$5.3 billion in foreign direct investment hits SA

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Foreign direct investment flows into South Africa more than doubled to $5.3 billion (R78.5 billion) last year largely due to renewable energy and automotive investments from China, Germany and Japan

According to the UN Conference on Trade and Development’s World Investment Report, which was released last week, this recovery in FDI came after several years of low-level inflows.

In addition, Ireland’s Mainstream Renewable Power began building a 110MW wind farm in the Western Cape, with a planned investment of about $186 million. FDI flows to southern Africa recovered to nearly $4.2 billion last year from an outflow of $925 million in 2017.The largest investment in Morocco was the acquisition of the remaining 53% of Saham Finances, Morocco’s largest insurer, by Sanlam Emerging Markets for $1 billion.

“The decline – the third consecutive year’s fall in FDI – was mainly due to large-scale repatriations of accumulated foreign earnings by US multinational enterprises in the first two quarters of last year following tax reforms introduced in that country at the end of 2017,” the report said. Among South Africa’s partners in the Brics group of countries, Brazil received $61.2 billion in FDI last year, India got $42.3 billion and Russia saw inflows of $13.3 billion.

“Projections for FDI in 2019 point to a 10% increase to almost $1.5 trillion – still below the average of the past 10 years,” the report said.“The ratification of the African Continental Free Trade Area agreement could also have a positive effect on FDI, especially in the manufacturing and services sectors,” the report said.

 

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