S.A still tops FDI in Africa

WHILE some analysts and stakeholders in business called on President Jacob Zuma to help make South Africa an investment destination of choice in his state of the nation address, others whipped out charts and graphs this week to prove that the South African glass is still half full.

Michael Lalor, director of the Africa Business Centre at Ernst & Young, said that "contrary to current sentiment, the facts show that South Africa is not losing ground to other investment destinations in Africa or elsewhere".

According to Ernst & Young's new report on repositioning the South African investment case, this perception became apparent in reports and commentary after a United Nations Conference on Trade and Development World Investment survey showing that foreign direct investment (FDI) shrank between 2009 and 2010.
Factors such as the nationalisation debate, events in the mining sector and South Africa's credit downgrade fuelled this. Then came The Economist magazine's "Cry, the beloved country" cover story in October, declaring that South Africa is doomed to go down as the rest of Africa goes up.

However, Mr Lalor said in a survey of 503 business leaders in 38 countries, done for Ernst & Young's new Africa Attractiveness report, 41% said they regard South Africa as the most attractive country in which to do business. Nigeria, often touted as the country that will surpass South Africa as Africa's leading economy, was ranked number one by only 6% of the respondents.

Looking at numbers, Mr Lalor pointed out that the number of FDI projects into South Africa grew by a compound annual rate of 28.7% between 2007 and 2011. FDI capital invested in South Africa grew by 24.7% compared to 1% in Nigeria.

"In relative terms South Africa is still stacking up very well against any other African economy that may be considered as competition," Mr Lalor said.

"The perception and the numbers tells us that FDI into South Africa in growing."

Mr Lalor said South Africa is also among the highest-ranked emerging markets on Ernst & Young's emerging market risk index.

It considers factors like the quality of governance, levels of democracy and the strength of the institutional environment.

Audit, tax and advisory consultancy Grant Thornton also released research this week that shows things are not as bad in South Africa as they are often made out to be.

According to the report on the firm's emerging market opportunity index, South Africa is the only African economy ranked in the top 15 emerging economies worldwide and is still the African leader in terms of potential investment.

"Although recent events in the mining sector have hurt our county's reputation as a destination of choice for FDI, there are significant benefits that continue to attract investors," Grant Thornton South Africa's chairman Deepak Nagar said.

The Grant Thornton report highlights South Africa's location, the financial system, the JSE and the country's infrastructure as the key benefits and attractions to investors.

Ernst & Young also highlighted the growing working age population, natural resources, macroeconomic stability, the diversified economy and the National Development Plan as factors counting in South Africa's favour.

From yahoo news.