Wiseman Khuzwayo

The rest of Africa presented great opportunities for the country’s private sector, Finance Minister Nhlanhla Nene said yesterday.

About 25 percent of South Africa’s manufactured exports were destined for the sub-Saharan market.

“The stock of South African direct investment in the rest of Africa equals approximately 5 percent of our country’s gross domestic product,” Nene told the 2014 KPMG executive forum on Africa.

“So the simplified tax and foreign exchange framework for companies with operations on the continent and elsewhere has been extended to unlisted companies, and the cap of such benefits for listed companies will be increased.”

Nene was speaking on the same day as the UN Conference on Trade and Development (Unctad) released its World Investment Report 2014.

The report shows that South Africa is back in the number one spot as the biggest recipient of foreign direct investment (FDI) on the continent.

In 2012, South Africa slipped down two places, behind Nigeria and Mozambique.

Last year $8.188 billion (R87bn) flowed into the country compared with $4.559bn the year before.

Nigeria’s FDI inflows came in at $5.609bn.

South Africa also led in outward FDI flows to the rest of the continent. Unctad says other investors were Angola and Nigeria.

South Africa’s outward FDI into the continent almost doubled to $5.6bn, powered by investments in telecommunications, mining and retail.

A few emerging transnational corporations expanded their reach over the continent. In addition to well-known South African investors, such as Bidvest, AngloGold Ashanti, MTN, Shoprite, Pick n Pay, Aspen Pharmacare and Naspers, other countries’ conglomerates are upgrading cross-border operations first in neighbouring countries and then across the whole continent.

The report says global FDI flows returned to an upward trend last year. Inflows rose by 9 percent to $1.45 trillion and increased in all major economies: developed, developing and transition economies. Unctad projects global flows will rise to $1.6 trillion this year, $1.75 trillion next year and $1.85 trillion in 2016.

“The rise will be mainly driven by investments in developed economies as their economic recovery starts to take hold and spread wider.

“The fragility in some emerging markets and risks related to policy uncertainty and regional conflict could still derail the expected upturn in FDI flows,” it says.

Unctad says the regional distribution of FDI may tilt back towards the “traditional pattern”, with higher FDI growth expected in developed countries. Nevertheless, it expected flows to developing economies to remain high in the coming years.

It says FDI flows to developing countries reached a new high of $778bn, accounting for 54 percent of global inflows, although the growth rate slowed to 7 percent, compared with an average growth rate of 17 percent.