File image: IOL.
JOHANNESBURG - Corruption, a weakening rand, credit downgrades and political turmoil have cost South Africa six places in investor-friendly rankings, according to the World Bank Doing Business Report 2018.

The report has ranked South Africa the 82nd most investor-friendly country this year among 190 economies, having deteriorated from 74th last year.

According to the report, released on October 31, South Africa has lost growth momentum, with the economy in a downward trend over the past several years.

South Africa’s growth last year marked the lowest rate in the past 16 years, apart from the 2009 recession.

Economists projected that the economy would grow between 0.6% and 0.7% this year, and 1.1% next year.

The low growth, according to the report, was mainly a result of South Africa experiencing an investment recession due to a lack of business confidence and policy uncertainty.

Internal events such as political infighting, widespread corruption and the problems with state-owned entities such as Eskom and SAA added to the woes.

The report stated that the country’s growth was also below that of its neighbours. Mauritius had shown a compounded growth rate during 2012 to 2016 of 3.5percent, with projected growth of 4.1percent expected during the next financial year.

In South Africa’s race with Mauritius for the most investor-friendly regime in sub-Saharan Africa, the country’s island rival was gaining ground. Mauritius has been ranked 25th out of 190 countries.

This leap of 24 places implied that since last year, Mauritius had improved its business regulations and was narrowing the gap with the global regulatory frontier, according to the report. Five years ago, South Africa and Mauritius were actively vying to be positioned as the gateway to Africa.

South Africa’s economic growth was now below that of both sub-Saharan Africa and world growth, and “this is not a trend that will change in the foreseeable future”.

With Malawi, Nigeria and Zambia, sub-Saharan Africa is the most represented region among the global top 10 improvers in the Doing Business Report 2018.

Multiple economies in the region implemented four or more reforms in the past year, including Kenya (6), Mauritania, Nigeria, Rwanda and Senegal (5 each) and Malawi, Mauritius and Niger (4 each).

Soria Hay of Bravura Holdings said this resulted in a significant increase in investment in Mauritius and other sub-Saharan African jurisdictions.

According to RMB’s Where to Invest in Africa rankings in 2017/18, the top five most attractive business environments in 2006 were - in order: Botswana, South Africa, Mauritius, Namibia and Tunisia. This has changed to Mauritius, Rwanda, Botswana, South Africa and Seychelles in 2017.


South Africa can no longer be considered the leading destination for investment into Africa, the report states.