Export-led foreign investment is the answer to SA’s economic woes
With the domestic market out of puff, locals producing services and products for foreign markets will rake in cash and boost skills
Is attracting foreign direct investment (FDI) a panacea or another flavour-of-the-day pseudo solution that distracts from unlocking the country’s growth potential? The short answer is that SA needs to attract a specific type of FDI. This country has abundant investment capacity, while global investors are flush with cash. What our economy lacks is not access to investment capital but rather access to sufficient purchasing power. Domestic consumption can’t spur adequate growth as far too many local households are either extremely poor or overwhelmed by expensive debt.
FDI focused on selling to local consumers through displacing incumbents or local start-ups will do little, if anything, to boost growth. Foreign investments that create tens of thousands of jobs will simultaneously destroy a similar number if they seek to take market share given SA’s low long-term growth trajectory.What is needed is FDI that employs locals to produce products and services for foreign markets. When...