The story of U.S. investment in Africa is often overshadowed by the large sums of foreign capital arriving from China, the EU, and Turkey. We hear billion-dollar figures being tossed around, but it is hard to pinpoint who exactly is benefiting from these large investments. However, when the American private sector invests in a market, it is for the long haul and directly benefits the people of Africa, providing much-needed skills transfer, job creation, and certainty.
That is why American companies have historically maintained a strong presence in South Africa. For more than 100 years, GE has helped build power and transportation infrastructure. John Deere has significantly boosted the region’s agriculture market for over 50 years, and Pfizer has been providing South Africans with lifesaving drugs for decades. Today, more than 600 American companies are investing in South Africa, generating more than 10% of the country’s GDP.
Billions of dollars of foreign direct investment from the United States have flowed into South Africa over the past 25 years, creating tens of thousands of jobs, adding value to an already impressive manufacturing sector, and helping lift thousands out of poverty. But, this is only half the story: We must not overlook the investments being made in the U.S. by South African companies like Sasol, amounting to billions of dollars.
According to an old African proverb: “If you want to go fast, go alone. If you want to go far, go together.” These words still ring true. Truth be told, we can do more to increase trade and investment opportunities in South Africa, but it will require a lasting commitment from both the public and private sectors in both countries.
The U.S. Chamber of Commerce, representing the interests of more than 3 million companies, is taking up this call through the revitalization of its U.S.-South Africa Business Council. As a long-term commitment by the business community, the goals of the Council are three-tiered: to enrich investment and trade between the United States and South Africa; to serve as a platform for commercial engagement at the most senior levels of business and government; and to enhance investment across southern Africa. By 2025, the Council is working to expand the presence of U.S. companies operating and investing in South Africa to more than 1,000, surpassing 15% in overall GDP contributions.
While optimism is on the rise in South Africa, we must be pragmatic about the journey ahead. Every market has its challenges and South Africa is no exception. Poverty, income inequality, and unemployment have taken a toll on the country for far too long. The nation needs to clarify laws regarding property rights, broad-based black economic empowerment, and visa policy, to name a few. Furthermore, the South African government has an opportunity to take a fresh look at longstanding issues that impact FDI such as improving rule of law and strengthening intellectual property and ownership rights.
Despite these challenges, the outlook for future investment and opportunity in South Africa is bright. Under President Ramaphosa’s leadership, there is renewed interest in South Africa by investors around the globe, and American companies are no exception. Buoyed by its well-developed physical infrastructure and strong capital markets, South Africa has all the markings of an economy on the rise.