President Cyril Ramaphosa is this week expected to face the arduous task of rallying investors behind his new five-year, R2-trillion investment drive amid SA’s energy crunch as Eskom experiences multiple generation failures at its ageing coal plants.
Ramaphosa’s presidency is seen by investors as being conducive to the rapid implementation of reforms to electricity, rail, ports and water infrastructure, thereby bolstering economic growth, state revenue and economic stability.
However, Team SA faces steep hurdles in the drive to achieve the new investment target of R2-trillion by 2028 as it needs to assure investors that despite the worsening energy crisis and longstanding issues at its ports and railways, the country remains a good investment destination.
And unlike 2018 when the first round of the investment drive was announced, Ramaphosa enters the new phase with the unresolved Phala Phala scandal hanging over his head. This has been flagged by ratings agencies as a risk to policy continuity, even after Ramaphosa was successfully elected as party leader at the ANC’s elective conference in 2022.
To allay investor concerns over the electricity crisis, the government aims to assure them it is implementing the Energy Action Plan announced by Ramaphosa last year, and that it is working with the private sector, says Invest SA deputy director-general Yunus Hoosen.
“Companies are now doing self-embedded generation and a number of these will be announced,” Hoosen told Business Day.
Thursday’s event will be the last leg of the first investment drive which set a target of R1.2-trillion. SA is set to meet this target, having already secured R1.14-trillion in investment pledges from domestic and international investors over the last four years of the conference. An update will be given during this week’s SA Investment Conference.
“Of the 152 investment announcements made previously, 45 projects have already been completed while a further 57 projects are currently under construction,” the presidency says. “These investments have resulted in new factories, call centres, solar power plants, undersea fibreoptic cables, expansion of production lines and the adoption of new technologies.”
The Reserve Bank expects the economy to grow 0.3% in 2023 as cripplingly high levels of load-shedding restrain business activity.
Business lobby groups Business Unity SA (Busa) and Business Leadership SA (BLSA), who represent some of SA’s largest listed companies, have said the government needs to act urgently to tackle the electricity and logistical crises which have hit business confidence and investment.
“SA competes for investment with countries on our continent and elsewhere and we need to work, under the leadership of the government, to urgently address blockages to attracting substantial investment,” says Busa CEO Cas Coovadia.
Business Leadership SA CEO Busisiwe Mavuso says the government’s abrupt termination of the state of disaster over the energy crisis, and the reversal of Eskom’s exemption from Public Finance Management Act declarations, has dented SA’s brand ahead of the conference.
“The way it was communicated to the market, with the impression created that the exemption was to enable the withholding of information from ratings agencies, was a serious blunder. It damages the government’s reputation as an honest counterpart to investors,” Mavuso said on Tuesday.
Confusion was further created when electricity minister Kgosientsho Ramokgopa was quoted by various publications as saying that the life of Eskom’s coal-fired power plants should be extended as a means to ease load-shedding, Mavuso says.
“While the minister may not have intended to imply a swing in his focus from renewables to coal-based generation, his comments are at risk of being interpreted like that. Investors who are planning to pour billions of dollars into the project of transitioning our economy will have been alarmed.”
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