If there’s one thing every South African knows, it’s how to keep going when the odds look long. From the lively harbors of Durban to the tech startups of Cape Town, we understand that building a truly thriving economy takes more than hope, it takes careful planning, funding, and partnerships that make sense for our unique context.
Across the continent, the debate over what actually drives development has raged for years. At its core, it’s about finding the right mix between aid and investment, two levers that, used wisely, can unlock new levels of growth with effects that ripple far and wide.
As Hennie Heymans, CEO of DHL Express Sub-Saharan Africa, puts it:
“...aid and investment trends are changing. In some cases, this means large and abrupt movements with far-reaching implications.”
The world is shifting. Africa’s approach to development must shift with it.
Aid vs Investment: Old Arguments, New Stakes
For decades, economists have wrestled with a simple but stubborn question: What moves the needle, more international aid or foreign direct investment (FDI)?
There are those who say aid lights the initial spark, opening doors before investment can get in. Others argue aid should be saved for emergencies, while investment powers the engines of long-term growth.
Recent global shifts have only made this debate sharper. The U.S., once the world’s top bilateral aid donor, has slashed its USAID budget by as much as 90%. The OECD noted that 2024 saw the first drop in official development assistance in six years, down 7% from the year before. Sub-Saharan Africa, which currently receives nearly a third of all bilateral aid, could lose a big chunk of that in a matter of years.
Akinwumi Adesina, President of the African Development Bank Group, sums up the moment:
“The era of aid or free money is gone. Africa must overhaul its approach toward achieving fast-paced development.”
Aid Has Its Place When It’s Done Right
That’s not to say aid is useless. Far from it. Some of the continent’s biggest wins have come from targeted, well-managed aid:
HIV/AIDS: PEPFAR and similar programmes have saved around 21 million lives since 2003.
Malaria: Since 2000, 2 billion infections and 13 million deaths have been prevented.
Immunisation: Widespread vaccine campaigns have wiped out polio and smallpox in Africa and saved more than 50 million lives in the past half-century.
The IMF has also pointed to “early impact aid” money for infrastructure, farming, and business that can lift GDP when institutions are solid.
But here’s the catch: aid only works as intended in places with strong, transparent governance. Without that, it risks making countries dependent, fuelling corruption, and even crowding out private investment.
Investment and FDI: Building for the Long Haul
If aid is the quick patch, FDI is the marathon.
Unlike short-term “hot money” flows, FDI builds real, lasting capacity factories, logistics parks, tech clusters that keep paying off for decades. Between 1960 and 2024, investment levels grew more than 70% of the differences in economic growth worldwide. In Africa, FDI does more than just boost GDP:
Jobs: FDI creates employment for men and women, especially where local institutions are strong.
Industrialisation: Good FDI can jumpstart domestic manufacturing and infrastructure.
Skills & Technology: Multinational investment brings training, new tech, and better standards.
Exports: In South Africa, a 1% bump in FDI is linked to a 2.74% jump in exports proof that FDI connects local firms to world markets.
But FDI isn’t a silver bullet either. It pays off most when governance is transparent, roads and ports work, and workers are skilled.
South Africa’s Reality Check
South Africa shows both the promise and the hurdles of attracting investment. From renewable energy projects in the Northern Cape to auto plants in Gauteng, FDI has powered exports, sped up tech adoption, and sharpened competitiveness.
The spillover benefits are real: new technologies, a drive for efficiency, and steady capital inflows have meant higher productivity and stronger exports. But make no mistake, the competition for FDI is fierce. South Africa and Africa at large must keep making the case as a stable, opportunity-rich destination for global investors.
Charting the Way Forward
Insights from the DHL–GIBS Development Series suggest practical steps:
Put transparency and anti-corruption efforts front and centre to boost investor trust.
Invest in both hard infrastructure (roads, ports, energy) and digital networks (fast, reliable internet).
Prioritise skills development for a high-tech, value-added economy.
Attract greenfield investments that build new capacity, not just change hands.
Use trade openness to plug African economies into global value chains.
These moves don’t just bring more FDI—they make it work better for everyone.
Beyond Aid vs Investment: The Real Formula
Africa’s future isn’t about picking aid or investment, but about using both the right way. Aid should focus where it makes the biggest difference,health, education, early infrastructure. Investment should drive industry, jobs, and fresh ideas.
The real magic is in the mix. As the saying goes, “When the music changes, so does the dance.” The music of development finance is changing fast. Africa’s dance must keep pace.
DHL: Connecting Potential to Progress
DHL has always been more than a logistics provider in Africa.
We’re a partner in the continent’s growth story, helping businesses large and small bridge the gap between potential and delivery. Whether you’re a South African SME looking to grow across borders, or a global investor seeking your next opportunity, logistics is the link that turns ambition into achievement.
Now’s the time to join the network that’s helping Africa deliver on its promise. Open a DHL business account today and let’s move Africa forward, together.
The Bottom Line
Africa’s future won’t be built on aid or investment alone. It will be shaped by how we blend the fast impact of targeted aid with the staying power of sustainable investment.
South Africa and Africa as a whole has the talent, resources, and grit to own its growth story. The challenge now is to build an environment where every rand, dollar, and shilling whether from aid or investment works harder for our people.
Time to stop talking and start delivering. The future is here.
Share
