SA remains an attractive destination for investment on the continent, EY report shows

Southern Africa has emerged as the most preferred destination for foreign direct investment in 2020, as revealed by the EY Africa Attractiveness Report. With South Africa taking the top spot, experts are analyzing the trends that shaped this investment landscape and predicting where FDI is likely to flow in the coming years. The report, which highlights key sectors that attracted the most FDI in Southern Africa, points to a significant shift away from traditional extractive industries towards technology, connectivity, and renewable energy sectors. Sandileh El-Tawpe, EY Africa's Government and Infrastructure Leader, emphasized the impact of the COVID-19 pandemic on investment trends, noting the surge in technology investments driven by remote work and online services. Additionally, the report underscores the growing interest in renewable energy, aligning with global climate transition goals. In 2020, the region saw $38.5 billion in FDI, creating over 70,000 jobs across 516 projects. While there was a decline in project numbers compared to 2019, the move towards non-extractive industries signifies new opportunities for growth and sustainability. Foreign investors from France and the U.S. played a significant role in driving FDI flows, particularly in areas like manufacturing, data connectivity, and telecoms. This shift highlights the attractiveness of Southern Africa's evolving sectors to international investors. However, challenges persist in some parts of the continent, notably in Ethiopia, where political instability raises concerns about the ease of doing business. Despite Ethiopia's resilience during the pandemic, ongoing conflicts in regions like Tigray threaten to disrupt investment prospects. The importance of stability in attracting investment is a key factor across Africa, emphasizing the need for collaboration and security measures to foster a conducive business environment. As African leaders discuss the continent's economic prospects, a focus on cross-border investment becomes crucial. The report highlights the significant increase in intra-Africa trade, with countries like Kenya and Nigeria seeing notable investments in telecoms and manufacturing. This emphasis on regional trade sets the stage for the African Continental Free Trade Agreement, projected to boost intercontinental trade income to $450 billion by 2035. Overall, the EY report signals a promising trajectory for FDI in Southern Africa and underscores the potential for sustainable growth in evolving sectors like technology and renewable energy.