Question

QUESTION 1

In 2019, the South African president, Cyril Ramaphosa embarked on a drive to attract $100 Billion in new investments within five years. This underscores the significance of FDI as a source of capital for South Africa.
(i) Discuss some of the possible reasons why investors would be attracted to the South African economy [7]
(ii) Are there any factors that may dissuade investors from investing in the South African economy?[9]
(iii) Does FDI benefit or disadvantage the South African economy? Explain [9]
NB: Apply your knowledge of the general motives, benefits and costs of FDI, to the South African context. This means your discussion cannot be generic. It must speak to the South African context or realities

Answer 1

(i) I have uploaded the statistics of foreign direct investment in South Africa in the year 2019 South Africa has attracted FDI of 4.625 billion. So the President of South Africa has now made a statement to attract hundred billion dollars of FDI in five years.
Why such an announcement has been made by the president?

Currently the state of economy Is dwindling the unemployment rate has reached an all-time high of 30 percentage and the state finances is deteriorating and there is a fear of Moody's investment grade downgrading so there is a need for a fresh capital injection for growth and comparatively the FDI into South Africa is lesser.yes dwindling the unemployment rate has reached an all-time high of 30 percentage and the state finances is deteriorating and there is fear of Modi's investment grade downgrading so there is a need for fresh capital injections for growth and comparatively the FDI into South Africa is lesser.

State enterprises are devoid of funds and not in a situation to invest So definitely there is a need for foreign investors to step in and this will help in employment generation capital investment productivity enhancement and finally in GDP growth and also helps in local Industrial renaissance.

(ii)

Any foreign country will invest in another country if there is a considerable profit so they look into stability aspect infrastructure aspect profitability aspect. Political Stability Is insured by the government but the recent which may hinder FDI is the lack of demand the fear of investment exist in the ground level this may pull the legs of investors not to step in so these factors need to be addressed by the government to attract more FDI into the country.

(iii)

FDI is definitely a boon as Well as bane. It will help in boosting productivity enhancing development and employment but FDI is concerned the government should act in a decisive manner so that the local manufacturers or investors or not affected at the level playing field should be ensured for all. Definitely taking the economic credentials  of South African economy there is a need for FDI investment into the country and it should be hasslefree so that it may not hinder the FDI inflows.