SA offers strategic entry point into Africa for investors

Pretoria, 14 March 2022.

South Africa’s strategic position within the continental free trade area (AfCTA)adds immense value to investors who want to benefit from improved access to large markets.

This will be highlighted at the 4th South African Investment Conference (SAIC) on 24 March. Among other objectives, SAIC brings together private and public sector decision-makers as they seek to showcase trade and investment opportunities in the continent.

“Africa offers investors access to a market of more than one billion people with a gross domestic product that exceeds $2.6 trillion,” says Jeff Radebe, who is one of President Cyril Ramaphosa’s investment envoys.

“Historic trade barriers are coming down and economic activities are increasingly conducted seamlessly across the continent. Africa is growing fast into an integrated investment destination,” said Radebe.

At the root of the envisaged growth is the African Continental Free Trade Area (AfCFTA) which became a reality in January 2021. This trade bloc brings together 55 member states of the African Union. It aims to accelerate intra-continental trade and boost Africa’s standing in the global market.

“AfCFTA adds a new dimension to the 2022 Investment Conference,” Radebe added. “Now we can demonstrate the significant advantages of investing in the South African economy and how returns can be multiplied through access to a much larger market.”

South African President, Cyril Ramaphosa, has described AfCFTA as “a new beginning with increased opportunities,” and said it will attract more foreign direct investment to a continent with significant potential for growth. President Ramaphosa was the chair of the African Union when the AfCFTA was launched.

It has created a free trade area which will eventually develop into a continent-wide customs union and facilitate the movement of capital and people between countries. The UN Economic Commission for Africa has estimated that it will increase intra-African trade by more than 50%.

At the same time, recent global turmoil in the northern hemisphere has meant that South African assets are finding favour among foreign buyers. South Africa’s stock market is
outperforming, returning 3.1% in dollar terms this year compared with a 10% drop for the MSCI Emerging Markets Index.

The market has been buoyed by its exposure to the mining sector, which has benefited from soaring metals prices as importers steer clear of Russian products, and to precious metals stocks – a haven in times of volatility. Foreign inflows since the beginning of the year have now reached R20.76 billion.

AfCFTA symbolises the emergence of a more assertive continent which no longer merely exports raw material and imports finished goods. The bolstering of trade ties between countries also strengthens Africa’s industrial base and opens opportunities for the continent to become more self-sufficient.

Africa’s wealth of natural and mineral resources can now be utilised to build industrial capacity, strengthen the growth of industries and create a large market which can attract outside investors to locate their production facilities on the continent.

Increased growth will inevitably lead to new prospects for emerging entrepreneurs and small and medium enterprises. This will especially empower women and boost the potential of the youth – the fastest growing segment of the African population – to find work opportunities.

Radebe says South Africa is an attractive destination for investor located outside of the continent. Many such companies also prefer to locate their regional headquarters in the country because of the access to quality infrastructure and connections to global supply networks.

“Our positioning within AfCFTA enhances our attractiveness to investors,” . “Through our participation we have preferential access to African markets and a deep understanding of business conditions on the continent.

“Investments in South Africa immediately offer a strategic entry point into a much wider region with immense potential for future growth.”

Media Enquiries:  Mr. Ayanda Holo

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Meropa Communications: Ms. Leigh-Ann Carey

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