Policies to Attract FDI in South Africa

To attract FDI into the country, South Africa should focus on addressing various aspects that create a negative image of its suitability as a foreign investment destination. First of these should be in the aspect of strengthening its crime prevention organs. The country’s crime rate has been among the highest in the world thus creating an image of a very insecure destination for investors. With the recent xenophobic attacks, the country’s image as a safe haven for foreign investors has further been dented. Ultimately, this has resulted into shortage of skilled expatriates who are willing to go to the country to oversee an entity’s operations. The short-term priority for the country would thus be to provide security for investors willing to invest in the country. A related priority would be the security of its boarders to avoid overwhelming influx of individuals from bordering countries whose political and economic environment has not been stable. Whereas such individuals may be a source of skilled labor required in the country, uncontrolled replacement of nationals with foreign country nationals could be a source of tension.

In the long-term, the country should however plan to revamp its supply of skilled labor from its nationals. With many highly qualified whites having left the country following the end of the apartheid era, shortage of adequately qualified nationals would mean that the country might remain dependent on foreign expatriates to sustain growth. This increases the labor costs for organizations thus may be a deterrent to many organizations. The country should therefore equip training institutions with adequate resources to enable them prepare young individuals who can provide skilled labor in future. Secondly, the country should evaluate environmentally friendlier energy sources that would increase its attractiveness to investors without raising the cost of doing business. Go to part 5 here.

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