South Africa's recent decline in global investment rankings is a stark reminder of the challenges facing the country's economy. The Kearney index, a respected measure of investor sentiment, has placed South Africa 12th among developing economies, down five places from the previous year. This drop is a significant concern, especially given the country's long-standing reputation as an attractive investment destination.
The mining sector, once a cornerstone of South Africa's economic appeal, is facing persistent challenges. Output in this sector declined by 2.7 percent year-on-year in November, according to Statistics South Africa. Logistics bottlenecks and failing transport networks are constraining exports of key commodities such as coal and iron ore, further dampening investor confidence.
The Kearney report highlights a combination of domestic and global pressures that are impacting demand for South African minerals exports. Domestic political uncertainty, infrastructure issues, increasing operational costs, and global trade tensions are all contributing to this decline. While natural resources remain the country's strongest draw, cited by 36 percent of surveyed investors, other fundamentals are proving less compelling.
Ease of doing business and governance each attracted just 22 percent, while workforce skills and economic performance scored 23 percent and 24 percent, respectively. Infrastructure quality, including roads, ports, and power supply, registered only 25 percent, underscoring persistent capacity gaps. These findings come shortly after scrutiny of investment pledges announced at a conference hosted by President Cyril Ramaphosa.
The event reported commitments totaling R415 billion, approximately $22.5 billion at current exchange rates, from 22 countries. However, analysts have questioned the credibility of the figures when compared with official data. Government figures indicate that total commitments since 2018 have reached R1.14 trillion, roughly $61.8 billion. Yet actual realized investment remains modest. Data from Statistics South Africa shows new investment rose by just 1.3 percent in the final quarter of 2025, contributing only 0.2 percentage points to overall economic growth.
The Kearney report also warns that rising geopolitical tensions, particularly in the Middle East, could further dampen global capital flows. Erik R Peterson, a senior analyst at Kearney, noted that 'capital continues to flow, but companies are becoming more selective about where they invest.'
This decline in investor confidence is a significant challenge for South Africa's economy. The country's ability to attract foreign investment is crucial for economic growth and development. The government must address the underlying issues, including political uncertainty, infrastructure problems, and rising operational costs, to restore investor confidence and ensure a brighter economic future for the country.
