They came for its riches, but big business is souring on South Africa

Subscribe to enjoy similar stories. JOHANNESBURG—The corporate exodus from what was supposed to be Africa’s breakout economy is accelerating, propelled by a toxic cocktail of corruption, lawlessness and poor infrastructure.

Foreign investors from Shell to British American Tobacco are downsizing in South Africa. Those decisions could mark a watershed moment for a country where the government’s ability to deliver basic services has become so limited that private firms have taken over many basic civic functions.

Africa’s biggest and most-developed economy has long been plagued by logistical problems, including failing infrastructure and rising electricity costs. Firms have put up with those drawbacks for access to South Africa’s deep seam of mineral wealth and its growing consumer market.

But a catalog of recent high-profile corruption scandals, often linked to laws intended to right the racial wrongs of apartheid, has eroded South Africa’s reputation among investors and exacerbated the country’s fundamental problems, including regular dayslong water and power outages. Legislation designed to improve the lot of South Africa’s Black majority has also deterred investment.

Elon Musk’s SpaceX was in talks with South African officials about launching its Starlink internet service in the country—which could have boosted the fortunes of the country’s economic backwaters—but the billionaire, the world’s richest, is demanding an exemption from a rule that requires foreign companies to give up 30% of their local operations to Black South Africans. The World Bank estimates that crime costs South Africa’s economy at least 10% of gross domestic product annually, including stolen property, the extra costs of security and insurance, and