Foreign Direct Investment (FDI) in South Africa dropped by 43.6 percent during the first six months of 2012, a UN report shows, due to slow economic growth.
Despite three years of decline in FDI to Africa as a continent, the first half of 2012 recorded a 5 percent growth in investments on the continent – reaching a total of $23.1 billion -, the 10th edition of the Global Investment Trends Monitor revealed.
The North African region showed exceptional levels of investors flocking to the area, as investor confidence returns following the political turmoil in the region over the past years. The report shows FDI inflows into North Africa has increased by three-quarters in the first half of 2012, with Egypt experiencing particular favour from global investors – gathering $2.5 billion in FDI over the first half of the year.
The results will be worrisome for South Africa, which has hitherto been the African continent’s largest economy. However, the economic stability of the country has been shaken over past months due to the huge wave of illegal strikes that have occurred – beginning in the mining sector over workers’ demands for increased pay packages, and spreading to multiple sectors causing widespread financial losses across the market and hitting important industry players badly.
It appears that the labour force woes of South Africa have been enough to push investor attention to other countries in Africa – with Africa’s FDI levels growing (to $23.1 billion), as opposed to the extensive drop in South African investments which fell to only $1.7 billion. It may now prove difficult for the country to draw back investor confidence, as the continent provides endless and increasingly attractive investment prospects.
Globally speaking FDI trends took a hit, with investment figures world-wide totalling $667.6 billion, demonstrating an 8.4 percent drop on FDI figures for the corresponding period last year.
For the first time ever, developing countries received over half of the global FDI funds – due largely to substantial falls in investment infows into the US, and into BRIC countries (Brazil, the Russian Federation, India and China).
China was the largest recipient of FDI funds, with FDI totalling $ 59.1 billion, despite experiencing a 3 percent drop in FDI figures.
By; Gabriella Mulligan