South Africa - Foreign investment

Despite a considerable increase in recent years in domestic savings available for investment, foreign capital investment plays a significant role in South African economic development, and a number of manufacturing and industrial concerns have been established by the United Kingdom, the United States, and continental European companies since World War II. UK capital has been invested primarily in manufacturing, heavy engineering, and in the development of new gold fields in Transvaal and the Orange Free State. US investments are mainly in mining and manufacturing, and in wholesale and retail trade. Some 250 American companies accounted for about one-fifth of total foreign investment in South Africa as of 1982. However, between 1984 and 1987, the number of US companies with direct investments in South Africa dropped from 325 to 259. In 1986, the United States and the EEC banned new investment in South Africa.

The establishment of a multiracial government in 1994 and the lifting of sanctions led to an increase in foreign investment in South Africa. The number of multinationals with direct investments or employees in South Africa increased by over 20%. By 1997, total foreign direct investment (FDI) exceeded $18 billion. The inflow of FDI in 1997 was over $3.8 billion, but fell to $561 million in 1998. Inward FDI flows increased to $1.5 billion in 1999 and to $888 million in 2000. Contrary to worldwide trends in the economic slowdown of 2001, FDI inflow in South Africa reached a record $6.65 billion.

The UK has been the largest investor with almost half of the total, followed by the US, Germany, the Netherlands, Malaysia, and Switzerland. Manufacturing and business services gained the lion's share of FDI, led by telecommunications; major investors included Petronas, SDC Communications, Dow Chemicals, Telecom Malaysia, Coca-Cola, and Lafarge.

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