South Africa’s Foreign Direct Investment (FDI) inflows more than doubled in the second quarter of 2026 to their highest level in nearly three years, driven largely by debt funding received by a domestic telecommunications company from its non-resident parent company.
FDI inflows into Africa’s largest economy rose by 145.3 percent to $3.03 billion (R49.8 billion) in the second quarter, from $1.24 billion (R20.3 billion) in the previous quarter, according to the latest Quarterly Bulletin from the South African Reserve Bank (SARB).
The second-quarter inflow was the highest since the second quarter of 2023, highlighting a sharp turnaround in foreign investment flows into the country.
The SARB attributed the increase to debt funding received by an unspecified domestic telecommunications company from its non-resident parent company. The central bank did not identify the company, noting that the transaction was not public.
The increase comes after the country recorded negative FDI inflows of $2.32 billion in 2025, according to the UNCTAD World Investment Report.
The negative annual flow was the first recorded by the country since 1990, with multinationals transferring accumulated earnings back to their parent companies contributing to the decline.
The latest quarterly data therefore points to a significant improvement in FDI flows, although the surge was heavily influenced by a single intra-company financing transaction rather than a broad-based increase across foreign investors.
Portfolio flows reverse
While FDI strengthened sharply, portfolio investment moved in the opposite direction during the quarter.
Portfolio investments recorded an outflow of $547 million (R9 billion) in April-June, reversing an inflow of the same amount in the previous three months.
Foreign investors sold $2.08 billion (R34.2 billion) worth of domestic equity securities during the quarter, while purchases of domestic debt securities amounted to $1.53 billion (R25.1 billion).
The purchases of debt securities were partly offset by the redemption of a $1.25 billion international bond by the national government, the SARB said.
The shift in portfolio flows suggests that the improvement in South Africa’s headline foreign investment numbers was concentrated in direct investment rather than reflecting stronger demand for the country’s domestic financial assets.
Other investment liabilities also weakened in the second quarter, recording an outflow of about $6 million (R0.1 billion), compared with an inflow of $3.26 billion (R53.5 billion) in the first quarter.
The SARB said the movement reflected withdrawals of bank deposits by non-residents, although this was partly offset by new debt funding provided to the private non-banking sector.
The contrasting movements across the three major components of the financial account – FDI, portfolio investment and other investment – underline the uneven nature of South Africa’s foreign capital flows in the second quarter.
The sharp increase in FDI was significant, but its concentration in debt funding from a foreign parent company means it does not necessarily signal a broad-based recovery in new foreign investment across the economy.
For South Africa, the sustainability of the rebound will therefore depend on whether stronger FDI flows extend beyond individual corporate financing transactions into new investment in productive capacity and expansion by multinational companies.