South Africa has fallen five spots to 12th position in a global list of top investment destinations among developing markets, reflecting declining foreign investor confidence amid increasing structural and political challenges.
According to the latest Kearney index, ongoing difficulties in the mining industry traditionally a key pillar of the country’s investment appeal remain a major concern. Data from Statistics South Africa shows that mining output dropped by 2.7% year-on-year in November, largely due to logistics constraints and deteriorating transport systems affecting exports of commodities like coal and iron ore.
Kearney noted that both internal and external pressures are weighing on demand. The firm explained that political uncertainty, infrastructure deficiencies, rising operational expenses, and global trade tensions are collectively reducing demand for South Africa’s mineral exports.
Although natural resources continue to be the country’s biggest attraction identified by 36% of surveyed investors other key indicators are less convincing.
Factors such as ease of doing business and governance were each cited by only 22% of respondents, while workforce capability and overall economic performance received 23% and 24%, respectively. Infrastructure standards, including transport networks and energy supply, scored just 25%, highlighting ongoing capacity challenges.
These findings follow renewed attention on investment commitments announced during a conference led by Cyril Ramaphosa.
The gathering reportedly secured pledges worth R415 billion (around $22.5 billion) from 22 countries, but analysts have raised concerns about how reliable these figures are when compared with official data.
Government records show that since 2018, total investment commitments have reached R1.14 trillion (about $61.8 billion), yet actual inflows remain relatively low. Figures from Statistics South Africa indicate that new investment increased by only 1.3% in the final quarter of 2025, contributing a minimal 0.2 percentage points to overall economic growth.
Kearney further cautioned that escalating geopolitical tensions, especially in the Middle East, could continue to suppress global investment flows.
“While capital is still moving, firms are becoming increasingly selective about their investment destinations,” said Erik R Peterson.