South Africa has been ranked as the leading emerging economy in Africa and the only country on the continent to be ranked in the top 15 worldwide, according to the Emerging Markets Opportunity Index done by international advisory firm Grant Thornton.
The country also ranked ahead of Nigeria as a potential investment destination, coming in at 14th on the index while Nigeria ranked 17th.
"Although recent events in the mining sector have hurt our country's reputation as a destination of choice for foreign direct investment (FDI), there are significant benefits that continue to attract investors," Grant Thornton South Africa's national chairperson, Deepak Nagar, said in a statement on Wednesday.
The index analayses a variety of indicators from Grant Thornton's International Business Report, the International Monetary Fund and United Nations Human Development Report.
Indicators include economic size, population, growth prospects and levels of development to rate the countries potential to attract business investment.
"With Nigeria improving its ranking by nine places since the previous survey, South Africa will need to improve its competitive edge in order to maintain its leading ranking in the years to come," Nagar said.
The index showed inflows of foreign direct investment into South Africa have been irregular over the past 10 years and that FDI in the first six months of 2012 dropped by 44% compared to the same period in 2011.
The growth of the country's banking sector and financial services could help improve levels of FDI though. "It is a well-known fact internationally that SA's financial systems are sophisticated, robust and well-regulated while its economy boasts a world-class securities exchange," he said.
"The government has identified massive infrastructure projects as key to boosting the economic growth rate, as well as creating employment, and it is spending billions of rand on getting the investment ball rolling."
The index also showed that business expect to grow in 2013; 71% of local businesses expect an increase in revenue and forecast 4.1% growth between 2013 and 2017.