The role of selected investment promotion agencies in South Africa to attract foreign direct investment

Abstract

The strategies used by investment promotion agencies (IPAs) to attract foreign direct investment (FDI) differ between countries. This seems to be the case among the provincial IPAs of South Africa and the provincial IPAs of developed countries and their best practices. South Africa has a lower investment inflow than developed countries and this is unsurprising. It is pointed out that the goal of the study is to compare the investment promotion strategies used by the provincial IPAs of South Africa and compare them with best practices like BW–I and FIT. The results of this comparison will contribute to the improvement of the investment policy framework of South Africa. One of the ways to improve our investment promotion strategies used to attract FDI is by learning from the best. It should be kept in mind that the goal of the investment promotion strategies is to market a country?s investment opportunities and more importantly, of the province. By using the following variables: perception building, targeting investors, the structure of the IPA and incentive and policies; the study intends to point out the gaps in those strategies followed by provincial IPAs of South Africa. It should also be taken into account that the study wants to establish the origin of certain gaps in the strategies followed by South Africa to improve investment inflow. In order to complete the goals of the study a questionnaire was conducted to gain the primary data from the IPAs needed for the comparison. The questionnaires were distributed to the different IPAs for purposes of comparison and where possible interviews were conducted. The following sources were used for secondary data: United Nations Conference Trade and Development (UNCTAD), Financial Investment Advisory Service (FIAS), Department of Trade and Industry (DTI), Investment Map and World Association of Investment Promotion Agencies (WAIPA). The study finds that there are gaps like targeting the investor, the education level of the IPA staff and the annual budget (Table 28) in the investment promotion strategies used by the provincial IPAs of South Africa. The study could not fully answer one of the research questions because it was not possible to find out how regularly these IPAs were interacting with each other. Further studies are therefore necessary to establish how regularly the provincial IPAs of South Africa interact in terms of meetings and forums to determine whether these IPAs consider cooperation as a high priority rather than being in competition with each other.