SOUTH AFRICA:
A Rainbow in the Rain
T
he impact of the coronavirus pandemic on investing continues to reverberate across the globe. Last year the macro economy contracted by 4.3% and international foreign direct investment (FDI) levels came to an abrupt halt. Fortunately, despite heightened investor caution, the FDI slump is unlikely to become a lasting feature of the global economy. However, uncertainty is still at an alltime high, and investors continue to delay or cancel projects as countries face the prospect of re-closing borders. Furthermore, threats of new virus variants have further dampened hopes that vaccines will lead to a longterm solution or a permanent return to normality any time soon. Africa recorded a FDI total of $38 billion in 2020, representing a drop of
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18% from $46 billion in 2019, according to the United Nations Trade Association. Nevertheless, thanks to the continent’s innovative spirit, the COVID-19 crisis has also prompted positive change and development across Africa. An increased allocation of capital from corporates to their corporate VC activities, acquisitions of African tech companies, intensified FDIs and major initiatives such as the ‘Enrich in Africa’ programme, shine the spotlight on what the region has to offer. South Africa in particular, is renowned for its strategic location, varied topography and great natural beauty, and is on the cusp of transformative and long-lasting growth. Geographically situated to service international markets, South Africa boasts excellent infrastructure, sound
public finances, a developed financial market, valuable innovative capacity, a highly skilled workforce and a steadily growing consumer market. Nicknamed the Rainbow Nation, reflecting the country’s multicultural diversity, South Africa has experienced rapid change and regeneration in the last few years, and is ranked as an ‘upper middle-income country’ by the World Bank. Of the approximate 400 companies on the continent earning more than $1bn, about half are based in South Africa. More specifically, Durban paves the way over other South African locations, offering a southern gateway to and from Africa, an attractive social environment and a rising economic development rate. The main obstacle that South Africa faces in becoming a leading investment destination, is the backlog of infrastructure development and the slow turnaround in administrative procedures and approval times. Consequently, South African cities are making huge efforts to improve, develop and stimulate enterprise, and