SA benefits from green investment
2010-07-23 Shirley, Beth (Business Day, Johannesburg)
Resources > By Topic > OTHER TRADE TOPICS > Investment
Global foreign direct investment (FDI) in renewable electricity generation, recycling and the manufacture of environmental technology reached US$90 billion last year, up from US$10 billion in 2003, with developing and transition economies receiving 40% of that investment.
But if the effects of climate change are to be mitigated, that investment spend should be US$440 billion by 2015 and US$1.2 trillion by 2020, South African economist Stephen Gelb warned at the release of the United Nations Commission for Trade and Development’s (Unctad’s) 2010 investment report on Thursday.
South Africa was among the emerging economies in which transnational corporations invested in low- carbon enterprises such as the manufacture of solar panels, rechargeable batteries and wind turbines.
About 10% of the low-carbon FDI projects were generated by transnational corporations from developing economies targeting other developing countries, said Gelb.
“It is possible to see emerging countries as forerunners for the development of a low-carbon economic order, but strategies need to be put in place, such as promoting low-carbon FDI, maximising the benefits and minimising the risks of low-carbon investment.”
But SA lacks the financial resources and institutional capabilities to do this effectively.
“An international support structure is thus essential,” Gelb said.
Unctad proposed a global partnership to coordinate synergies between investment and climate change policies to promote low-carbon foreign investment. “There are immense technology and investment opportunities, with technological leapfrogging in the next few years,” Gelb said.
In addition, FDI strengthens productive capacity and export competitiveness.
“On the downside, multinational companies could crowd out local companies, which could have less experience and financial backing,” said Gelb.
Although FDI for low carbon projects is expected to increase substantially in the next five years, Unctad warned that there is timid and uneven recovery in global FDI flows.
The report states that developing and transitional economies attracted half of global FDI and invested one quarter of global outflows. “It points to the fact that developing countries are leading overall FDI recovery and will remain favourable destinations for FDI,” said Jorge Maia, Industrial Development Corporation’s research and information director.
Southern Africa remained the largest recipient of FDI in Africa last year.
North Africa registered a decline, despite diversified FDI programmes and sustained privatisation initiatives.
South Africa was the fourth-largest recipient of FDI inflows in Africa, and maintained its position as greatest investor in other African countries. Investments were mainly in commodities and infrastructure.
“Manufacturing in SA accounted for 41% of greenfield investments, especially in the metals sector,” Maia said.
Published in: Resources > By Topic > OTHER TRADE TOPICS > Investment