For decades, South Africa has marketed itself as Africa’s premier investment destination, boasting the continent’s most industrialised economy, sophisticated financial markets, modern infrastructure and access to regional markets.
However, a growing wave of attacks on businesses owned by foreign nationals, coupled with increasingly bold raids by anti-migrant groups targeting companies that employ foreigners, is raising concerns about whether the country remains a safe and attractive place to invest.
Recent months have seen foreign-owned shops looted, threatened or forced to close during anti-migrant protests.
In some instances, groups claiming to protect local jobs have conducted unauthorised inspections of businesses, demanding employment records and questioning workers about their immigration status.
“These actions go beyond the immediate financial losses suffered by individual enterprises. They raise concerns about the predictability of the operating environment,” analyst Donald Porusingazi says.
He notes that investors seek certainty that property will be protected, contracts respected and disputes resolved through lawful institutions.
“When non-state actors are able to intimidate businesses or disrupt commercial operations with limited consequences, questions inevitably arise about the strength of the rule of law,” he says.
Critics argue that the South African government’s response has often been inconsistent and slow.
While officials regularly condemn xenophobia and affirm constitutional protections, business owners and civil society groups say authorities have failed to act decisively when threats emerge.
According to Porusingazi, the resulting perception problem extends well beyond those directly affected.
“Investors do not distinguish between attacks on a foreign-owned convenience store and attacks on larger enterprises. What they see is whether the state is capable of protecting businesses operating legally within its borders.”
That perception matters because investment decisions are influenced not only by economic fundamentals but also by confidence in governance and security.
Although South Africa remains one of Africa’s leading destinations for foreign direct investment, competition for capital across the continent is intensifying.
Countries once considered peripheral investment destinations are increasingly positioning themselves as stable and business-friendly alternatives.
This creates a risk that South Africa could gradually lose its advantage, not because of a single policy failure, but due to a combination of concerns over crime, energy supply, logistics constraints and business security.
Elsewhere in the region, Zimbabwe is seeking to attract capital into mining, agriculture, renewable energy and manufacturing.
The United States, which is currently at loggerheads with South Africa, has recently shown interest in improving business ties with Harare.
Botswana continues to benefit from its reputation for political stability and policy consistency, making it another potential destination for foreign capital.
Namibia has gained attention following major oil and gas discoveries, and Mozambique remains a significant long-term energy investment prospect because of its vast natural gas reserves.
Individually, these countries may not yet rival South Africa’s economic scale. Collectively, however, they offer investors a growing range of alternatives in southern Africa.
The key question is whether South Africa can afford to take its long-standing investment advantage for granted.
JN/APA