FOREIGN DIRECT INVESTMENT: LESSONS FROM SADC

The document outlines findings from a multi-year research project on FDI in SADC, highlighting that while FDI can catalyze regional trade and economic development, its success is heavily dependent on governance, policy certainty, and the transition from donor-led to private-sector-led investment. It examines the FDI regimes of South Africa, Namibia, Angola, Mozambique, and Tanzania, alongside specific analyses of the energy, transport, and agricultural sectors (specifically macadamia nuts and soybeans). The briefing concludes that regional value chains in SADC remain limited and that the primary barriers to deeper integration are trade facilitation and the lack of private sector opportunities rather than a lack of financing.

• In Mozambique, poor governance and political instability have made investors cautious, despite the country possessing significant mineral resources. The country's public debt rose sharply from 40% of GDP in 2011 to 112% by the end of 2017, partly due to borrowing against anticipated revenues from natural gas and mineral deposits expected in 2023.
• Namibia's New Investment Bill reflects a shift toward restricting liberal FDI regulation to protect the public interest, including provisions to reserve certain sectors for citizens and introduce performance requirements. However, the document suggests that FDI legislation must remain flexible to account for sector-specific differences, as strict requirements may deter investors in sectors where the state has low bargaining power, such as manufacturing.
• Angola is perceived as one of the least hospitable business environments due to corruption, bureaucracy, unpredictable regulatory frameworks, and inadequate transport infrastructure. These factors have limited FDI primarily to the oil and mineral sectors, hindering the government's goal of economic diversification.
• South Africa's efforts to ensure inclusive growth through stricter investment regulation have created concerns regarding transparency and certainty for potential investors. This uncertainty has been further exacerbated by state capture scandals during the Zuma presidency and debates over land expropriation without compensation.
• Tanzania's ability to attract and retain FDI is hindered by structural challenges, including the need to harmonise investment regulatory instruments and empower the Tanzania Investment Centre. In the energy sector specifically, disjointed policies and regulations make attracting FDI difficult despite support from the private sector and donors.
• Regional value chains in SADC are few and limited in scope. While donor assistance can initiate these chains, they only become viable when the private sector demonstrates significant interest and invests. Examples include the macadamia nut sector in South Africa, Mozambique, and Malawi, and the soybean industry in Zambia, Malawi, and South Africa.
• The primary obstacles to deeper regional integration in Southern Africa are trade facilitation and the creation of opportunities for the private sector to enter regional value chains, rather than a lack of available financing.

APA

Bertelsmann-Scott, T., Langalanga, A., Markowitz, C., Mouzinho, A., Ngidi, Z., Parshotam, A., Prinsloo, C., Shipalana, P., Schoeman, M., & Wentworth, L. (2018). FOREIGN DIRECT INVESTMENT: LESSONS FROM SADC. South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2018/08/Policy-Insights-65.pdf

Chicago

Bertelsmann-Scott, Talitha, Azwimpheleli Langalanga, Chelsea Markowitz, Aurea Mouzinho, Zinhle Ngidi, Asmita Parshotam, Cyril Prinsloo, et al. FOREIGN DIRECT INVESTMENT: LESSONS FROM SADC. South African Institute of International Affairs, 2018. https://saiia.org.za/wp-content/uploads/2018/08/Policy-Insights-65.pdf.

Wikipedia

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BibTeX

@techreport{bertelsmannscott2018foreign, author = {Bertelsmann-Scott, Talitha and Langalanga, Azwimpheleli and Markowitz, Chelsea and Mouzinho, Aurea and Ngidi, Zinhle and Parshotam, Asmita and Prinsloo, Cyril and Shipalana, Palesa and Schoeman, Mark and Wentworth, Lesley}, title = {{FOREIGN DIRECT INVESTMENT: LESSONS FROM SADC}}, institution = {South African Institute of International Affairs}, year = {2018}, month = aug, url = {https://saiia.org.za/wp-content/uploads/2018/08/Policy-Insights-65.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }