Ramaphosa hits R1 trillion investment mark

The South African government’s fourth investment conference heard pledges of investment from companies of R332 billion, which will take President Cyril Ramaphosa 95% of the way towards his R1.2-trillion investment goal.

Four years ago, at the inaugural conference, an annual event that he has placed at the centre of his presidency, Ramaphosa said he wanted to attract R1.2 trillion in new investment in five years.

Together with pledges made and kept over the past three years, investment pledges now stand at R1.14 trillion.

While the announcements are evidence that business, particularly domestic and multi-national companies that already have a strong presence in South Africa, remain committed to growing their businesses here, there was much debate informally among delegates of the extent to which these comprised “new investments” or would have been made by the companies in any event and have been a long time in the planning.

Many of the announcements have been previously made. Among the biggest was the Ford Motor Company’s R16.4-billion investment in the manufacturing of its new Ranger model in Gauteng and the Eastern Cape.

It further includes African Rainbow Minerals R11-billion investment in two platinum mines in Limpopo, the expansion of Anglo American’s R100-billion investment announced in 2018 by a further R10 billion; Impala Platinum’s R11.8-billion investment in the platinum sector and Norwegian energy company Scatec’s R16-billion solar PV and storage project in the Northern Cape.

In his keynote address, Ramaphosa highlighted his government’s recent progress with structural economic reforms in the energy, digital economy, and transport and logistics sector.

These include far-reaching reforms to state-owned enterprises, such as the splitting up of Eskom and the corporatisation of Transnet’s port division.

“These reforms are not insignificant. Nor are they superficial. These reforms are contributing to an economy that, despite the setbacks of the last two years, is developing and transforming. We see signs of this everywhere,” Ramaphosa told delegates.

Constraints

Under Ramaphosa’s administration, relations between business and government have strengthened.

While business is frequently outspoken on the constraints to investment and the difficulty of doing business where network infrastructure has become unreliable, business leaders were overwhelmingly positive and supportive on the case for investment.

Anglo American CEO Mark Cutifani urged business to “take the time to understand the president’s strategy for the country”. Business should seek to assist government to build democracy and an effective state.

“We need to stand up and speak responsibly in support of these initiatives and talk about what we can do to help government achieve them. As business we have to support our political leaders,” said Cutifani.

Adrian Gore, CEO of Discovery Holdings, said that for the country and investment to thrive it was critical to shift “the negative narrative” that was pervasive in SA as the reality was far better than that and a lot less risky.

“The investment opportunity tactically is that the narrative is much worse than the reality and if you are an astute investor that it is where you can make super profits. The narrative here is continuously negative. But the country is more resilient than people think. The economy is more resilient and bigger than people give it credit for,” said Gore.

Wrapping up the conference, Ramaphosa underlined the importance of the event - even if many of the investments were in the pipeline already – as it created interest and confidence in SA from investors who were not here.

“This conference is also important for those who were not here. The ask themselves what others have seen here and they follow. It gets the world to see that South Africa is an investible destination,” he said.

-Fin24/Bloomberg