South Africa continues to attract investment, despite global challenges, with foreign direct investment in the country increasing.
In a statement on Monday, the International Cooperation, Trade and Security (ICTS) Cluster said South Africa’s total trade with the East African region amounted to R25.5 billion in 2016, up from R23.6 billion in 2015 — representing a 7.92% increase.
The composition of trade between South Africa and the East African region has remained the same since 1994, with South African exports being mainly semi- to manufactured products, while imports from the region remained primary products.
The cluster was reporting on work done in the first quarter of 2017.
Through several bilateral engagements, South Africa continues to see growth in regional, continental and global trade and investment. This has resulted in increased sales of manufactured value-added exports from the Industrial Policy Action Plan priority sectors by R62.2 million. This has brought total sales for the year to R4.2 billion.
“The ICTS Cluster’s work of targeting emerging and traditional markets, and our product and market diversification strategy, has led to an increase in FDI inflows of R15.3 billion during the fourth quarter (January to March 2017), particularly in the energy and chemicals sectors. This brings the total investment pipeline to R50.2 billion,” said the cluster.
The investment pipeline consists of investment projects that have been committed to by project owners. Every year, a target amount is determined. The target amount for this year is R45 billion.
InvestSA, which was launched by President Jacob Zuma earlier this year, will engage in a range of activities to identify potential investment opportunities, targeting potential investors and assisting and supporting them until the potential projects are turned into investment commitments. The amounts will then be added to the investment pipeline.
“These figures follow the recent announcement by the United Nations that global FDI has fallen by less than previously thought in 2016, and is expected to grow again this year and for 2018. This implies that, contrary to challenges often referred to around the world, as investment risk in the developing world, we continue to attract foreign investment,” said the cluster.
South Africa’s ability to attract foreign investment was affirmed by the recent A.T. Kearney 2017 Foreign Direct Investment Confidence report, which placed South Africa as the 25th most attractive destination for FDI globally – and the first on the continent. Furthermore, the 2016 African Economic Outlook placed South Africa fourth amongst the leading African investment destinations in 2015.
Regional and trade integration
The cluster said work is continuing to advance the country along a development trajectory that is sustainable and prioritises integration.
“Continental integration is the foundation for Africa’s socio-economic development and a prerequisite for building stability, prosperity, peace and unity,” the cluster said.
A key element of the Implementation Plan of the Southern African Development Community (SADC) Industrialisation Action Plan is the development of regional value chains, which will contribute to SADC-wide industrialisation and investment.
The Action Plan calls for an improved policy environment for industrial development and enhanced competitiveness through the use of targeted industrial policy instruments.
SADC countries continue to collaborate on several issues, including food security and agriculture.
South Africa is actively involved in the Tripartite Free Trade Area negotiations and the Continental Free Trade Areas.
These negotiations are aimed at promoting a developmental integration agenda that combines market integration with industrial and infrastructure development. These arrangements will ensure an integrated regional market and address the challenges of small and fragmented markets, improving Africa’s proposition as a viable destination for investment.
Work is also underway to promote active participation of the private sector in the regional integration agenda in order to promote intra-Africa investment and the development of regional value chains.
To further South Africa’s contribution to the socio-economic development of the region, the 37th SADC Summit will take place from 9 to 20 August 2017 under the theme, ‘Partnering with the Private sector in Developing Industrial and Regional Value Chains’.
South Africa takes over from Swaziland as the chair of SADC from August 2017 to August 2018.
“During our tenure as chair, we will ensure that we harness the participation and involvement of the regional private sector in the implementation of the SADC Regional Industrialisation Strategy and Roadmap,” said the cluster.
The summit will be held in Tshwane.