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Articles: Low investment in SA puzzles policy chief

Posted by admin on Wednesday, March 15, 2006 - 04:42 PM

CAPE TOWN — A recent World Bank study on SA’s investment climate was generally positive but left unanswered the key question of why foreign direct investment into the country remained lacklustre, said the trade and industry department’s policy co-ordinator, David Jarvis, yesterday.
Linda Ensor

The reason foreign investors stayed away in spite of SA’s comparative advantages relative to similar developing countries, and in spite of its accelerating economic growth rate, required further study, Jarvis told Parliament’s trade and industry portfolio committee during a briefing on the findings of the survey. SA’s low rate of foreign direct investment is a continuing source of concern for government. The Accelerated and Shared Growth Initiative aims to address constraints to growth such as red tape and a shortage of skilled workers as these also restrain foreign investors. “There is nothing really wrong with SA that you can put your finger on to explain why foreign investors are not coming,” Jarvis said. “We have this growth and stability, except for the exchange rate. Why has it not been transformed into productive investment?” Jarvis said further analysis was required into the impact of factors such as the size of the domestic market, the facility to export, black economic empowerment, market concentration, service industries and SA’s comparative advantages. The survey, commissioned by government, was conducted in 2003/04 among 803 small, medium and large manufacturing firms. Jarvis said one of the areas the survey identified as weak was the throughput of imports and exports through ports. He criticised the study for concentrating on problems rather than on the factors attractive to investors.

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