SA is a reliable investment destination
Much has been said about the flight of capital from South Africa in recent weeks, suggesting that the country has become an investment pariah.
This sentiment has been coupled with the decision by ratings agencies to downgrade South Africa’s investment status. We are cognisant of the domestic and international factors that have contributed to concerns about the stability of South Africa’s economy.
As we conclude 2015, it is important to contextualise some of the successes we have had in building an investor-friendly environment.
We have finalised the new Protection of Investment Bill, which aims to balance the rights and obligations of investors and government while also preserving the right of government to embark on regulations in the public’s interest.
One of our most significant interventions has been the establishment of a one-stop interdepartmental clearing house that will provide efficient support to investors to ensure that South Africa offers an investment-friendly environment.
We are also implementing incentives and support services for investors through our Special Economic Zones programme. As part of the suite of these economic zones, the six industrial development zones established between 2002 and 2014 have attracted a total of 59 investors with an investment value of more than R10.7 billion.
This is important for the country’s growth and development agenda because research shows that investment is the most reliable predictor of future economic growth and the country’s gross domestic fixed investment (GDFI) to gross domestic product (GDP) stands at about 20%.
This is benchmarked against the international norm where the fastest-growing developing countries have GDFI-to-GDP ratios of above 30%.
The target in the National Development Plan (NDP) for foreign direct investment (FDI) is also set against this international benchmark of 30%.
Insofar as South Africa’s ability to attract investment goes, it bodes well for our country that despite a global trend, which indicates declining FDI levels, we have been able to attract more than R140 billion in the 2013/14 financial year.
This is almost double the amount of FDI in 2012. South Africa was also the recipient of $3.31 billion (R50 trillion at the current exchange rate) in FDI from January 2015 to July 2015, which also saw the creation of 5 037 jobs.
Our efforts to create an investor-friendly environment are bearing fruit and we have developed a robust investment pipeline over the past five years. We have converted a number of these projects into committed investments and launched them this year.
We are mindful of our challenges and goals set out in the NDP. We are committed to implementing the nine-point plan for South Africa to achieve a higher level of inclusive growth.
As we come to the end of this year, we are confident that South Africa will continue to provide a reliable and attractive investment destination for multinationals who continue to use South Africa as a base for their regional and continental operations.
We have laid the platform for Regional Integration and Intra-Africa Trade and the roll-out of the infrastructure programme will serve as a catalyst to boost trade and investment on the continent.
Global economic conditions are affecting all countries and in an increasingly interconnected world, no country is immune from its effects.
What I am confident of is that South Africa will remain an attractive investment destination that is open for business.
Davies is minister of trade and industry