South Africa has maintained its position as the leading emerging economy on the African continent, ahead of Nigeria, in terms of potential investment destinations, a report by global business and audit advisory firm Grant Thornton has confirmed.

The report, entitled 'Emerging Markets Opportunity Index: High Growth Economies', which ranked the 27 largest emerging economies in terms of their potential for business investment, revealed that South Africa had climbed one place to the fourteenth position, with Nigeria improving nine places to the seventeenth position.

South Africa was the only African country to be ranked in the top fifteen emerging economies worldwide.

“Although recent events in the mining sector have hurt our country’s reputation as a destination of choice for foreign direct investment (FDI), there are significant benefits that continue to attract investors.

“With Nigeria improving its ranking by nine places since the previous survey, South Africa will need to improve its competitive edge to maintain its leading ranking in the years to come,” Grant Thornton South Africa national chairperson Deepak Nagar said in a statement.

The only other two African countries to be ranked in the emerging markets opportunity index were Egypt at number 22 and Algeria at number 26.

The survey highlighted that inflows of FDI into South Africa’s local economy have been volatile over the past decade. It peaked at $9-billion in 2008 before the financial crisis struck, recovering to $6-billion in 2011.

Inflows over the first half of 2012 were down 44% compared with the same period in 2011.

“It is a well-known fact internationally that South Africa’s financial systems are sophisticated, robust and well-regulated, while its economy boasts a world-class securities exchange. The government has identified massive infrastructure projects as key to boosting the economic growth rate, as well as creating employment, and it is spending billions of rands on getting the investment ball rolling,” Nagar added.

Despite the country’s appealing strategic geographic location, he urged international investors to appreciate the regulatory complexities in South Africa, which consisted of a host of rules and compliance requirements.

Meanwhile, China remained at the head of the emerging economies index, by virtue of its strong economic growth rates and large consumer market. India ranked in second place and Russia was once again in third place.