This article highlights the prominence of net investment income payments made to foreign
direct investors in South Africa's current account deficit. After a brief history of South Africa's
balance of payments, we describe several factors driving the growth of South Africa's direct
investment assets and liabilities, including the roles of China and Africa as investment
destinations and the relisting of major South African companies abroad. The slow
accumulation of direct investment assets by South African firms before 2006, coupled with …

In its balance of payments with other countries South Africa has a growing current account
deficit (5.8% of GDP in 2013) since 2003. This reflects an excess of expenditure over income
in relation to foreign trade and the transfer of earnings. The gap in South Africa's current
account is financed by a surplus on its financial account, which relies on investment inflows
from abroad. A large part of these inflows consists of portfolio investments, which are short-
term in nature and therefore volatile: they can just as easily flow out again. This much is well …