President Cyril Ramaphosa’s newly appointed investment envoys face the difficult task of easing the concerns of investors around the state's plans to implement land expropriation without compensation, says the South African Institute of Race Relations.
The president on Monday announced a drive to attract R1.2trn in investment to South Africa over the next five years. SA will hold a major investment summit in August or September this year.
Ramaphosa also appointed four investment envoys who he said would spend the next few months engaging both domestic and foreign investors around economic opportunities in the country.
They are former finance minister Trevor Manuel, former deputy minister of finance Mcebisi Jonas, executive chair of the Afropulse Group Phumzile Langeni, and chair of the Liberty Group and former Standabnd bank head Jacko Maree.
Economist Trudi Makhaya, meanwhile, has been appointed his new economic adviser and will help coordinate the plans of the envoys.
In a statement on Tuesday the institute raised concerns related to the challenges land reform may present when attracting investment.
“This invitation to foreign investment is contradicted by the government’s commitment to expropriation without compensation," it said. “This sends out a strong message that investments are vulnerable to government seizure. This is already a serious consideration for investors."
The IRR argued that land expropriation without compensation would give rise to fears among investors about the security of their investments. The institute also referred to government’s attempted policy changes intended to abridge property rights in the past.
“South Africa’s prospects for a prosperous future depend significantly on establishing a policy environment which is conducive to the creation of wealth and the operation of business, both local and domestic.
“Expropriation without compensation stands in flat contradiction to this,” the institute said.
Trade and Industry Minister Rob Davies previously told Parliament’s portfolio committee on trade and industry that investors need not fear as their investments are secure.
He also reaffirmed government's position that land reform will only be implemented in a way that does not threaten food security and agricultural productivity. Ramaphosa has also told Parliament that land reform will not be implemented in a way that is damaging to the economy.
Scenario planner Clem Sunter has previously flagged land reform as a key risk of the future which could escalate into a civil war if not managed well.
* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER