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Global executives rank South Africa among top emerging markets

‘Investors have been and continue to be particularly attuned to efficiency of legal and regulatory processes and domestic economic performance as they choose where and how to invest,’ said MD of Kearney’s global business policy council Erik Peterson about investor sentiment. (Photo: Kearny / Wikipedia)

By Kara le Roux

10 Apr 2025

South Africa has earned seventh place in Kearney’s Emerging Markets 2025 FDI Confidence Index for the first time, climbing from 11th place in 2024.

South Africa has entered rarely seen territory. And this time, it’s for the right reasons.

For the first time, the country has cracked the top 10 in the category “Emerging Markets” in Kearney’s Foreign Direct Investment (FDI) Confidence Index, jumping from 17th place in 2023 to seventh place in 2025.

The annual ranking, based on a survey of global executives, gauges how attractive different countries or regions are for foreign investment over the next three years.

Erik Peterson, managing director of Kearney’s global business policy council, said Kearney included the “Emerging Market” rankings in its index to “provide some additional insights regarding investor preferences in developed economies”.

“We don’t get a lot of positive news, so it was really great to see South Africa tracking up the rankings,” managing partner at Kearney Africa Theo Sibiya said at the index’s unveiling. “You will recall that in 2023 we were in 17th position, we steadily moved up to 11th position, and now we’re in 7th position, which is fantastic progress for us.”

What is the FDI Confidence Index?

The FDI Confidence Index is an annual barometer of investor sentiment, compiled by global management consulting firm Kearney. The index surveys global business executives to understand what and where they’re most likely to invest over the next three years.

The 2025 edition surveyed more than 500 senior executives from the world’s largest companies.

According to Peterson, this year’s report introduced something new: for the first time since the Index’s inception in 1998, respondents were asked why they planned to invest in particular markets. “This helps us to illuminate the perceived strengths of each individual market,” he said.

You can view the full report here.

Lights on, confidence up

One of the bigger changes driving investor optimism in South Africa is a development that would have seemed improbable just a year ago: the lights have stayed on.

“The inconsistent power supply [...] was a huge challenge in terms of influencing investors and them putting capital into the country to take advantage of opportunities,” Sibiya said. “We had interruptions almost on a daily basis not so long ago. With [Eskom’s] efforts, we were able to get to over 300 days of uninterrupted power supply, which made a huge impact in terms of people’s confidence in our ability to resolve such complex issues.”

Read more: Business has saved the ANC’s bacon on load shedding. Perhaps a cheer is in order?

That confidence has come on the back of intensified maintenance efforts at Eskom and a boost in renewable energy production, Sibiya noted. From 2014 to 2024, South Africa’s installed renewable energy increased by 4,710 megawatts, according to a report by the Council for Scientific and Industrial Research.

Read more: Future looks sunny for expanding renewable energy sector in SA

State-owned overhauls

Beyond energy, investors are also paying attention to what’s happening inside South Africa’s often sluggish public institutions.

“Survey participants like, and they’re responding very well to, the reforms we’ve been seeing in the infrastructure and related sectors, such as transport,” Sibiya said. “Most notably, our energy utility — Eskom — being unbundled.”

After President Ramaphosa’s announcement of this plan during his State of the Nation Address in 2019, the National Transmission Company of South Africa was spun out of Eskom, marking a key step in the utility’s unbundling and enabling third-party access to the grid.

At Transnet, South Africa’s state-owned rail and port operator, reform is also inching forward. “[Transnet is] unbundling their organisation and creating the Transnet Rail Infrastructure Management Company, together with the Transnet Freight Operations Company,” Sibiya said. “Again, creating the space to bring in the private sector to resolve and improve some of the logistics challenges we’ve faced.”

That change can’t come fast enough. According to a National Assembly briefing, Transnet’s dysfunction has cost the economy as much as R1 billion in lost output per day.

Betting on green hydrogen

One of the more forward-looking signals investors are responding to is South Africa’s growing bet on green hydrogen.

Sibiya emphasised this: “There’s a lot of excitement in respect of the hydrogen industry and significant investments north of $7-billion actually being committed towards those projects, which have such huge long-term potential.”

Read more: The future of green hydrogen in South Africa — opportunities, challenges, and a path forward

Under the Hydrogen Society Roadmap, led by the Department of Science and Innovation, pilot projects in the Northern Cape are already up and running.

As Europe and Asia continue to seek alternatives to fossil fuels, South Africa’s geographic resource advantages could make it a serious player in the global energy transition.

Mining still anchors the investment case

While the hydrogen economy may be the future, minerals remain the bedrock of South African investment.

“A mining and energy complex is really what South Africa was developed on the back of,” Sibiya noted. “We have a whole host of minerals, such as gold, diamonds, iron ore, manganese. We’ve got all the platinum group metals (PGMs).”

In 2024, the South African mining industry’s total merger and acquisition transaction value amounted to more than $10-billion.

“We export about R65-billion worth of minerals to the US, and of that, 75% comprises our PGMs,” Sibiya explained.

To further support exploration and investment, the Department of Mineral Resources and Energy is expediting a new digital cadastral system, replacing the outdated and opaque mineral rights registry.

Read more: South Africa’s mining cadastre is on track to shine the light of transparency after years of stumbling in the dark

What this means for you

Despite all the noise, the world is starting to believe in South Africa’s potential again — and that could trickle down to you. If more foreign companies invest here, it could mean more jobs, better infrastructure and new industries such as green hydrogen bringing fresh opportunities. If Eskom keeps the lights on and Transnet starts working properly, your day-to-day life might just get a little easier. It won’t change everything overnight, and risks still loom, but this shift in perception is a signal that things might, just might, be turning a corner.

A cautious caveat

The upbeat tone of South Africa’s improved ranking comes with a few footnotes. On Wednesday, 2 April, the White House issued an executive order imposing tariffs on virtually all imports and a 30% tariff on South African goods.

The rand weakened sharply following the announcement. Although the tariffs have not yet taken effect (a 90-day freeze was announced on Wednesday, 9 April), the uncertainty has rattled the market.

Read more: Rand collapses amid market turmoil after GNU jitters and Trump tariff shock rattle investors

In light of these rapidly changing economic circumstances, Peterson said, “Our survey results reflect a bygone period. I think it’s on the same planet, but there’s different worlds between what was January and where we are today.”

He said Kearney planned to run a mid-year “flash survey” to gauge how investor priorities might shift. DM

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