Can the South African business experience in Africa offer a way forward?

This research paper by the South African Institute of International Affairs examines the role of South African business investment in Africa, contrasting the high risks and low foreign direct investment (FDI) levels on the continent with the strategic success and high returns achieved by South African firms.

• African nations faced significant economic challenges in the 1990s, with an average GDP growth of 2.6%. There were regional disparities, as North Africa averaged 3.2% growth while sub-Saharan Africa averaged 2.3%. To meet the 2015 Millennium Development Goals (MDGs) regarding poverty, child mortality, and primary education, African countries require at least 7% year-on-year GDP growth.
• Political instability and corruption are identified as the primary obstacles to business confidence in Africa, affecting both foreign and local investors. Other significant risks include currency fluctuations, poor infrastructure, lack of skilled labor and finance, high import tariffs, and inadequate regulatory frameworks. Consequently, Africa received less than 2% of the world's foreign direct investment in 2001, according to the OECD.
• South Africa has become a leading investor in Africa, serving as the largest source of FDI outside the oil and gas sector. Since 1991, South African firms have invested an average of $1.4 billion annually, exceeding investments from France, the United States, and the United Kingdom. South African exports to Africa rose from Rand 5 billion in 1991 to Rand 35 billion in 2001, accounting for 18% of South Africa's total exports that year.
• Specific large-scale investments by South African companies include Sasol's US$1.1 billion in Mozambique's Pande and Temane gas fields; a US$860 million investment in the Mozal aluminum smelter by BHP Billiton, the IDC, and Mitshibishi; Vodacom's investments of US$142 million in Tanzania and US$139 million in the DRC; Sun International's US$56 million hotel investment in Zambia; and Eskom Enterprises' US$6 billion investment in the Inga power project in the DRC.
• South African businesses achieve high returns on equity in Africa, ranging from 30% in banking to 50-65% in other sectors. Their success is attributed to the appropriateness of their products for African conditions, proximity to markets, and knowledge of local environments. However, some local businesses view this expansion with hostility, fearing they are being muscled out of markets by superior and cheaper South African goods.

APA

South African Institute of International Affairs (2008). Can the South African business experience in Africa offer a way forward? https://saiia.org.za/research/can-the-south-african-business-experience-in-africa-offer-a-way-forward/

Chicago

South African Institute of International Affairs. Can the South African business experience in Africa offer a way forward? 2008. https://saiia.org.za/research/can-the-south-african-business-experience-in-africa-offer-a-way-forward/.

Wikipedia

{{cite report |author=South African Institute of International Affairs |title=Can the South African business experience in Africa offer a way forward? |date=18 April 2008 |url=https://saiia.org.za/research/can-the-south-african-business-experience-in-africa-offer-a-way-forward/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{southafricaninstituteofinternationalaffairs2008can, author = {{South African Institute of International Affairs}}, title = {{Can the South African business experience in Africa offer a way forward?}}, institution = {South African Institute of International Affairs}, year = {2008}, month = apr, url = {https://saiia.org.za/research/can-the-south-african-business-experience-in-africa-offer-a-way-forward/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }