Sameera Casmod | sameerac@radioislam.co.za
28 November 2024 | 10:37 a.m. CAT
2-minute read

A report by the South African Institute of Race Relations (IRR) shows the potential for South Africa to become a magnet for foreign investment, provided a suitable policy and governance framework is put in place.

Project manager at IRR, Terence Corrigan, said that South Africa’s investment level is low compared to that of big global investment winners like Indonesia, Vietnam and China.

“The big winners over the last 30 years have been middle-income countries. Think Indonesia, Vietnam and China. You have an investment level there of 30% plus, sometimes reaching close to 40%. In other words, 3 in every 10 rand spent in that economy is going to be producing things that will be [generating] wealth. In South Africa, we are sitting at 15%, so about half of that,” Corrigan explained.

A major contributing factor is what the IRR calls a “systems failure”, which refers to poor governance that is keeping investment in the country at bay.

Maintenance of basic infrastructure, such as roads, power and basic security, is an integral part of keeping an economy afloat, Corrigan noted.

He also attributed the stagnation to inadequate skills development and inconsistent regulations.

Corrigan proposed key strategies to boost investor confidence. First, the government must prioritise essential governance and basic service delivery.

Second, foundational infrastructure—roads, rail, and electricity—requires urgent upgrades.

He also emphasised reforming regulatory frameworks, proposing the deregulation of certain industries, such as the township economy, which holds untapped potential.

Rebuilding trust between governments and businesses is critical for long-term growth. Corrigan pointed to success stories like Vietnam and Indonesia, which reformed governance and policies to attract significant investment within a decade.

Despite the challenges, Corrigan remained cautiously optimistic. He underscored the importance of collaboration between the public and private sectors to unlock South Africa’s immense potential.

Listen to the full interview on Sabaahul Muslim with Moulana Habib Bobat.