Why is South Africa Appealing to Foreign Investors?

According to recent statistics, South Africa is emerging as one of the most promising consumer markets globally. With big shots like Google (US) and PepsiCo investing several million, this picturesque African nation is all set to enter the big league as a favorite destination for foreign investors. Additionally, in 2021, Ford also announced a highly lucrative investment in South Africa, along with expanding its manufacturing unit in the Gauteng province.

In this article, we will find out why foreign investors are getting drawn to this African nation in hordes.

Investor-friendly foreign direct investment policy

Policy changes from 2018 onwards have encouraged foreign investors to invest in South Africa. Since then, the South African government has been actively vying for investment, especially in those areas where they believe South Africa is poised with a competitive edge. These are mostly manufacturing and other labor-intensive sectors with developmental prospects for supply chain locally. Additionally, the Trade and Investment South Africa or TISA department of the government offers both online and offline support to investors through their unique shops in Cape Town, Johannesburg, etc.

Strong legal and banking system

South Africa boasts of a world-class financial and legal structure that is consistent with international regulations. The country publishes its laws in the form of a draft inviting comments from stakeholders. South African banks are also well-funded. While the South African Reserve Bank (SARB) governs the banking services sector in South Africa, the Financial Services Board (FSB) supervises the non-banking financial services sector.

Macro-economic security arising out of South Africa’s rich reserve of natural resources

South Africa has a rich reserve of natural resources like gold, platinum, diamond, coal, and base metals. Over the past couple of years, the mining houses have catapulted themselves into the big league, which has given the country a fair amount of macroeconomic security. Also, the well-developed agriculture sector provides an added advantage. South Africa is not only self-sufficient in almost all major agricultural products, but the country is also a formidable food exporter.

Robust logistics and transportation infrastructure 

With a wide network of passenger and cargo carriers ranging from road to water to air, South Africa has a world-class transportation infrastructure. South Africa’s main transport operator, Transnet, is state-owned. At the same time, it also serves as a holding company for other carriers. On the other hand, South African Airways (SAA), which is the largest airline in the country, is a public company owned by the government. It ferries more than 7 million passengers across the world and operates in 700 destinations.

Skill development initiatives

South Africa has a wide range of top-class educational institutions armed with the infrastructure to carry out extensive research in multiple areas. The country also has a pool of unskilled, semi-skilled, and medium-skilled laborers. The government has come up with legislation aimed at imparting necessary training to this workforce for skill upgrades. This is intended to put the economy on the fast track to economic growth.

Conclusion

The above factors play a key role in making South Africa the go-to place for foreign investors.