The South African Reserve Bank (SARB) revealed that the country’s foreign direct investment more than doubled in 2018 to reach its highest in five years.
The development will enhance President Cyril Ramaphosa’s pledge to woo investors to help revive a struggling economy, especially since South Africa, Africa’s most industrialised economy has barely grown in the past decade with fiscal missteps and corruption contributing to weak business and consumer confidence.
In its quarterly bulletin, SARB said foreign direct investment inflows rose to 70.7 billion rand ($4.88 billion) in 2018 from 26.8 billion rand the prior year.
The foreign direct investment inflows were the highest since 2013, when the country recorded investments of 80.13 billion rand. The unit head of balance of payments, Piet Swart said the higher inflows could be attributed to a more positive investor environment in 2018.
However, portfolio investment inflows fell to 90 billion rand in 2018 from 278.8 billion rand the previous year, with outflows of 33.9 billion rand recorded in the final quarter of 2018.
Ramaphosa, who has made reviving the economy a top priority since taking over from scandal-plagued Jacob Zuma in February 2018, said last year he wants $100 billion of new investments from foreign and domestic firms over the next five years.
The Reserve bank said the 2018 inflows were recorded despite outflows of 8.2 billion rand in the last three months of 2018 as South African subsidiaries repaid short-term loans to foreign parent companies.
South Africa relies heavily on foreign money to cover its large budget and current account deficits.