SA HAS been ranked 14th out of 20 countries regarded by international companies as top prospective investment destinations between this year and 2014, according to a global report released yesterday.
The research by the United Nations Conference on Trade and Development (Unctad) showed that SA was a key driver of a 25% leap in foreign direct investment (FDI) into sub-Saharan Africa last year.
FDI inflows into the country increased nearly five-fold to $5,81bn from $1,23bn in 2010, making SA the second-largest recipient in Africa after Nigeria, which received $8,9bn, according to the figures in the World Investment Report 2012.
The news is reassuring amid mounting concern over the effects of a slowdown in economic growth this year and debate over further state intervention in the economy, which might spook investors.
"SA's investment policy regime is quite liberal compared to other countries," said Jorge Maia, research head at the Industrial Development Corporation, which took part in the research with Unctad.
"SA is not only rich in natural resources, it also has very good infrastructure relative to its peers and very good technical skills," he said.
Mr Maia said it was hard to predict what FDI SA could expect this year, as most of its inflows stemmed from large corporate deals.
FDI flows into SA last year accounted for 13,6% of Africa's total, while its overall FDI stock amounted to 31,8% of gross domestic product, up from 9,9% in 1995, the research report showed.
Total FDI into Africa slowed to $42,65bn last year from $43,12bn in 2010, but that was mainly due to political and social instability in North Africa.
Inflows to sub-Saharan Africa surged to $36,9bn last year from $29,5bn in 2010 - a level comparable to the peak of $37,3bn reached in 2008, when the global financial crisis started to unfold.
Prospects for the continent this year were "promising", as strong growth, economic reforms and high commodity prices have boosted investor appetite, the report said.
"One such indication was that in sub-Saharan Africa, excluding SA, net sales related to mergers and acquisitions - the purchase of African firms by foreign transnational corporations - over the first five months of this year more than doubled from the same period the previous year," it added.
Leon Myburgh, sub-Saharan Africa strategist at Citigroup, said Africa was outperforming most developed markets and some emerging markets as well.
"Given its relatively low state of development there are huge opportunities for investment across the continent, either for new business or infrastructure. These are being exploited and will continue to be exploited in coming years," he said.
Mr Maia said that contrary to popular perceptions, the relative importance of the primary sectors of African economies to FDI was declining in the wake of a shift towards services and manufacturing.
Economic uncertainty and the possibility of lower growth rates in big emerging markets risked undercutting global FDI this year, the report said. Total global FDI would "level off" to $1,6-trillion this year before picking up to $1,8-trillion next year and $1,9-trillion in 2014.
Developing countries continued to account for nearly half of global FDI last year, with their inflows rising 11% to $684bn, a new record high, according to the report.
Inflows to developed countries jumped by 21% to $748bn, the research showed.
Transnational companies were sitting on estimated cash holdings of $4,5-trillion last year, which suggested that $500bn would be available to invest once they had stopped holding back, Mr Maia said.