Foreign direct investment (FDI) into South Africa remained stable at just over $5 billion (around R72 billion) in 2019, according to a United Nations Conference on Trade and Development (Unctad) report released this week.

While the FDI data showed a slight decline in inflows in 2019 compared to FDI of some R5.3 billion in 2018, Switzerland-based Unctad described the investment as a consolidation. This is because SA saw FDI more than doubling in 2018 from a low of around $2 billion in 2017 towards the end of Jacob Zuma’s presidency.

“South Africa consolidated last year’s recovery with inflows remaining almost constant at a little more than $5 billion. In addition to intra-company transfers by existing investors, investment to the country was led by M&A [merger and acquistion] deals in business services and petroleum refining,” the UN agency noted in its report.

Egypt was again ahead of South Africa as the largest FDI recipient on the continent and showed a 5% increase in inflows to $8.5 billion.

Overall Africa saw a 3% increase in FDI, amounting to an estimated $49 billion in 2019.

Read: ‘SA’s private sector is not on an investment strike’

“Persistent global economic uncertainty and the slow pace of reforms seeking to address structural productivity bottlenecks in many economies continue to hamper investment in the [African] continent,” the report noted.

Comparing FDI data, South Africa had more than double the foreign investment inflows of Ethiopia ($2.5 billion) in 2019. Ethiopia, Africa’s fastest growing economy, has seen massive investment from China over several years. However, FDI into the country slowed down by a quarter last year, according to Unctad.

While FDI into South Africa last year remained largely steady, some of the country’s fellow Brics (Brazil, Russia, India, China and SA) economic bloc member nations, such as Brazil and India, have seen double-digit growth in foreign inflows. Brazil saw a 26% increase, from $60 billion to around $75 billion, while India’s FDI growth came in at 16% and totalled some $49 billion.

Consolidation seen as positive, but not enough

With President Cyril Ramaphosa setting an ambitious target of luring $100 billion in investment from foreign and local companies into the South Africa economy over a five-year period to 2023, the consolidation of FDI is seen as positive. However, some economists have warned that the country needs to see more FDI by new investors, as opposed to “intra-company transfers by existing investors”.

Read: SA investment drive: Ramaphosa’s claimed pledges now stand at R663bn

Independent economist Mike Schüssler says it is apparent that there has been no significant “new greenfields fixed investment” from outside South Africa, apart from the motor industry.

“My problem is that the big foreign investors outside of motor vehicle manufacturing have invested in old established firms. Many of those investors that are now foreign are ex-South African firms with a history tied to the country,” he says, referring to the likes of Glencore, Anglo American and South African Breweries (now SABMiller).

“We see few big new investments into South Africa from firms that have had no relationship with the country before,” says Schüssler.

“Even most motor firms who are here are the same ones that are continuing to invest in the country. We have not seen much investment from new investors such as the likes of Apple, Amazon, Netflix, Alibaba or other big new brands here. They have not arrived and that says we are still not able to really sell South Africa as an investment destination, so the president will have his work cut out for him.”

Schüssler adds that there haven’t really been any new major FDI projects, partly due to power shortages.

“To get investment we need Eskom working and we need to be far more friendly to businesses generally.”