Foreign Direct Investment into SA falls by almost half amid global downturn

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  • Foreign direct investment into South Africa fell by almost half in 2020, according to a new UN report.
  • Egypt was again Africa's largest receipt of FDI inflows, while Nigeria pushed South Africa into third place on the continent.
  • According to the United Nations Conference on Trade and Development, a global FDI recovery is not expected until 2022 due to the lingering impact of the Covid-19 pandemic.

Foreign direct investment into South Africa, a key component of President Cyril Ramaphosa's push to kickstart the country's struggling economy, fell by almost half in 2020 amid the global downturn caused by the Covid-19 pandemic.

South Africa attracted $2.5 billion in new foreign investments in 2020, a 45% drop from the figure of $4.6 billion in 2019, according to a report by the United Nations Conference on Trade and Development (UNCTAD).

Egypt was again Africa's largest receipt of FDI inflows, attracting $5.5 billion. Nigeria pushed South Africa out of second place on the continent, garnering $2.6 billion.

While SA's FDI fell, the country did nab two large investments last year – a undersea fibre optics cable by Google that is set to boost the country's internet speed, and the announcement that US multinational PepsiCo was acquiring Pioneer Foods.

The drop in South Africa's FDI was in line with international trends, with global FDI falling 42% to an estimated $859 billion in 2020, from $1.5 trillion in 2019.

South Africa's economy is expected to contract by 7.1% in 2020, according to the latest projection by Reserve Bank Governor Lesetja Kganyago, who said last month that weak investment was weighing on SA's growth prospects.

The UN report said that global FDI flows were likely to remain weak in 2021, with cautious investors holding back from committing new capital. A global FDI recovery is not expected to start before 2020.  

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