FDI Trends in SADC: Implications for Value Chains, Industrialisation and Inclusive Growth

The analysis finds that while FDI in the SADC region is heavily driven by natural resource endowments and GDP, secondary activities (manufacturing and construction) are the primary drivers of job creation and inclusive growth. The paper highlights a mismatch between export potential and FDI in sectors like aquaculture and meat, while identifying strong growth opportunities in agro-processing and a potential revival in textiles driven by sustainable sourcing. It concludes that while services are growing, they provide significantly fewer jobs than industrial activities, validating the SISR's focus on industrialisation.

• FDI in the SADC region is strongly correlated with GDP and natural resource endowments, though Mozambique is a notable outlier with FDI levels consistently between 15% and 40% of GDP due to natural gas and aluminium discoveries.
• Secondary activities, specifically manufacturing and construction, are far more effective at creating jobs than tertiary (service) activities; on average, secondary activities create 412 jobs per project compared to only 53 for tertiary activities.
• The food and beverages sector, particularly agribusiness manufacturing, shows high potential for inclusive growth, with manufacturing activities in this sector averaging 291 jobs and $56.5 million in capital investment per project.
• Natural resource investments have seen a gradual decline, and there is little evidence that beneficiation (processing) has increased, as manufacturing activities within these investments only rose marginally from 28% to 31% over the studied period.
• Financial services received the highest number of FDI projects in the region, but these investments have a minimal impact on industrialisation as they are not geared toward financial inclusion or small business access.
• There is a significant mismatch between export potential and FDI in several sectors; aquaculture (fish/shrimp) in coastal countries, meat in Botswana and Namibia, and oilseeds/legumes in Tanzania and Malawi are export-competitive but receive low FDI.
• The renewable energy sector has experienced the most aggregate growth from Period 1 to 3, with an increase of 118% in the number of investments, boasting the highest average capital investment per project in the region.
• Regional FDI is low, with over two-thirds of investments originating outside SADC. Of the regional investments, at least two-thirds consistently come from South Africa, though these often create fewer jobs than non-regional investments.
• Recent growth in the textiles sector is primarily driven by retail rather than manufacturing, but a shift toward sustainable supply chains presents an opportunity to revive regional cotton and CMT (cut, make and trim) manufacturing.

APA

MARKOWITZ, C. (2020). FDI Trends in SADC: Implications for Value Chains, Industrialisation and Inclusive Growth. South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2020/05/Occasional-Paper-306-markowitz-002.pdf

Chicago

MARKOWITZ, CHELSEA. FDI Trends in SADC: Implications for Value Chains, Industrialisation and Inclusive Growth. South African Institute of International Affairs, 2020. https://saiia.org.za/wp-content/uploads/2020/05/Occasional-Paper-306-markowitz-002.pdf.

Wikipedia

{{cite report |last1=MARKOWITZ |first1=CHELSEA |title=FDI Trends in SADC: Implications for Value Chains, Industrialisation and Inclusive Growth |publisher=South African Institute of International Affairs |date=April 2020 |url=https://saiia.org.za/wp-content/uploads/2020/05/Occasional-Paper-306-markowitz-002.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{markowitz2020fdi, author = {MARKOWITZ, CHELSEA}, title = {{FDI Trends in SADC: Implications for Value Chains, Industrialisation and Inclusive Growth}}, institution = {South African Institute of International Affairs}, year = {2020}, month = apr, url = {https://saiia.org.za/wp-content/uploads/2020/05/Occasional-Paper-306-markowitz-002.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }