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South Africa’s outward FDI stock grows

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South Africa’s outward FDI stock grows

Photo by Duane Daws
IDC research and information head Jorge Maia

3rd July 2015

By: Terence Creamer
Creamer Media Editor

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Foreign direct investment (FDI) flows to South Africa fell by over 31% last year to $5.72-billion, from $8.3-billion in 2013, the latest World Investment Report (WIR 2015) shows.

The decline in what is known to be a volatile number, drawn from South African Reserve Bank (SARB) data, came amid a 16% fall in global inflows to $1.23-trillion in 2014, from $1.47-trillion in 2013. The South African figure was better than inflows reported between 2010 and 2012, but below the $7.5-billion recorded in 2009.

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The Industrial Development Corporation’s Jorge Maia, who facilitated the release of the flagship United Nations Conference on Trade and Development (Unctad) report in Johannesburg last week, also noted that the 2013 figure had been heavily influenced by the large Barclays Africa transaction.

No details were provided in the report about the sources of the 2014 inflows to South Africa, with the SARB quarterly reports for the period covered by the WIR 2015 referring mainly to loans and equity injections provided to South African subsidiaries of foreign corporations in various sectors, ranging from leisure and telecommunications, to automotive manufacturing and renewable energy.

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Unctad attributed the weaker global FDI figure to the fragility of the global economy, policy uncertainty for investors and elevated geopolitical risks.

South Africa’s slide was far steeper, though, than the 16% decline in global flows and in the fall in the performance of the Southern Africa region, where FDI fell by 2% to $10.8-billion. Inflows to Africa as a whole, meanwhile, remained more or less flat compared with 2013, at $54-billion.

Nevertheless, the report indicates that South Africa was still the largest FDI host economy in Africa, followed by the Republic of Congo ($5.5-billion), Mozambique ($4.9-billion), Egypt ($4.8-billion) and Nigeria ($4.7-billion).

The country’s inward FDI stock of $145-billion also comprised the lion’s share of Southern Africa’s inward FDI stock, which Unctad indicated stood at $195-billion in 2014.

South Africa also remained a leading outward investor, particularly into the rest of the continent, with a 4.3% rise in FDI outflows to $6.9-billion in 2014. The WIR 2015 made specific reference to Nedbank’s agreement to purchase a 20% stake in Togo’s Ecobank for $0.5-billion, as well as Shoprite’s commitment to open 30 new stores on the continent by June.

The report also showed that the outward FDI stock attributable to South African multinationals had increased to $134-billion in 2014, up from $27-billion in 2000 and $15.6-billion in 1995. The report did not provide a breakdown as to the nature and destination of that FDI outward stock.

South Africa was also included in a group of the largest outward investing developing economies along with Brazil, China, Hong Kong (China), India, the Republic of Korea, Malaysia, Mexico, Singapore and Taiwan.

Services continued to be the focus of African firms’ FDI outside Africa, with Woolworths’ acquisition of Australian department store group David Jones for $2.14-billion highlighted. Overall, however, there was an 18% fall in FDI outflows from Africa, from $16-billion in 2013 to $13-billion in 2014.

Investments by developing- country multinational enterprises reached record levels last year, with nine of the 20 largest investor countries from developing or transition economies.

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