US Assistant Secretary of State for African Affairs Tibor Nagy believes there is a window of opportunity for South Africa to attract direct investment from US firms that are currently seeking outlets for billions of dollars in capital, accumulated as a result of strong economic conditions in the world’s largest economy.
Speaking at the Wits Business School at the tail-end of a multicountry tour of the continent in June, Nagy argued that foreign direct investment (FDI) was the key to creating jobs for young people in Africa, and South Africa specifically, where youth unemployment remains stubbornly high.
The former ambassador, who spent most of his diplomatic career in Africa, said he was actively encouraging American companies to consider Africa as an investment destination.
He stressed that firms would only consider investing in South Africa and Africa if the environment was more “welcoming” of FDI.
Nagy was encouraging American ambassadors across the continent to meet directly with their host governments to outline the conditions that would be supportive of investment by US companies.
These included creating a level playing field for US firms relative to companies from other territories, guaranteeing the sanctity of contracts, lowering levels of corruption, ensuring frameworks for fair dispute resolution and encouraging good governance more generally through open political contestation and instilling a human rights culture.
South Africa was particularly well placed to attract further US investment, owing to its well-developed economic and social infrastructure, as well as its institutional resilience.
Nagy acknowledged South Africa’s economic regression over the past nine years, which he attributed partly to the global economic crisis, but largely to internal political problems.
“But South Africa starts with so many advantages that so many other countries on this continent do not share . . . those treasures exist and now just have to be re-exploited and re-engaged.”