Johannesburg - President Cyril Ramaphosa’s plan to raise over R1trn in new foreign investment has been hailed by economists as the beginning of a “new dawn” for South Africa after years of low growth and policy uncertainty.
On Monday, Ramaphosa announced that South Africa will later this year host a major investment conference aimed at raising over R1.2trn in new investments over the next five years.
“This initiative marks a new dawn for the economy, given that over the past half a decade government was seen to have lost focus when it came to promoting South Africa,” said Isaac Matshego, senior economist at Nedbank.
Matshego described the initiative as part of a “bigger programme to revive the economy” since Ramaphosa took over from Jacob Zuma as SA president in February.
“We really need a renewed commitment to growing the economy, previously South Africa was positioned as a gateway to the African continent, right now we are at risk of losing ground to regional powers like Kenya, Nigeria and even Ghana,” said Matshego.
South Africa, the continent’s most developed economy, has been growing at a much slower rate than other developing economies in the region, only posting 1.3% growth in 2017. The figure was slightly higher than the National Treasury's expectation of 1%
The International Monetary Fund has forecast a 1.5% growth rate in 2018 and 1.7% in 2019.
Matshego cautioned that for Ramaphosa's ambitious plan new attract investment to succeed it needed to be aligned with clear policy and coordination at government level.
“We cannot have this plan, and on the other hand not have a coordinated government policy to support the message were sending out, said Matshego.
Ramaphosa was elected president in February, following the resignation of Jacob Zuma whose term was marked by poor investor confidence, slow growth and high unemployment. His arrival has been largely welcomed by the financial markets, with a marked strengthening of the rand against the dollar.
Ramaphosa on Monday also unveiled a four-member team of 'special envoys on investment', who have been tasked with engaging domestic and foreign investors around economic opportunities in the country.
The team consists of trusted hands like former minister of finance 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 Standard Bank head Jacko Maree.
“It’s a respected group of people, trusted by the public and the private sector. Finally we are putting our best people forward,” said Martyn Davies, managing director of Emerging Markets & Africa at Deloitte Africa.
However, Davies stressed that the target of raising over R1trl in investment over the next five years was a big task. “I believe the period is a bit ambitious, as it takes years to bring in tangible investments,” he said.
Davies stressed that government’s focus should also shift to the strengthening of institutions and conditions that enable investment.
“For instance, we cannot be encouraging foreign investment when our visa regulations do not make it easy for people to come into the country,” he said.* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER