JOHANNESBURG - South Africa saw foreign direct investment inflows in the first three months of this year versus outflows in the previous quarter as private domestic firms received funding from foreign parent companies, the central bank said on Thursday.
South Africa relies heavily on foreign money to cover its large budget and current account deficits.
The economy nosedived 3.2% in the first quarter, its worst economic contraction in a decade, another sign that President Cyril Ramaphosa’s growth drive is struggling to gain traction.
Despite the GDP contraction, FDI inflows totalled 11.7 billion rand ($825.33 million) in the first quarter, against outflows of 8.2 billion in the previous three months, the South African Reserve Bank (SARB) said.
The country also registered portfolio investment inflows of 29.2 billion rand from January to March from outflows of 33.9 billion rand in the prior quarter as foreigners’ acquisitions of domestic debt securities exceeded net sales of local equities, the SARB said.
Investor confidence in Africa’s most industrialised economy remains fragile, despite Ramaphosa’s pledges to woo investment, create jobs and root out rampant corruption.
SARB data showed that South Africa’s business cycle has been in a downward phase since December 2013, its longest downswing since 1946.