Picture: 123RF
Picture: 123RF

Foreign direct investment (FDI) more than doubled in 2018 to a five-year high, giving President Cyril Ramaphosa’s investment initiative a much-needed boost.

FDI increased from R26.8bn in 2017 to R70.7bn in 2018, according to the Quarterly Bulletin released by the Reserve Bank on Wednesday.

The last time FDI was this high was in 2013 when it reached a record high of R80.1bn.

In 2018 Ramaphosa said he aims to attract $100bn in investment to SA by 2023, and told the investment summit in October the country was well ahead of its target following pledges of R290bn.

SA has seen sharp declines in FDI since 2014 and the president  has come under immense pressure to show he is delivering on pledges to revive the economy in the lead-up to the May election. Stronger growth forecasts for 2019, however, are at risk as embattled power utility Eskom implements load shedding.

Despite the improvement in 2018 as a whole, FDI dropped steeply in the fourth quarter to the lowest level in a year with outflows of R8.2bn compared to inflows of R28.7bn in the third quarter. This was due to the repayment of short-term loans by SA subsidiaries to foreign parent companies.

Compared to 2017, portfolio investment liabilities made up of bonds and equities decreased to R90bn from R279.8bn and reversed from R17.9bn in inflows in the third quarter to outflows of R33.9bn in the fourth quarter as non-residents disposed of both equity and debt securities.

menons@businesslive.co.za