SA’s third annual investment conference garnered R109.6bn in investments from companies such as Sasol, Pepsico and Google, even as SA’s economy continues to grapple with the ramifications of the coronavirus pandemic.
Though 2020’s pledges are only about a third of 2019’s commitments, which came in at R363bn, President Cyril Ramaphosa counted the event a success given the "difficulties and turmoil" facing the economy and the rest of the world.
The pledges take the total value of investment commitments to R773.6bn, or about 64% of the R1.2-trillion target that Ramaphosa’s administration has set to attract over five years.
"It is taking place in an extremely subdued economic climate," said Ramaphosa in his closing remarks on Wednesday. Tough investment decisions have had to be made by companies regarding their expansion and in this context the commitments represent a "huge number", he said.
The test of the conference’s success will be the extent to which the pledges are turned into physical assets, and the progress the state makes in delivering on reforms to address issues that have alienated investors in the past.
Already roughly 10% of investments made at the previous events held in 2018 and 2019 have been delayed in the wake of the pandemic and the lockdown that has pushed SA into its worst recession since the Great Depression.
The fallout is expected to shrink SA’s GDP by more than 8% this year, while SA’s unemployment rate, already high before the crisis, has risen to 30.8%, its worst on record.
The event was the first opportunity the government has had to communicate its economic reconstruction and recovery plan directly to investors after its release in October.
The plan, which includes reforms such as the overhaul of network industries, from electricity to ports and logistics, and prioritises improving the state’s capability, demonstrates the government’s commitment to work with business and other social partners to reposition the economy, Ramaphosa said during a panel discussion earlier on Wednesday.
He stressed its role in demonstrating to the private sector that "we are very serious about creating a conducive environment in which investors can invest in our country".
Assessing the success of the drive is, however, difficult. Despite the pledges in previous years, gross fixed capital formation — an indicator of fixed investment in the economy — has declined since 2017, according to the most recent GDP data from Stats SA.
Martin Kingston, the vice-president of Business Unity SA, said on the sidelines of the event that "in the final analysis people will judge us by our actions not by our words, which is why we have to make sure that the primary focus is on implementation … and it needs to happen urgently and effectively".
Business believes that SA needs aggressive timeframes and targets within which to deliver on reforms to ensure it is accountable both to the investment community and SA society at large, he said.
"We are in the last chance saloon," Kingston said, adding that the country needed to make the most of the fact that the recovery plan provided the chance to "galvanise resources" in a collaborative and co-operative way.
The government could not give more details on what percentage of the pledges constituted new greenfields projects versus expansion of existing ones.
However, Trudi Makhaya, the economic adviser to the president, said both types of investments matter.
"When you do have an existing company that expands … that should be seen as equal in value to a greenfields investment," she said.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.