Investors Are Increasingly Sour on South Africa
aerial coastal view of Cape Town, South Africa

Investors around the world are currently rotating funds out of emerging markets and back into the developed world.  A rallying US dollar is often cited as a primary factor – however, recent xenophobic tensions and slowing economic growth are accelerating the trend away from South Africa, which just sustained a significant demotion on AT Kearney’s FDI Business Confidence Index. Last year the Index ranked South Africa 13th globally but this year the Rainbow Nation didn’t even make the list.

According to one analyst, investors are also concerned that Eskom, the country’s troubled power utility, is unable to cope with a burgeoning power crisis.  The IMF recorded South Africa’s GDP growth at just 1.5% in 2014 – significantly below the pan-African average of 4.5%.  A prominent economist claims that national GDP growth would be more than double its current rate if it were not for Eskom.

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