In terms of potential investment, South Africa has emerged as the leading economy in Africa according to recent report – Emerging Markets Opportunity Index: High Growth Economies – released by Grant Thornton International.
In its report, Independent consulting and accounting firm Grant Thornton, positioned South Africa in front of Nigeria when it comes to potential investment countries. According to the research and outcomes of the study South Africa emerged as the only country to be placed in the top 15 emerging economies throughout the world. In spite of the recent industrial action and horrific events throughout the mining sector of the nation there continues to be numerous and considerable advantages that the country can provide to draw in investors.
“Although recent events in the mining sector have hurt our country’s reputation as a destination of choice for foreign direct investment (FDI), there are significant benefits that continue to attract investors,” Grant Thornton South Africa chairman Deepak Nagar pointed out.
Mineral Resources Minister Susan Shabangu pointed out that the government continues and is wholly committed to creating stability in the moning sector and is actively dealing with the challenges encountered by the mining industry.
Earlier this year, Anglo American Platinum, publicly expressed its intention and was considering retrenching 14 000 workers. Since this announcement the company has decided to place this decision on hold for further review. The shocking traumatic events that occured at Marikana towards the end of last year followed by industrial action has also contributed to the uncertainty of the industry and placed pressure on the currency and future investment opportunities.
Shabangu has made an effort to assure investors that the government addressing the challenges within the mining sector and that the country continues to be a good investment destination. The government is constantly engaging with all stakeholders with the goal of a positive and balanced end result.
The emerging markets opportunity index draws together a variety of key indicators, making use of the company’s International Business Report (IBR) data with the emerging markets research and studies coming from the World Bank, International Monetary Fund (IMF) along with the United Nations Human Development Report.
With regards to global ranking, South Africa moved up one spot to 14 in the Emerging Economies survey, preserving its place as the highest ranked African economy, in front of Nigeria, which climbed nine places to 17th globally.
Examples of the indicators utilized to rank the 27 largest emerging economies in relation to their prospects for business investment include population, economy size, wealth, involvement in world trade as well as levels of development.
The market research did highlight the fact that over the past decade inflows of foreign direct investment into the country’s local economy have been volatile. Foreign direct investment peaked in 2008 at US$9billion ahead of the global financial crisis struck, and recovering to US$6 billion in 2011. Inflows over the first half of 2012 were down 44% in comparison to the exact same period the previous year. South Africa’s banking sector has always been perceived as being among the list of top 10 globally along with its financial system, just about the most developed in Africa which keeps growing.
“It is a well-known fact internationally that SA’s financial systems are sophisticated, robust and well-regulated, while its economy boasts a world-class securities exchange. The government has identified massive infrastructure projects as key to boosting the economic growth rate, as well as creating employment, and it is spending billions of rands on getting the investment ball rolling,” said Nagar.
President Jacob Zuma announced in his State of the Nation Address recently the fact that the country is planning to invest billions over the coming years on new infrastructure wiht a primary focus on building rail, road, and economic links in five regions in the country.
Based on the survey, another key attraction for international investors is the country’s key strategic geographic location, serving as the gateway to Africa. The nation also provides world-class ICT and transport infrastructure which was enhanced as a result of investment prior to the 2010 FIFA World Cup.
Based on the report, a forecast of 2013 showed that 71% of local businesses anticipate a rise in revenue over the next 12 months. When it comes to global expansion by SA business owners, 80% of South African businesses are contemplating other regions of Africa for investment.
Having said that, considering the fact that Nigeria considerably improved its ranking by a whopping nine places since the last survey, South Africa will probably need to greatly improve its competitive edge if it wants to maintain its leading position in the foreseeable future. .
When examining other countries included in the survey, mainland China continues to be, without a doubt, the leading country in the emerging economies index, due to its strong economic growth rates and huge consumer market. India placed in second place. The only other African countries to be ranked were Egypt (22nd) and Algeria (26th).
The International Business Report is a survey which includes both listed and privately held businesses. The comprehensive data for this report originated from interviews carried out between May and September 2012 with more than 6000 businesses coming from all industry sectors.