South Africa’s investment climate is flashing red.
The latest data from the Centre for Risk Analysis shows local capital fleeing abroad faster than foreign money is flowing in, underscoring a deep crisis of confidence.
The South African Reserve Bank confirms foreign direct investment (FDI) inflows plunged to R21 billion in the third quarter of 2025, down sharply from R73.5 billion in the previous quarter.
IRR warns of hostile investment environment
For the Institute of Race Relations (IRR), this is more than a statistical dip – it’s proof that hostile legislation, insecure property rights and crumbling infrastructure are strangling growth and job creation.
Makone Maja, special engagements manager at IRR, said the data “proves the low investor confidence levels in the country”.
Maja said of great concern to the institute was that in order to end poverty and unemployment, and even compete on the international stage with the middle-income economic peers, South Africa needed to substantially raise its foreign direct investment and domestic investments – something the country failed to achieve on all fronts.
She said barriers to investment were essentially barriers to job creation.
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‘Outdated economic policies’
The biggest obstacles to this much-needed growth are the hostile investor environment and legislation, which can be found in the ailing infrastructure, insecure property rights and racebased legislation.
Economist Dawie Roodt said: “It is true that South Africans take more money out of the country, investing abroad. While foreigners buy bonds and equities and do not invest in the factories in the country.
“To change that, we need to have an economy that is growing or with a growing prospect. And we don’t have that because of the wrong and outdated economic policies, because of the wrong ideological beliefs of the ANC. Corruption and incompetence also contribute.”
Labour calls for coordinated investment drive
Trade union federation Cosatu’s parliamentary coordinator, Matthew Parks, said the pace of economic growth and the high rates of unemployment were the biggest challenges.
“A bold investment plan mobilising resources from the state, private banks and pension and investment funds is needed. These need to be targeted at key industrial and jobs-rich sectors such as agriculture, tourism, energy and manufacturing,” said Parks.
“Equally important to attracting investment is to mobilise resources towards modernising our critical economic infrastructure, in particular roads, energy, water, ports and rail.”
Similarly, more must be done to fix public and municipal services that society and the economy depend upon, said Parks.
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“This needs to include an overhaul of our crime-fighting strategy. We will not attract investment if we remain a crime-ridden country,” he said.
“More must be done to improve the skills of our workers to ensure they remain competitive in a globalised economy.”
Global uncertainty compounds local pressures
Prof Peter Baur, an associate professor at the University of Johannesburg, said data showed the foreign direct investment flows decreased in the second and third quarters of 2025.
Baur said the biggest impact on the second quarter appears to be amplified through Anglo American’s platinum assets deal.
“The third quarter also showed a similar trend, but it appears that this may have been countered somewhat by investments into the media industry,” he said.
Currently, international market and investment volatility is associated with global uncertainty, which is apparent in the rising price of gold, as uncertainty is often accompanied by an increasing gold price as investors seek security within commodities in a risky market environment.
“Overall, the overarching concern appears to be the global market volatility, mostly because of global trade policy implications from the onset of the challenging US administration objectives,” said Baur.
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