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Investment Climate

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A conducive investment climate is essential for a country to achieve inclusive and sustainable growth. It plays a decisive role in attracting national and foreign investments. As the most advanced, broad-based economy on the continent, South Africa offers EU investors a diverse economy with a mature financial sector and highly developed transport infrastructure. President Ramaphosa has repeatedly stressed the need to improve the conditions for domestic and foreign investors.

The EU remains South Africa’s first trading and investment partner, accounting for 25% of South Africa’s trade and 75% of its foreign direct investments (FDI).

South Africa could dramatically improve investor confidence through a set of measures enhancing investment protection.

  • A re-shaping of certain B-BEEE requirements would trigger increased FDI flows; especially from smaller EU companies and at the same time promote skills and technological transfers into SA.
  • A re-calibration of procurement policies should be considered to achieve the intended policy goals related to transformation without hurting productivity and South Africa’s competitiveness. If EU businesses have a level playing field they can boost local manufacturing capabilities all along the value chain.
  • Skills constraints can be tackled through a combination of short-term solutions such as the easing of immigration regulations and long-term reforms in education.
  • South Africa should remove regulatory hurdles for the benefit of Independent Power Producers (IPPs) and Public Private Partnerships (PPPs) to resolve infrastructure constraints.

News

  • Investment Climate in South Africa - Survey Results

    The representatives of EU companies outside of South Africa have a strongly favourable perception of South Africa as a potential investment destination, relative to the nine other emerging markets that were rated as part of this survey. See the results in the full survey report.
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  • LOCALISATION: What is Realistic?

    Localisation has been highlighted by the government as a key policy aim during the recovery of the economy from the Covid-19 crisis. Organised business in Nedlac has been asked to substitute 20% of non-petroleum goods imports for domestically produced goods as soon as possible. This study assesses whether such a target is realistic through three parts. First, a literature review was conducted, placing such a policy aim within the context of South Africa's own history of industrial policy and with evidence from other countries. Second, a quantitative study looks at how the import, manufacturing, and capacity data can give us insights on such a target and whether it is possible to reach it. Third,  125 firms were surveyed across sectors to understand views on localisation and how fast they believe they can localise, what the constraints are, and a range of related matters.
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  • ANNUAL DIGEST 2020 SA-EU trade under the SADC-EU EPA

    This second annual digest reflects on the trade partnership between South Africa and the European Union (EU) largely within the context of the Coronavirus 2019 (COVID-19) pandemic. During the 2020 year, the global economy experienced a record-level contraction, with South Africa’s economy shrinking by a historic 7% in 2020. However, despite this record decline in economic activity, South Africa’s nominal trade with both the EU and the rest of the world has shown remarkable resilience. The SADC-EU Economic Partnership Agreement (EPA) has continued to support bilateral trade between South Africa and the EU.
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Research & Publications