South Africa’s leadership is focused on reassuring foreign investors at the World Economic Forum in, Switzerland, in a bid to renew investor confidence and attract foreign direct investment (FDI) to the country.

“This is a step in the right direction, especially after the recent credit rating downgrades, slower economic growth and strike action in the economy,” says global professional services firm KPMG senior economist Lullu Krugel.

This follows an address by President Jacob Zuma at the World Economic Forum in Davos, Switzerland, where he affirmed the National Development Plan (NDP) as a leading framework that would guide the initiatives of the country in alleviating the three evils of poverty, unemployment and inequality.

“FDI can be quite volatile from one year to the next and the decline in FDI to South Africa does not necessarily represent a permanent trend. Bureaucracy and labour market constraints are two of the biggest concerns for international investors looking at South Africa,” Krugel continues.

In previous years South Africa, Nigeria and Ghana received the bulk of FDI within the continent and jointly accounted for about 50% of FDI inflow in 2011. However, in the second half of 2012, FDI inflow in South Africa experienced a 43.6% decline when compared with the same period in 2011.

Krugel also noted that “given the infrastructure requirements in the economy, FDI is a very important source of funding for South Africa and a factor that has an important bearing on our currency as well.”

She further asserts that “South Africa has world-class plans, where the NDP and subsequent to this, the stimulatory infrastructure plan, are clearly aimed at keeping the economy on the road to recovery. Efficient implementation and delivery on these plans will better serve to suspend investor concerns and bolster FDI into the country”.

Meanwhile, the International Monetary Fund in its January World Economic Outlook has lowered South Africa’s growth forecast to 2.8% in 2013 from the previous 3% forecasted in October.