GINEN MOODLEY: SA did the groundwork at the Brics summit; now it’s time to start investing

The Brics bloc seeks to enhance co-operation among its members to counteract economic stagnation in the West and reduce reliance on the dollar. With SA’s R1.9-trillion GDP accounting for some 30% of Africa’s total GDP, the country is an attractive investment destination on the continent in support of this mission. 

The 15th Brics summit held in SA earlier this year provided a platform for important discussions on foreign direct investment (FDI) and highlighted the immense potential for investment in SA. The discussions shed light on the challenges and opportunities for investment, showcasing why investing in SA makes strong economic sense. With the groundwork well under way, it is time to leverage these opportunities and reap the rewards. 

While SA’s investment potential is undeniable, the Brics summit discussions also unpacked the challenges and barriers that could potentially affect investment. One such challenge is power and water shortages, which have hampered investment in various sectors. Issues such as the country’s skills shortage, bureaucratic red tape, infrastructure gaps and sociopolitical stability concerns were recognised at the summit as areas needing improvement. 

One notable step taken in tackling obstacles to FDI involves the country’s commitment to enhance the conditions for conducting business. As part of an investment drive government has implemented an attractive package of incentives managed by the department of trade, industry and competition, including tax breaks, grants and support for research & development initiatives. The primary objective of these incentives is to aid potential investors in identifying prospects and streamline the investment process. 

With a robust legal framework, well-developed financial markets, and a diverse economy, SA provides a stable and conducive environment for investors despite its challenges. This is evident in the significant increase in FDI inflows, which reached R53.8bn in the second quarter of this year, reflecting growing confidence in SA’s economic prospects.

There are specific sectors within SA that are ripe for FDI. The renewable energy sector, for example, has experienced substantial growth in recent years, driven by initiatives such the Renewable Energy Independent Power Producer Procurement Program (REIPPPP), which presents attractive investment opportunities. Alongside this, the manufacturing and agribusiness sectors hold untapped potential, offering avenues for diversification and economic development. These sectors provide fertile ground for foreign investors. 

The meetings of the Brics communication ministers focused on the digital economy, underscoring the pivotal role technology plays in shaping the future. Amid the global acceleration of digital transformation, SA presents a particularly fertile ground for investment in this emerging sector. The discussions underscored the country’s commitment to harnessing the power of technology and innovation to drive economic growth and create employment opportunities.

The Global Data Centre Market Comparison report compiled by Cushman & Wakefield notes that Johannesburg is an ideal location for data centres as it is the third most affordable market for land and is situated outside main flood plains. Considering that data centres have a limited effect on surrounding traffic and do not require parking availability, they could be a way to revitalise vacant, destitute properties and provide investment opportunities.

Another opportunity for foreign investors is the trading relationship between India and Africa. Over the years India’s investments in Africa have accumulated to a significant total of about $73.9bn, positioning India as Africa’s fourth-largest trading partner. India’s trade with Africa reached $89.5bn in 2021-22, demonstrating SA’s potential as a gateway to the African market. 

Investing in SA yields numerous other benefits for foreign investors. The country boasts a young and vibrant workforce, a well-developed financial services industry and a strategic geographical location in relation to Southern Africa. SA’s membership of Brics opens doors to a vast market of over 3-billion consumers, providing access to new business opportunities and catalysing growth.

The discussions at the 15th Brics summit also highlighted the importance of exploring synergies among the Brics countries and tapping into the investment opportunities presented by SA’s thriving sectors. With a proactive approach to attracting FDI the country is ready to embrace new investors and forge mutually beneficial partnerships.

It is time for people and businesses with the means to invest in SA and Africa to seize this golden opportunity and contribute to the growth and development of the region. 

• Moodley is founder of Moodley Attorneys.