 - 2012-10-24 09:08

      The 'proffesor' is just like Roelof Botha - they are running their own statistics and agendas. Nobody knows where they get the data, but they are very eloquent in tallking BS. Not that I trust the UN any more, either..

      orania.betaenduro - 2012-10-24 09:13

      Thanks to Malema and the corrupt ANC CROOKS.

      denis.dendrinos - 2012-10-24 09:14

      The Economist's article "Cry the beloved country" was soooo wrong huh? I mean this is proof! We're doing just hunky dory thank guys! Bloody imperialist mischievous agents trying to counter the great gains made by glorious brother leader Zuma...... bwahahahahahahahahahahahahahahaa......I can't do it right......come on Mac - give us a spin quick, I can;t wait to hear the drivel that comes out your mouth.

      clive.kihn - 2012-10-24 10:38

      Semonatenate: I think you should do a Unisa Economics 101 course before you make a fool of yourself again on this forum. And read some credible newspapers and journals. FDI is soaring in many developing countries because of the European crisis; we are not one of them due to govt's inability to implement comprehensible investor-friendly conditions. Plans we have aplenty, but implementation is patchy, at best. Investors will not bring hard money in on the basis of schemes and plans about which even the cabinet seems to have different views. Too many unreconstructed card-carrying communists in the cabinet, I say, and their influence is totally out of proportion to the SACP's relevance and support base in SA. But then Jake needs them for his second term.

  • kobus.hattingh.5 - 2012-10-24 08:06

    And this is only the beginning whilst the ANC remains in power :(

      Rabbler.Rouser - 2012-10-24 08:18

      What's absolutely amazing is that in spite of the global economic problems, other developing nations are attracting increased FDI. Yet it is declining in South Africa. It means that the government is making it unattractive to invest here.

      thapelo.maleka.94 - 2012-10-24 08:55

      At least 10% of FDI will go to cape town thank Zille the rest of the Anc lead province can suffer

  • jo.barton.92 - 2012-10-24 08:10

    There are enough global problems and yet we continue to create more.Shame on this government.

  • robert.starke.98 - 2012-10-24 08:15

    What do you expect when the Govt and its crooks cant do their job properly. More to come, this is only the tip of the iceberg !!

  • marc.ross.965 - 2012-10-24 08:16

    It's time for minorities to establish a new Freedom Movement.One that will do whatever it takes to free ourselves from ANC dictatorship. The time is soon approaching when an armed struggle may be our only recourse to survival.

  • flysouth - 2012-10-24 08:17

    This further huge decrease in FDI comes on top of a massive decrease last year of 70% or so! Quite staggering!

  • max.maxwell - 2012-10-24 08:23

    Who'd have thought this might happen? Gosh and gumdrops and heavens to betsy!

  • jan.human - 2012-10-24 08:30

    Don't worry... The Chinese are investing big on the fleemarkets....

  • neil.kroese - 2012-10-24 08:33

    In 2006 I attended a investment seminar hosted by Stanlib at the CTICC..All the projections made for SA were up until 2015...When I asked a question from the floor what their view was past 2015..since 9 years is a relative short term I was met by absolute silence...Could this be the beginning of the reason behind the silence?

  • douglas.reid.921 - 2012-10-24 08:34

    This is a direct reflection of the confidence the world has in the ANC and their ability to run the country.

  • ben.spreeth - 2012-10-24 08:34

    No, we are not doing too badly because the president said so.

      alan.gernet - 2012-10-24 11:50

      eish!! When did the Prez speak?

  • dragonfire47 - 2012-10-24 08:39

    this entire anc and its kiddie brats have got to go, if this carries on the damage will be irreversable, on the DA can save this country

  • dragonfire47 - 2012-10-24 08:40

    this entire anc and its kiddie brats have got to go, if this carries on the damage will be irreversable, only the DA can save this country

  • sibusiso.mkoko - 2012-10-24 08:40

    Its tumbling the world over. Its called a recession news24 jurnos. Damit ya'l r aNnoying with your negativity. What about Domestic ddirect investment ( if there is such), is it plummeting as well?

      richard.hipkin - 2012-10-24 08:44

      Dude, stop living in denial. The ANC and COSATU are destroying this country. Time to rise up , acknowledge the problem and vote them out. They were always only ever going to be a terrorist organisation.

      shaun.knoesen.9 - 2012-10-24 08:47

      Ummm Sibusiso, if this is due to the global recession why is the investment to the rest of Africa still rising then.....?

      vicker.man.3 - 2012-10-24 08:53

      You obviously missed the point where the article indicated how the FDI in other African countries is INcreasing??? Explain that then, Einstein???

      hendrikvs - 2012-10-24 09:04

      Ai tog! Where is Chris Barnard when we need him to do some transplants?

      alan.gernet - 2012-10-24 09:05

      er Sibosiso - that is called Denial if you want to blame it on the global slump! The fact is that SA is becoming more and more unproductive. The population is increasing out of control, and there is no chance of employment or education for the youth. Labour unrest is at an all time low. And the beloved Govt is rocked by corruption scandals on a daily basis. So who in their right minds would want to take the risk of investing here in an imploding 3rd world banana republic??

      alan.gernet - 2012-10-24 09:08

      er Hendrik - not transplants boet - IMPLANTS!

      carl.v.rooyen - 2012-10-24 09:22

      while I appreciate your stance, local investment is also moving offshore. Its all about risk and reward. Would you put your savings and your pension fund, that money that you are saving for when you retire or send your children to university into an account yielding 3% or into an account yielding 7% ? My guess is that you will go for the higher return. Foreign AND local investors are the same. Added to that the lower yielding account has a higher chance of loosing your money, well that makes the decision even easier. This had more side effects, 1) if we want investment we have to offer higher returns to make up for the risk (think Greek bonds) and this untimely increases future cash outflows from the country, 2)It effects the current account, in other words SA as a net importer needs forex to pay for all these fancy things that everyone wants, the less forex coming into the country, the higher the R/$ exchange rate(elasticies approach)and this is not good for anyone as everything gets more expensive and the whole cycle starts again. And no a weaker exchange rate is not better for exports, only in the short term. If you were selling apples and you could get R2 each overseas and only R1 locally where would you sell? And if you wanted those apples then you would have to pay the farmer the same price that he can get overseas. In the short term the forex flowing in will drop the exchange rate but will will not return to its original point.

      clive.kihn - 2012-10-24 14:17

      Sibusiso: then please tell us why direct investment is growing in other developing countries while we are losing out? A lot of money that is not going into Europe because of the crisis there is going to the other BRIC countries and certain African countries. It is not coming here because of the govt's subservience to the unions and because it cannot implement the right policies to attract such investment. It is not negativity to point out genuine failures, it is realism.

  • vmeiring1 - 2012-10-24 08:41

    Wonder why??? They are realising this county is ran by idiots, ruled by even bigger idiots, calling themselves unions and creating false expectations for the working force, instead taking on the government for ridiculous price increases as a result to poor governing and not to mention corruption (as we know it - theft)

  • shaun.knoesen.9 - 2012-10-24 08:44

    Well done ANC! Well done! Bravo! And no - you can`t blame this one on apartheid either.....

  • eric.martinsich - 2012-10-24 08:47

    Alot of doom and Gloom writers on this page. Stand behind your country and do your piece not run down everything that has been done

      alan.gernet - 2012-10-24 08:58

      I will run down corruption every chance that I get!

  • victor.windsor - 2012-10-24 08:49

    Well done ANC !!!!!!!

  • nicolaas.geldenhuys - 2012-10-24 08:58

    Beginning of the end. 18 years late, but we still predicted it.

  • orania.betaenduro - 2012-10-24 08:59

    Thanks to Malemmer and the very capable ANC corrupt crooks.

  • Eterni80 - 2012-10-24 09:01

    This is my surprised face

      dewalds3 - 2012-10-24 09:09

      A very terrrible thing, the tears into my eyes, they spring!

  • joyce.beeton - 2012-10-24 09:05

    Who is surprised? And then we have Patrick Craven of Cosatu saying that the losses in the mining sector not so bad "because the gold is still in the ground". What a chop!

      alan.gernet - 2012-10-24 09:09

      a bit of the Vavi genius has clearly rubbed off....

      Foremind - 2012-10-24 09:23

      Zuma's tendency

  • terrylee.heuer - 2012-10-24 09:12

    This Govt is all about power and no leadership!!!

  • gary.desousa.7 - 2012-10-24 09:17

    FDI flows to countries where profits can be made, where goverments are private enterprise friendly and have stable policies and goverments support the enterprises not block them. Are we one of those?

      alan.gernet - 2012-10-24 09:25

      We have Stable Policies ---- definately a smell of hoss dung in the air.

      gary.desousa.7 - 2012-10-24 09:40

      Stable policies means been able to make profits,a labour policy that is friendly to Companies, not socialist in nature,stable in that it invites entry and does not fight the investor like the walmart deal. Hoss dung? Are you a vet?

  • stephen.j.dickson.3 - 2012-10-24 09:32

    The ANC and all its followers are basically Levers i.e. simple tools with no understanding of consequence to actions hence the reason SA is now a pitiful and pathetic 3rd world nation rapidy becoming 4th........bottom line.

  • peter.jefferies.90 - 2012-10-24 09:40

    Well done ANC you are running South Africa like every other African country now!! Take everything you can now and who cares about the future! Can we just get rid of these thieves that are stealing everything while they pretend to run the country!!!

  • richard.zanner - 2012-10-24 10:04

    SO Rand will plummet further, fuel will go higher and all other costs will go higher so inflation rises so interest rates increase to fight higher inflation. How did they screw it up so badly so fast.

      alan.gernet - 2012-10-24 10:52

      then we strike for more money to outstrip inflation. No problem. whaahaa

  • phathuchicos - 2012-10-24 10:26

    What the hell is wrong with News24?...when our counrty's bonds debutted on Citi index this year the foreign inflow reached a critical level. the article must be a mistake I think.

  • clive.kihn - 2012-10-24 10:27

    No doubt Mr Gordhan will express "surprise".

  • dawie002 - 2012-10-24 11:47

    Thank the ANC!

  • themba.thwala.98 - 2012-10-24 13:08

    The saddest thing is that the first citizen does not even have a concept of what FDI means and its relationship to the economy. He is happily spending over R240m of the public's money upgrading his harem while the average citizen, his boss, can no longer even afford to fill up his petrol tank. “Cry the beloved country ...”

  • jecarstens - 2012-10-24 14:30

    The comments say it all! The ordinary people don't trust the Government anymore, how do you expect some foreigner to trust us with his money? We had such a good chance after apartheid to ban race as a criteria and open the economy for all. Instead the ANC reintroduced the race card, made the money available only to its inner circle, got rid of the capacity held by whites,replacing it with inexperienced ANC cadres, and left the infrastructure to rot.In foreign affairs it alined itself to every rouge nation and dictator. Investment. What investment?

  • beverly.young3 - 2012-10-24 14:46

    Actually, the government make it difficult for investors. The 'red tape' is horrific. I speak as an observer here. Currently there is a group trying to set up 'foundations' that will employ thousands of people, and bring in millions of Australian dollars. The person who told me the story said that he couldnt understand how he could set up dozens of bank accounts in seconds, but to get business agreements out of the various departments was frustrating.

  • attie.gerber.1 - 2012-10-25 11:41

    that is when you get idiots like malema telling people the minerals belongs to the masses and workers dictating to the mines what they want. why is it that companies from australia ie billiton etc. are investing in zambia, drc, ghana etc. they know their money is safe in those countries compared to south africa.

  • braamc - 2012-10-25 17:12

    There is a surprise, who would have thought. Get rid of this cANCer

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