FDI into SA drops by 70%

[Dave A]

South Africa's foreign direct investment (FDI) inflows has dropped by 70% in 2010 when compared with 2009, according to Professor Stephen Gelb of the University of Johannesburg.

He was speaking on Tuesday at the launch of the United Nations Conference on Trade and Development (Unctad) World Investment Report 2011 in Johannesburg.

South Africa had also been placed tenth on Africa's top 10 recipients of FDI inflows in 2010, compared with fourth place in 2009.

Full story from M&G here.

The multi-million dollar question that isn't answered in that article though, is why?

[AndyD]

Possibly because foreign investors are looking for the oil and gas rich African nations maybe?

Maybe the local labour price and laws are beginning to be deterrent as well?

[AmithS]

I would go with the later at the moment, SA is becoming unpredictable and too many things being left as is, not being set straight!

[Blurock]

I agree. Investors do not want instability as now caused by the unions. The corruption in business and in government and the stupid remarks by politicians is a big deterrent and may lead to South Africa becoming another Zimbabwe if we do not stop them now. Head the warnings from Tutu, Vavi, Moeletsi Mbeki and others.

[Dave A]

I personally expect it's an accumulation of all things mentioned both here and in the comments below the article.

What concerns me most is it is hard of evidence of significant problems, and if it isn't recognised as such we're not going to see any effort towards fixing the issues that are causing the trend. It really is a pretty serious warning sign.

[Dave A]

Interesting article here - Door closing on SA's gateway status.

It's a fair read, but here's the punchline:

Everywhere we look we encounter growing doubt about South Africa's economic management. This encompasses business scepticism concerning the emphasis on state-driven development in the government's new growth path; worries over what appears to be an increasingly interventionist attitude to foreign direct investment in South Africa and recourse to the competition authorities to act as a quasi-inward investment regulator; tolerance of an extremely destabilising one-sided "debate" about nationalisation; and resultant concerns over who is *actually driving economic policy.

We detect a growing feeling in the international and domestic investor community that South Africa is not getting it right, whereas better opportunities are emerging elsewhere on the subcontinent. The trickle of foreign direct investment previously destined for South Africa but now diverted to the likes of Nigeria and Kenya is unlikely to become a flood any time soon.

Let's hope government wakes up sooner rather than later.

[Lawyer Destroyer]

Reasons FDI into SA has dropped dramatically

IMHO - one of the reasons can be attributed to the general "wild West" perceptions of SA by the outside world, which compares SA with i.e. the Philippines, Sudan etc and this type of report does not go well especially when it involves domestic fraud perpetrated at professional levels - http://www.slideshare.net/KVDMerwe/s...m-copy-8473602

When a document is titled Investors Warning - South Africa 2010 - A Dangerous Place for Investors - Financial Bandit Country - Even in Modern Times (which has to do with another thread on this forum, and the article publication - which must now result in what is termed "harmful business practice" as a consequential charge against the perpetrators), one has to reflect on domestic business practices and judicial process. Mr. Sterne (member on this forum) will advise you on the practice of SA law and the state thereof I am sure. I would give you a personal opinion that only a fraction of international investor losses ever result in legal or criminal action mainly through judicial impotence and lack of attention or drive by the victims. The result is simple - investors shy away. The old maxim of "Once bitten, twice shy" applies. Would you stay at a hotel in a foreign country which was notorious for ripping it's guests off or overcharging or for having a hostile unfriendly or criminal environment ? No. Even if you had never been there to experience it first hand, the simple notoriety would scare you away....just so - in fact more so, with investors from outside our borders. Every time Malema opens his big mouth, I regret, he bowls over outside investment (even when he says nothing and only smiles) and investors "en masse". Everytime a company or individual calls "Fraud" and little is done - investors shun. People, generally, do not call "fraud" for nothing. Invariably the last resort a person has to being cheated is to call "fraud". When this happens, ears prick up. Fraud, especially defrauding of elderly people, is nothing more than stealing life, it is a heinous crime and can be likened to commercial sabotage of a country. It affects every person in the economy and like shop lifting, does have an effect on the business community as a whole. Thus the law in RSA provides for mandatory sentencing guidelines for fraud in excess of R1 million to carry the consequence of 15 years in prison. Fraud dates back to Roman times, and should be dealt with absolutely ruthlessly. Simply put, fraud is cheating - and cheating at any game or sport deserves to have the perpetrators knocked clean out the game - to keep the sport clean, just so with business. In the Philippines fraud is called Estafa, it carries the option of life imprisonment and the death penalty according to a Presidential decree which demonstrates just how seriously it is viewed as an economic crime. In many countries fraud is considered a serious economic crime and dealt with accordingly - rapidly and without mercy. International banks set a trend and it is their vigilance which prevents many frauds from ever transpiring in the first place.

Regrettably South African banks still have a bit of catching up to do with their international counterparts in this respect and some SA banks, by their very inaction, and lack of due process and investigation prowess, become unknowing participants in fraud by the very processes they put forward to protect individuals, companies, businesses and the banks from fraud and White collar crime. In fact I would go so far as to say that in many fraud cases the perpetrators are enabled by the unknowing collaboration and connivance of the banks due to these very policies and processes the banks rely on. Some banks, especially one particular one in SA, likes to take a neutral stance when Fraud is called and sooner or later one of the victims of fraud is going to challenge them openly and take them down on the basis of international case precedents. The world is sick and tired of White collar criminals and fraudsters - especially professionals who could make more than sufficient income from their qualifications and positions yet simply see fraud and liquidation manipulation as a way to generate a fast buck.

Foreign investors, like swimmers, prefer calm seas, with few dangers, no surprises and clear water. South Africa - well - immigration figures coupled with investment decline, extended judicial process, etc.....speaks for itself. JMHO (Just My Honest Opinion). LD

[desA]

We detect a growing feeling in the international and domestic investor community that South Africa is not getting it right, whereas better opportunities are emerging elsewhere on the subcontinent.

Simply put : Zuma & his cronies simply do not have the faintest clue about leading a country.

[Blurock]

Libya is another example of the incompetence of our so called leaders. Time magazine has published an article about the winners and losers in the Libyan civil war. Guess where South Africa featured?

First Zuma signs the UN agreement, then he turns around and tries to side with the dictator, criticising the UN and NATO. Funny that all the rogue governments in the world side together; Venezuela, Libya, Cuba, Zimbabwe, South Africa?! Birds of a feather?

It is clear that South Africa, who aspires to join the security council of the UN, still do not have the political maturity required to perform on the world stage. It is better that our leaders just stay at home and shut up as they do not have the right to further disgrace our country in the face of the world. Their actions have a direct negative impact (amongst others) on direct foreign investment and the creation of local jobs.

[murdock]

while china rubbs its hands to gether with a big smile...as they flood our markets.


could this be what they are hoping for...less investment from other countries easier access for them...without competion...or am i smoking to much knowledge weed.