There is ample potential to grow foreign direct investment (FDI) into South Africa, European Union (EU) Ambassador Roeland van de Geer said on Monday.

He pointed out that in 2012, FDI made up 0.9% of South Africa’s gross domestic product (GDP), which was low, compared with countries such as Chile.

“Investment into South Africa has to be increased,” Van de Geer said at the Mandela Institute’s second annual economic law update conference, adding that this was something that South Africa and the EU had to discuss.

He pointed out that EU investment in South Africa made up 88% of South Africa’s total FDI in 2010, and about 2 000 European companies were currently investing in South Africa, creating about 350 000 direct jobs.

He further stated that it was important to note that Africa had a lot to offer, not only with regard to natural resources but also with regard to value-added products.

Currently, 25% of South Africa’s exports go to the EU, 50% of which were manufactured goods, which showed that it was possible to diversify the country’s economy to not rely too heavily on its mineral resources.

Meanwhile, Van de Geer said South Africa was facing significant challenges, in terms of its economic development, that were not known in Europe.

“Europe has never had to carve out its way from a system of apartheid,” he said, adding that the EU was well aware of South Africa’s triple challenges of unemployment, inequality and poverty.

“In this environment, it is especially important for government policies to be conducive to attracting FDI, as investors have to be convinced of the benefits of investing a specific country,” Van de Geer stated.