South Africa’s foreign direct investment (FDI) was down in the third quarter of 2023, the country’s central bank said today (14 December).

According to the Quarterly Bulletin published by The South African Reserve Bank, FDI inflows during Q3 2023 were ZAR26bn ($1.40bn), below the ZAR53.8bn ($2.94bn) recorded in the second quarter.

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In addition, portfolio investments saw an outflow of ZAR41.9bn ($2.26bn) in Q3, compared to ZAR4.6bn ($250m) in Q2 2023.

In 2022, overall FDI levels were $9.05bn, down from $40.9bn in 2021 and above pre-Covid levels – $5.45bn in 2018 and $5.12bn in 2019 – according to UNCTAD.

However, the US Department of State has previously said that entrenched corruption and economic mismanagement led to a “lost decade” in South Africa during which growth petered out. In addition, violent crime and energy shortages have worsened the investment climate, steering investors away from the country.

In October, the World Bank granted South Africa’s government a $1bn Development Policy Loan to solve its ongoing energy crisis as well as expand investment in the renewable energy sector. In 2022, energy cuts reduced the country’s GDP growth by 2-3%.

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Of the loan, Mmakgoshi Lekhethe, Deputy Director General of Asset and Liability Management of the National Treasury of South Africa, said: “This operation comes at a crucial time for South Africa as it will provide much-needed fiscal and technical support, enabling us to pursue our policy priorities in the energy sector, including easing the electricity crisis in the long term, stimulating private sector engagement and creating jobs in the renewables space.”