President Cyril Ramaphosa has laid out the country’s plans to revive its ailing economy, and has appealed to investors to open their wallets.
“As South Africa emerges from a period of great difficulty and uncertainty, as it confronts challenges that are immense – but not insurmountable – we can declare with confidence that South Africa is a land of untold opportunity,” he said today at the Investment Summit in Sandton, Johannesburg.
“It is a land that has known the pain of division and conflict and deprivation. But, equally, it has experienced the exhilaration of liberation and knows very well the value of partnership and collaboration.”
Ramaphosa is seeking billions of dollars of new spending pledges from foreign investors and local firms at an investment summit on Friday, as he seeks to haul the economy out of recession before next year's election.
The former union leader wants $100 billion of new investments over the next five years and so far has secured pledges for around $35 billion, mainly from China, Saudi Arabia and the United Arab Emirates.
Ramaphosa has made reviving the economy a top priority since taking over from scandal-plagued Jacob Zuma in February, but he has been hampered by severe fiscal constraints and infighting in his party, the ANC.
The investment summit follows a jobs summit earlier this month at which Ramaphosa announced a wide-ranging set of deals between government, big business and labour which he said would create 275,000 more jobs a year.
Under pressure over his track record on the economy, Ramaphosa has also unveiled a “stimulus and recovery plan” which earmarked funds for job creation and infrastructure development.
The scale of the challenge facing Ramaphosa was underlined by Finance Minister Tito Mboweni’s bleak medium-term budget speech on Wednesday, when he unveiled weak growth forecasts and deficit estimates.
Ramaphosa referred to the inaugural South Africa Investment Conference on Friday as an “expression of a shared hope and a renewed confidence”.
“We are here to declare that we are determined to build a country that is driven by enterprise and innovation, to develop an economy that is diverse and resilient and prosperous, and to create companies that achieve sustained returns not only for their shareholders, but also for the workers that drive them and the communities that support them.”
Ramaphosa said that economic growth and job creation had been placed at the centre of our national agenda.
“We have prioritised the education of our children and the skilling of our workforce, and ... we are accelerating the provision of land and other assets to the poor and marginalised.”
On the “ambitious” and “unprecedented” drive to raise at least $100 billion in new investment over five years, he said that “no meaningful growth and no significant job creation would be possible without a massive surge in productive investment in the economy”.
This is what’s been done so far:
• Over the last half year, the four Presidential investment envoys – Phumzile Langeni, Jacko Maree, Mcebisi Jonas and Trevor Manuel – have travelled across the country and around the globe to meet potential investors;
• Invest SA, the award-winning investment promotion and facilitation agency, has compiled an investment book of projects that represent great potential.
• Announcement are expected from a number of local and international companies on investments to expand existing operations in the country or establish new ones.
• A number of countries have pledged investment in South Africa. Task teams have been appointed to work with these countries to convert these pledges into investments.
Measures in place
Ramaphosa referred to a number of decisive measures taken in the last few months to improve the investment environment. These include:
• Addressing issues of policy uncertainty and regulatory obstacles that have impeded investments in a number of industries.
• Working with the World Bank to improve the ease of doing business in South Africa and crafting a new foreign direct investment strategy for the country.
• Working to fast-track investment projects and reduce red tape.
He mentioned the challenges facing state-owned enterprises, “which have experienced years of poor governance, a decline in financial and operational performance and corruption” and said it was essential that they be restored as engines of growth and development.
“We have replaced the leadership in several state owned enterprises, ensuring that we have people with experience, integrity and the relevant skills who are now leading the development and implementation of sustainable business models,” he said.
Ramaphosa also spoke about ending corruption and holding responsible to account, using instruments such as the commissions of inquiry into state capture, the South African Revenue Service and the Public Investment Corporation.
His economic stimulus and recovery plan, announced last month in order to restore growth, save existing jobs and create new ones, included reforms in key sectors like mining, oil and gas, tourism and telecommunications – “all of which are sectors that have great potential for growth, but which have been constrained by policy uncertainty,” he said.
He said the budget was reprioritised to invest in those activities that will boost growth, including agriculture, township and rural businesses, and infrastructure.
“We do so in a severely restricted fiscal environment,” he said.
“As the finance minister indicated when presenting his medium-term budget policy statement earlier in the week, we are determined to ensure public spending remains within sustainable levels – and that we generate greater revenue by pursuing growth with a single-minded determination.
“We see infrastructure investment as a critical enabler of growth and job creation, and are therefore consolidating government infrastructure spending into a single Infrastructure Fund.”
Ramaphosa said the fund would be used to leverage investments from development finance institutions, multilateral development banks, asset managers and commercial banks.
South Africa’s strategic position at the tip of Africa, makes it a key investment location, both for opportunities that lie within its borders and as a gateway to the rest of the region. The African Continental Free Trade Area will provide access to a market of more than 1.2 billion people and a combined GDP of more than $3.4 trillion.
“This will fundamentally transform the economies of many African countries and will further enhance the attractiveness of South Africa – with its diverse manufacturing base, advanced infrastructure and sophisticated financial sector – as a compelling investment destination.” – Additional reporting by Reuters