Global investors show confidence in South Africa

4 June 2014

South Africa has climbed two spots to become the 13th most attractive destination for foreign direct investment, according to a recent survey by global consulting firm AT Kearney.

The results of the 2014 Foreign Direct Investment Confidence Index, which takes in the views of senior executives from 300 of the world's leading corporations in 26 different countries, were released on Tuesday.

South Africa is the only country in Africa on the list of 25 and came ahead of Switzerland, Spain, Japan and Italy. 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," the company said. "Nearly four out of five respondents are more optimistic about the global economy than they were a year ago."

"Despite racking volatility and economic uncertainty on a global scale, the findings from the 2014 FDICI suggest that a corner is being turned," said Paul Laudicina, founder of the FDI Confidence Index. "Corporations sitting on massive cash reserves are increasingly confident that they can parlay these into productive investments with attractive returns."

African growth

Africa managed to increase FDI flows by 12% to $47.6-billion in FDI, the survey found. Its growth was driven partly by investment in extractive industries, but manufacturing and services are also seeing increased interest. South Africa received $4.5-billion FDI in 2012 after a bounce of $5.8-billion 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 of AT 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 was 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.

Other key international survey highlights include:

Despite unresolved deficits in the Eurozone, 11 European countries still rank in the top 25, some entering the ranking for the first time;
Canada moves into the third spot;
39% of respondents voiced a more positive sentiment than last year for second- ranked China; and
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.

View the full report:www.atkearney.com/research- studies/foreign-direct-investment-confidence-index

SA reporter