South Africa loses its top spot on the African continent

South Africa has lost its position as the leading investment destination on the African continent. According to RMB’s Invest in Africa 2024 rankings, South Africa is gradually losing its status as an economic powerhouse in Africa, as reported by Daily Investor.

Just like the final 2024 Paris Olympics medal table, South Africa is not the top dog on the African continent. And the quicker we accept that other countries are more attractive to investors and we implement crucial reforms to boost economic activity, the better-off we’ll be in the long-term.

INVESTMENT ON THE AFRICAN CONTINENT

According to the report, South Africa has slipped to fourth place behind Seychelles, Mauritius and Egypt in Africa. This is due, in part, to the fact that South Africa’s economy has remained stagnant for the past decade, with only 1% GDP growth annually. As a result, South Africa ranked last on RMB’s lists of ‘GDP growth’, ‘income inequality’ and ‘unemployment rate’.

While the African continent is expected to grow at 3.8% in 2024, economists believe only 1% growth is possible in South Africa. In fact, there was only one category we still rank number one on the African continent, namely ‘forex stability and liquidity’. Egypt has the highest ‘economic output’ on the African continent. And Ivory Coast recently overtook us for ‘best-rate sovereign debt’.

BETTER RETURNS IN AFRICA

Like The South African reported recently, many local companies are finding better returns on investment outside of South Africa. Southern Sun, for example, has seen business boom in Mozambique while its concerns in Mzansi have faltered over the same period of time.  

Likewise, Standard Bank CEO Sim Tshabalala says for the first time Standard Bank made more money from its rest-of-Africa operations than it did in its home market. Therefore, proving that South Africa is lagging behind the rest of the African continent. Energy and logistical issues hamstrung the bank to just 3% growth in South Africa, versus African operations which grew by 49%.

South Africa has long been the African continent’s economic powerhouse, but the truth is we’re battling major economic headwinds that have seen other countries supersede us in a number of consequential metrics, concludes RMB. Recovery spurred on by the formation of the 2024 Government of National Unity (GNU) has seen renewed investor optimism. However, it’s going to take time for genuine reform to make a meaningful impact.