The head of British International Investment (BII) says the formation of the government of national unity (GNU) has boosted investor confidence in SA, but that policy implementation is key to unlock foreign direct investment.
The BII, the UK’s development finance institution, has skin in the game, having already invested $900m (R16.5bn) in SA — with many of the investments directed to energy projects. The financier said its investments in SA via nearly 100 projects support about 45,000 jobs.
BII CEO Leslie Maasdorp said the GNU had created a lot of goodwill among investors, but that policy implementation was now key to attract investments into the economy.
“The major emphasis that investors have when I meet UK investors has been on the lack of economic growth over the past number of years. Investors are looking for a growing economy. The lack of economic growth is the single biggest constraint why investment is not flowing into SA,” Maasdorp said.
“The important point is that confidence has now returned and I can see that there is a lot more interest in the positions coming out of the GNU. People are encouraged that there is a co-operative political machinery at work,” he said.
“But [they are concerned] that this is still to be translated into concrete policies that can generate economic growth because the biggest challenge in SA is unemployment and inequality, and the big urban and rural divide.”
The latest investment in SA by the BII is a $20m outlay in Summit Africa, a specialist black-owned and managed impact investment manager.
Summit Africa on Wednesday launched its Private Equity Fund II with a $20m anchor investment by BII.
The fund, according to Summit Africa’s Nthabiseng Thema, will invest in small-to-mid market companies in financial services and ICT sectors to drive financial and digital inclusion.
“The fund is grateful for the support and commitment received from BII. This anchor investment demonstrates the strength of Summit Africa’s investment platform, our team, our fully integrated ESG and impact strategy and our ability to work actively with portfolio companies to meet their financial and social impact objectives,” Thema said.
“This is also a vote of confidence in SA and the Southern Africa region as an investment destination,” she said.
The British high commissioner to SA, Antony Phillipson, welcomed the investment by the BII.
“This is an important example of the growth and investment partnership between SA and the UK and our shared aspiration to boost growth through deeper co-operation on trade, investment and economic reform between our two countries, creating economic opportunities for people and communities that urgently need them,” Phillipson said.
British Prime Minister Keir Starmer in September said the BII, which has more than £8bn in assets, would launch a new £100m concessionary finance facility to accelerate the flow of private capital into emerging economies, such as SA.
Massdorp said SA was a core market for BII’s mobilisation approach.
“The new concessionary capital facility demonstrates our commitment to unlocking private capital for developing and emerging economies. You will see BII develop our investment approach to harness more private capital to deliver sustainable and inclusive economic growth for the countries in which we invest.”
Maasdorp, formerly vice-president and CFO of Brics’ New Development Bank, also weighed in on SA’s G20 presidency, saying it gave the country a platform to showcase its abilities and that of the continent on a global stage.
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