President Cyril Ramaphosa's third investment summit, to be held this week, has elicited a wary response from business leaders, who made it clear that unless and until the government does what it has long promised to do to make it easier to do business in SA, it has little chance of attracting new fixed investment or even sustaining current projects.
The president presented his economic recovery and reconstruction plan a month ago, but little has been delivered since then. Nor has the government engaged to any significant extent with its social partners at Nedlac, who earlier agreed on a more tightly focused economic plan with a set of reforms they sought to implement jointly with the government to boost investment and growth.
Latest economic data suggest the economy started to recover in the second quarter but is still well below its pre-Covid crisis levels.
The Reserve Bank is expected to update its economic forecasts at its monetary policy committee meeting this week, but at its last meeting it forecast that the economy would contract 8.2% this year.
And official data show that the fixed investment spending that SA needs in order to achieve higher and more sustained economic growth and job creation rates was in decline in eight of the 10 quarters to June this year. This was despite Ramaphosa's efforts to talk up investment and the R664bn in investment pledges made at his first two investment summits, in 2018 and 2019.
Umbrella business organisation Business Unity SA (Busa) said it welcomed any meaningful initiative that might attract investment into SA, but warned that SA would not see sustained investment until it creates the right environment and improves its position on the ease of doing business index.
Investors are saying,
— Lungisa Fuzile, Standard Bank SA CEO
‘Get on with the
work of making it
easy for us to invest
in your economy’
"While business people will attend the investment conference and we are supportive of the president's initiative to try and raise investment, we have to make the point that the critical issues that need to be addressed to get investment onto the ground into job-creating business activity is that the structural economic reforms that business has been talking to government about for the past three years need to be addressed," Busa CEO Cas Coovadia said on Friday.
"The investment conference needs to be urgently backed up by clear indications by government that they are committed to structural reforms and are implementing short-term measures - such as the RFP for renewable energy - to instil confidence among investors and the public," he said.
Ramaphosa's economic adviser Trudi Makhaya said this year's summit was about "taking stock", halfway through the period over which the president had targeted R1.2-trillion in new investment.
The emphasis was on policy and what the government is doing to enable investment, and on how to ensure the existing pipeline of pledges, rather than on new pledges. There has been no indication of outright cancellations, with only 9% of the R644bn of pledged projects slowing down, she said.
The president's third investment summit is to be held online and at the Sandton Convention Centre on November 17-18, with 1,500 people having signed up online by Friday. It coincides with this week's eighth annual SA Tomorrow international investor conference, which the JSE, Standard Bank and Old Mutual usually host in New York but which this year is being held online.
Both sides insisted that the two conferences would complement, and not clash with, each other. Makhaya said the idea was to have an investment week. JSE CEO Leila Fourie said Ramaphosa's opening address to the investment summit will be streamed live to the SA Tomorrow conference, which runs all week in the afternoons - to accommodate different time zones, with the virtual format attracting investors in the US and Europe. So far 163 international investors have signed up to attend, from last year's 84.
Finance minister Tito Mboweni, Reserve Bank governor Lesetja Kganyago and public enterprises minister Pravin Gordhan are scheduled to address the SA Tomorrow conference, as are Eskom and Transnet's CEOs.
The president's summits target "real economy" fixed investment projects, and the New York conference connects policymakers and JSE-listed companies with the large US and global fund managers.
Fourie said it is a good time to be engaging with international investors. The weaker dollar signals a higher risk appetite, which is positive for emerging markets.
SA offers very good yields on its government bonds and although some international investors are concerned about SA's ability to deliver its growth plans, and its public debt level, others are encouraged by good plans from the government.
"The investors will have noticed the progress in anti-corruption. But the biggest catalyst would be a decent wage agreement in the public sector," Fourie said.
Standard Bank's SA CEO, Lungisa Fuzile, said it is good for the government to stay in touch with the investor community: "It crystallises in the minds of policymakers the depth of the problem and what solving it would mean for investment and prosperity."
The government has moved forward on certain reforms, even if it is baby steps, Fuzile said. "But investors are saying to the government, 'Get on with the work of making it easy for us to invest in your economy . We can't meet year after year to talk about the same thing,'" he added.
More than one CEO said this week that it would make more sense for the president to hold events such as the investment summit only periodically, to allow time for investment processes to unfold and ensure the government had something to report.
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