Building capacity to help Africa trade better

Changes in Foreign Investment in South Africa: a ‘Friends’ perspective

Trade Reports

Changes in Foreign Investment in South Africa: a ‘Friends’ perspective

Changes in Foreign Investment in South Africa: a ‘Friends’ perspective

Registration to the tralac website is required to download publications.

This paper provides an update on South Africa’s foreign investment position through to and including the December 2012 year with respect to the old, new and good friends of the EU and USA; the BRICs of Brazil, Russia, India and China; and Africa, respectively. The three categories of investment recorded by the South African Reserve Bank are: foreign direct investment (FDI), portfolio investment, and ‘other’ investment. Each will be examined in turn.

The data is stock data and it has been sourced directly from the South African Reserve Bank. It is the results of their survey data to assess the values of foreign assets in South Africa (liabilities resulting from inflows of foreign capital) and South African assets abroad (assets resulting from outflows of South African capital). The data is denominated in South African rands (either billion or million) and we show percentage shares to give a better perspective on the relative importance of sources and destinations in both absolute terms and relative changes.

South Africa’s total foreign liabilities are dominated by ‘old’ friends (EU and US). The ‘new’ friends are only starting to register at around the 2% level, while the ‘good’ friends of Africa have been relatively consistent at around the 5% level. Recent highlights are the big entry for new friends (China) in 2008 and some big changes from good friends in 2003 and 2004. There have also been fluctuations in the contributions from the ‘others’ or those not included as friends for this exercise. The two years of 2002 and 2008 stand out with large disinvestments from the old friends.

South Africa’s investments abroad (assets) again show that the old friends dominate as a destination. Good friends have been stable and increasing over the period while the new friends have featured from around 2006 onwards. Changes in investments for South Africa have been relatively stable, and only during 2002 was there a decline, with this decline reported for the old destinations. 

While this paper examines the ‘big picture’ only it does raise some interesting questions as to what is driving some of these recent developments. Especially important for the South African economy is the investment relationship with China, as this is the overwhelming development in the last few years. Similarly, but in a less dramatic manner, the steadily increasing South African investments in the African continent suggest than a more detailed analysis of these investments is likely to reveal some interesting stories at the firm level.

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.


Email This email address is being protected from spambots. You need JavaScript enabled to view it.
Tel +27 21 880 2010