President Cyril Ramaphosa says it is understandable that South Africa has drawn doubt from investors, given the many notable knocks it has taken over the last year – however, he has assured that the country is still solidly on the path to recovery.
Despite economic headwinds, an ongoing power crisis, and deep scepticism from international insitutions, the president believes South Africa is an investment destination with ‘significant untapped potential’.
Speaking at the country’s fifth Investment Conference, the president engaged with domestic and foreign investors seeking to add billions of rands more to his five-year plan to draw R1.2 trillion in investment to the country.
Since 2018, the country has been able to amass R1.14 trillion in investment pledges – and Ramaphosa hopes that the current conference will be able to shoot past that.
Looking towards the upcoming five years, Ramaphosa said that the new target is an additional R2 trillion in new investments between now and 2028.
On the defensive
Addressing the conference, the president was defensive about South Africa’s positioning but also acknowledged the own-goals that have been scored by over a decade of mismanagement.
He said the country has had to contend with a global pandemic, damaging social unrest, natural disasters and a cost-of-living crisis.
“In addition, we are now confronted with the consequences of years of under-investment, mismanagement and corruption in our electricity, rail and logistics sectors,” he said.
“We are on a long journey to rebuild our country and recover the ground we have lost. Our recovery is a mission that will take time to accomplish. We are on the recovery path, we refuse to be daunted by the challenges we face, we are confident that we will recover,” he said.
The president said that although investment decisions have taken several years to reach fruition, almost 70% of the total number of projects announced since 2018 have been completed or on their way to completion.
“To date, approximately R460 billion of capital has been invested in building new factories, purchasing equipment, constructing roads, sinking mine shafts and rolling out broadband infrastructure. ”
He added that international companies are turning to South Africa for business process outsourcing, tech start-ups, the automotive sector, green ammonia, green hydrogen or in the construction of mega data centres.
Addressing the thorn in South Africa’s side – load shedding – the president said that the energy sector remains the country’s foremost priority.
“The lack of reliability in electricity supply weakens business and consumer confidence, taints international perceptions about our country and affects investment sentiment and decisions.”
He reiterated the fact that the government, last year, implemented the Energy Action Plan to reduce the severity and frequency of load shedding in the short term.
Despite this initiative, a little reprieve from rolling blackouts has reached consumers and businesses nationwide.
Analysts and researchers at large are pointing to load shedding worsening in the coming months.
Ramaphosa said that load shedding would remain a challenge in the immediate future. However, its severity will begin to ease.
Although the country is focusing on improving its embattled coal-fired power stations, Ramaphosa added that it is still committed to a Just Energy Transition to renewables and net-zero by 2050.
Ramaphosa said that the shift to renewables would take place at a pace the country can afford and in a way that ensures energy security.
He noted, however, that in the long run, investment in green energy would be a huge boost to economic growth.
On top of issues arising from the troubled Eskom, South Africa’s logistic sector is further driving growth estimates downward. Ramaphosa said that the country is prioritising port and rail efficiencies as part of the structural reform process.
“To facilitate third-party access, Transnet is establishing a separate Infrastructure Manager for the rail network,” said the president.
“In the interim, Transnet is implementing a range of measures to arrest the decline in the performance of the freight rail system, including increasing the availability of locomotives for key corridors. ”
Ramaphosa dealt specifically with corruption, citing that the South African Police Service, the Special Investigating Unit and the National Prosecuting Authority’s Investigating Directorate has made notable progress in dealing with serious cases of state corruption.
“This work has resulted in arrests, asset forfeitures, successful convictions and the recovery of misappropriated funds,” he said.
Developments in this area indicate the country’s commitment to getting off the Financial Action Task Force’s grey list.