Despite negative perceptions of South Africa’s local economy, compounded by ongoing social challenges, the country remains the single-biggest recipient of foreign direct investment (FDI) on the continent, capturing more than a quarter of the continent’s total FDI allocation.
“But, to many countries outside, the dominant story about South Africa is one of crime, violence and, more recently, of poor labour relations,” noted Grant Thornton South Africa chairperson Deepak Nagar in a statement, adding that the country needed to counter the negative headlines and perceptions with more positive news that promotes the nation’s promising, emerging economy.
“Many emerging economies still face tough social challenges but, beyond the negative headlines, there is great investment potential for businesses to tap into,” he added, noting that, while no economic growth was expected for this year, South Africa had still clinched its biggest investment deal in 40 years, namely the R11-billion investment deal that the Coega Development Corporation signed with Beijing Automobile International Corporation.
This deal will see the establishment of a vehicle manufacturing plant in the Coega Industrial Development Zone, near Port Elizabeth.
“Most businesses in search of growth will, at some point, consider expanding into an emerging economy. The large working-age populations and huge, hungry consumer markets that these countries offer are strong pull factors for ambitious businesses,” said Nagar.
“Yet there is often something holding businesses back from investing in South Africa, namely the tough social challenges documented on an almost daily basis by the world’s media.”
Another emerging economy, Mexico, attracted $28.4-billion of FDI – a 25.8% increase on the previous year, catapulting the nation into AT Kearney’s list of the world’s top ten biggest recipient nations of FDI. Nevertheless, global perceptions of Mexico, similarly to South Africa, are those of a nation challenged by drug trafficking, violence and corruption.
POSITIVE PULLS
Nagar believes South Africa has a lot to offer businesses interested in expanding in the country. Alongside developed physical and digital infrastructure, South Africa has a well-regulated and secure stock market, tough banking regulations, attractive foreign exchange provisions, and political stability. This is the narrative that South Africa has to emphasise to the global community, he reiterated.
“There should be a greater emphasis on the country providing international businesses with good, concise information about relevant factors – such as economic performance, the wellbeing of the population and its strengths,” said Nagar.
“Communication must be constant and consistent over multiple platforms, as we continuously craft messages to increase the country’s brand as an investment destination,” he concluded.