South Africa: Trading international investment for policy space

The overall trend since 1994 of growing foreign direct investment into South Africa has been a reflection of the country’s openness to investment as well as significant international trust in its institutions. Recent policy and legislative developments, including the termination of South Africa’s bilateral investment treaties with EU trading partners and the introduction of the Protection of Investment Act, are however raising concern among international investors and bringing into question the attractiveness and reliability of South Africa as a destination for foreign investment. These concerns have been compounded by increasing regulatory restrictions upon foreign investors, including stricter visa requirements, and the introduction of various other pieces of legislation that have implications upon the level of protection of property rights in South Africa. A policy shift, reflected in legislation such as the Protection of Investment Act, the Private Security Industry Regulation Amendment Bill and the Expropriation Bill, indicates an enhanced focus on the public interest aspect of the constitutional right to property in accordance with the government’s constitutionally mandated transformative agenda. A balance needs to be found between the government’s sovereign right to implement domestic policies in order to achieve its socio-economic goals, its duty to protect foreign investments, and its overall objective of promoting sustainable economic growth.