FDI Trends in SADC: Implications for Value Chains, Industrialisation and Inclusive Growth

This paper analyses inward foreign direct investment (FDI) trends in SADC countries with the purpose of informing the SADC Industrialisation Strategy and Roadmap (SISR) and its ongoing implementation. It first examines the SISR and the role of private investment/FDI in industrialisation, after which it gives a brief explanation of the structural determinants of FDI within the SADC context. The bulk of the paper then analyses FDI trends in the region based on a number of metrics, including years, sector, activity, job creation, export potential and inter-regional investments. The findings confirm the importance of manufacturing investments in generating inclusive growth, while identifying specific sectors that show a mismatch between export potential and levels of FDI. Additionally, the findings highlight strong inclusive growth potential in agro-processing sectors in SADC, while noting the decline in natural resource investments. Classic manufacturing sectors such as textiles also show possibilities for revived potential. The economic spillovers from services investments have been minimal, yet there are opportunities to create additional value-add in these sectors.