the global investor
South Africa: A Rainbow in the Rain
T
he impact of the coronavirus pandemic on investing continues to reverberate across the globe. Last year the macro economy contracted by 4.3% and international foreign direct investment (FDI) levels came to an abrupt halt. Fortunately, despite heightened investor caution, the FDI slump is unlikely to become a lasting feature of the global economy. However, uncertainty is still at an alltime high, and investors continue to delay or cancel projects as countries face the prospect of re-closing borders. Furthermore, threats of new virus variants have further dampened hopes that vaccines will lead to a long-term solution or a permanent return to normality any time soon. Africa recorded a FDI total of $38 billion in 2020, representing a drop of 18% from $46 billion in 2019, according to the United Nations Trade Association. Nevertheless, thanks to the continent’s innovative spirit, the COVID-19 crisis has also prompted 26
positive change and development across Africa. An increased allocation of capital from corporates to their corporate VC activities, acquisitions of African tech companies, intensified FDIs and major initiatives such as the ‘Enrich in Africa’ programme, shine the spotlight on what the region has to offer. South Africa in particular, is renowned for its strategic location, varied topography and great natural beauty, and is on the cusp of transformative and long-lasting growth.
Of the approximate 400 companies on the continent earning more than $1bn, about half are based in South Africa. More specifically, Durban paves the way over other South African locations, offering a southern gateway to and from Africa, an attractive social environment and a rising economic development rate.
The main obstacle that South Africa faces in becoming a leading investment destination, is the backlog of infrastructure development and the slow turnaround in administraGeographically situated to service tive procedures and approval times. international markets, South Africa Consequently, South African cities boasts excellent infrastructure, are making huge efforts to improve, sound public finances, a developed develop and stimulate enterprise, financial market, valuable innovative and have implemented reforms, capacity, a highly skilled workforce making it easier to do business. and a steadily growing consumer market. Nicknamed the Rainbow FDI in South Africa fell by almost half Nation, reflecting the country’s last year, in line with the world-wide multicultural diversity, South Africa downturn, according to the United has experienced rapid change and Nations Conference on Trade and regeneration in the last few years, Development.The country attracted and is ranked as an ‘upper middle-in- R2.5 billion in new investments in come country’ by the World Bank. 2020, a 45% decline from the 2019
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