Investment in South Africa continues to become more attractive

South Africa has become an important emerging market in the global stage, offering solid and steady growth in its economy and providing secure rewards for potential investors. The country’s perceived attractiveness relative to other regions in the world has improved dramatically over the past few years and more foreign investors are taking notice.

Recently, South Africa climbed in two global surveys about foreign direct investment. According to the 2014 Foreign Direct Investment Confidence Index, South Africa is now the 13 most attractive destination for foreign direct investment, while Ernst & Young said the sub-Saharan continent is the second-most attractive investment destination in the world.

But why has South Africa suddenly become more attractive to foreign investors recently? It could be due to the country’s continued economic growth, or simply the fact that foreign investors continue to feel secure in their investments within the country. Just by taking a look at the results from the 2014 FDICI, which takes the views of senior executives from 300 of the world’s leading corporations in 26 different countries, South Africa came ahead of Switzerland, Spain, Japan and Italy on the list.

One thing that’s definitely caught investors’ eyes is the prudent monetary and fiscal policies in place in South Africa. Due to these policies, the country’s economy has grown in value from US $80-billion in 1994 to $400-billion today and it continues to grow despite the uneven global economic recovery.

Ernst & Young’s recent survey data revealed that while there has been a decline in African FDI project numbers, from 774 in 2012 to 750 in 2013, it’s primarily due to the ongoing uncertainty in North Africa. The data goes on to report that there is a noticeable divide between FDI trends in North African compared to sub-Saharan Africa; FDI projects in North Africa declined by nearly 30% in 2013, while projects in sub-Saharan Africa still increased by 4.7%. Additionally, South Africa held their 2012 positions in a list of top 10 countries by FDI projects for 2013.

Despite racking volatility and economic uncertainty on a global scale, the findings from both the Ernst & Young and FDICI suggest that a corner is being turned when it comes to foreign investment confidence in South Africa. South Africa received $4.5-billion FDI in 2012 and is expected to continue to see increased FDI flows. Companies in the energy-related, retail, infrastructure and transport sectors are all committed to investing in the country, with the Renewable Energy Independent Power Provider Programme in South Africa playing a major role in driving FDI.

All in all, South Africa continues to shine as an attractive investment opportunity for international investors. Over sixty percent of Ernst & Young’s survey respondents said that there had been an improvement in Africa’s investment attractiveness over the past year, up four percentage points from last year’s survey. And those that have already invested within the country feel the most secure with their investment choice in South Africa than those who haven’t yet. The survey also revealed that those who have companies with a presence in South Africa perceive the country to be the most attractive investment destination in the world, while seventy-three percent of those who are already established in the region believe Africa’s attractiveness has improved over the last year.

South Africa has become a sound destination for inward flows of investment and an emerging market that matters. It remains a reliable destination for international investors and these two recent surveys prove that it will continue to remain that way.