When President Cyril Ramaphosa appointed his four investment envoys — Jacko Maree, Trevor Manuel, Mcebisi Jonas and Phumzile Langeni, referred to by some as lions hunting for $100bn over the next five years — many of us were sceptical. By exploiting the Ramaphoria phenomenon, the president bought some credibility in the eyes of both domestic and international investors, enabling him to raise about $24.7bn on his own. This comprises about $10bn and $14.7bn from the Saudis and Chinese, respectively.
From October 25 to 27 SA will host domestic and international investors in an attempt to get the country’s economy moving. This will be a great platform for the four lions to pounce on and improve on Ramaphosa’s successes.
In its preparations for the investment summit, Team SA has put together an information-rich glossy investment brochure. It begins with “woke” language, describing SA as a hot emerging market. This evokes different images and emotions among the woke in our society, although my ideologically left comrades find the description ironic. They argue that the openness of the SA economy attracts foreign capital inflows as it is Africa’s biggest, and the JSE Securities Exchange draws “hot” money that can be withdrawn as sentiment changes. This directs capital away from foreign direct investment and as such SA should introduce capital management techniques, they recommend.
Despite Team SA’s excellent sales pitch, few will buy into it. Investors have seen various economic policies and strategies prepared by Team SA that have not been implemented.
Overall, the investment brochure presents SA objectively. Of interest is a recognition by Team SA that potential growth can be raised by 2.5 percentage points if the necessary policy and administrative reforms are undertaken, particularly in sectors with high growth potential according to Treasury estimates. Key areas of reform that would drive such growth include the mining sector policies supportive of investment and transformation that were announced by mineral resources minister Gwede Mantashe recently; telecommunications reforms, including the release of additional broadband spectrum; lowering barriers to entry for small, medium, micro- and co-operative enterprises by dealing with anticompetitive practices; supporting labour intensive sectors such as agriculture, tourism and manufacturing; as well as increasing skills levels across the economy.
However, despite Team SA’s excellent sales pitch, few will buy into it. Investors have seen various economic policies and strategies prepared by Team SA that have not been implemented. For example, in a May 2002 document the department of trade & industry presented “A guide to the microeconomic reform strategy”. The department recognised that macroeconomic reforms could not stimulate the levels of savings and investment needed to underwrite growth on the scale needed. Instead, analysis revealed then, that limits to growth persist at the microeconomic level, as they do today.
The microeconomic constraints include impediments to cost competitiveness such as the tariffs charged by certain state-owned enterprises, impeding the efficiency of supply chains. In the underdeveloped economy a lack of basic infrastructure, especially roads and communications exists. Impediments to cost competitiveness exist in the labour market as a result of a mismatch of labour demand and supply, the low levels of education and skills of the workforce, and the need for continuous review of labour market regulation.
After 1994 the ANC built strong, capable institutions, which it has been destroying since 2009. The governing party refuses to own up to economic mismanagement and has conveniently changed its approach to property rights, intensifying racial divisions, just as the apartheid regime did.
The economic recession, rising cost of living, structural unemployment and associated pathologies across the country require all sectors of society to be part of the solution, not only blacks, particularly in the absence of a capable state.
SA can be a successful investment destination if it uses all its skill endowment, unifying all South Africans to work for a better life for all.
• Mondi is a senior lecturer at the Wits School of Economic and Business Sciences.
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