Dynamics of South African Investment in the Rest of Africa
Given South Africa’s dominant economic role in the Southern African, and broader African, regions, it is important to understand the dynamics of investment from this country into the rest of Africa. This discussion paper aims to contribute to this understanding by reviewing the data on South African foreign direct investment (FDI) over the last decade. This is complemented by an extensive scoping analysis of the investment activities of South Africa’s largest listed companies in the rest of Africa and a review of South Africa’s trade with the rest of the continent. The analysis highlights that while South Africa remains one of the largest investors on the continent (measured in terms of FDI stock), its rate of investment is slipping behind that of other investors. In particular, Chinese investment into Africa (measured in terms of FDI stock) has grown significantly and more than doubled in the five-year period between 2011 and 2016. Other countries in Africa have also increased their level of cross-border investment, with particularly strong investment activity recorded by some North African countries. The analysis of South African firms’ presence in the rest of Africa demonstrates that, while there is a concentration of operational and investment presence in Southern Africa, the reach of South African companies in Africa is extensive – both in terms of geographic and sectoral presence (particularly services-oriented sectors). Furthermore, South African trade data with the rest of Africa reveals that while South Africa appears to mainly export manufactured goods (and largely import primary commodities), this may disguise South Africa’s important role as a regional distribution hub for goods imported from the rest of the world. This, together with South Africa’s traditionally market-seeking investment approach, highlights the importance of services sectors in South Africa’s trade and investment dynamics with the rest of Africa.