SA’s reality – plunging FDI now on par with high risk destinations like DRC, Sudan

By Alec Hogg

Capital is cowardly, flowing only to places where it feels safe. Never to where it risks being appropriated by those controlling levers of power. Zimbabwe is the poster nation for this reality. Its continued attacks on foreign investors has resulted in capital inflows drying up. And an imploding economy.

South Africa is moving in the same direction. The 2016 annual report of the trade and development arm at the United Nations, UNCTAD, reports Foreign Direct Investment into South Africa plunged 69% last year to a paltry $1.8bn, the lowest in a decade.

SA’s appeal to foreigners committing permanent capital fell in line with high risk unstable countries like the DRC and Sudan. It is now behind Ethiopia ($2.2bn) and got virtually half the long-term money risked during 2015 in Mozambique ($3,3bn) and oil price/terrorist hit Nigeria ($3.1bn).

Time for South Africans to join the dots. Fixed investment demands sensible economic management. Developing countries by definition lack capital so must attract it from foreigners to “develop”. Failure to do so means no economic growth, no creation of jobs, less tax being paid and expanding poverty. If you thought education was expensive, try ignorance.

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