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FDI in Africa: potential implications of Brexit on South Africa’s financial sector

Silindile Nomfihlakalo Buthelezi (Department of Commercial Law, University of Cape Town, Cape Town, South Africa)

Journal of Financial Regulation and Compliance

ISSN: 1358-1988

Article publication date: 28 August 2019

Issue publication date: 21 January 2020

Abstract

Purpose

This paper aims to investigate whether any potential weakening of the UK’s financial sector, as a result of Brexit, will have a negative impact on South Africa’s financial sector given the close ties between the countries’ financial systems. This paper seeks to also argue that Brexit may provide an opportunity for South Africa to pursue new trade linkages with other countries in Africa and Asia.

Design/methodology/approach

This paper is a review of relevant sources from foreign direct investment (FDI) and international economic literature. It analyses comparative and cross-disciplinary research and examines the current trends in the legal and economic climate in South Africa – within the context of economic growth and FDI inflows patterns.

Findings

This paper finds that Brexit does not pose a systemic risk to South Africa’s financial system. This paper also finds that South Africa’s recent policy changes may serve as obstacles to South Africa attracting new FDI.

Research limitations/implications

The implications of Brexit on the investment in the economy of African countries are under-researched, and this paper provides an additional contribution to the euro-centric discussion of the ramifications of Brexit on the economic developments in the financial sector after Britain’s exit.

Originality/value

This paper argues for an enhanced FDI system for South Africa and its policy proposals can be used to further the independence of African countries from European investment streams.

Keywords

Citation

Buthelezi, S.N. (2020), "FDI in Africa: potential implications of Brexit on South Africa’s financial sector", Journal of Financial Regulation and Compliance, Vol. 28 No. 1, pp. 114-129. https://doi.org/10.1108/JFRC-04-2018-0061

Publisher

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Emerald Publishing Limited

Copyright © 2019, Emerald Publishing Limited