DAVOS – Investment in South Africa is recovering, according to Team SA speaking at the Absa Davos Investment Summit at the World Economic Forum on Thursday.
“We lost our way in the last couple of years; South Africa lost the confidence of global and local investors and if there is no confidence, investors will simply invest elsewhere. Reasons for this were political instability and policy uncertainty and inconsistency,” said President Cyril Ramaphosa.
“But, we are turning this around. South Africa is on a renewal path where policy certainty and consistency shall be the order of the day.
“The new government is an enabler and facilitator. I invite all role-players to participate in creating a conducive climate for investments,” he said. The South African government will further engage with stakeholders at summits such as the investment and job summits, Ramaphosa told delegates.
Ramaphosa pointed to the success of the government's drive to raise $100 billion (R1.38 trillion) in new investments over the next five years and the $20bn in investment announced at the inaugural South Africa Investment Conference in October.
“There is definitely a turnaround in the South African investment climate. Foreign direct investments grew by more than 440 percent between 2017 and 2018, from $1.3bn to $7.1bn, according to a recent UN Conference on Trade and Development report.
“That is a huge increase for which we are grateful, but it follows in the wake of changes that we are effecting in our country and the reforms we have embarked on. We aim to to sustain and further increase this growth in investment, having raised $20bn. This year we are going to hold another investment conference where we intend to raise more and we want to hasten the pace of investments from both local investors and offshore investors.”
Further sectors ripe for investment and growth were telecoms, energy (particularly renewable energy) and tourism where the government was working hard to streamline processes for business and tourist visas, he said.
Economic Development Minister Ebrahim Patel added that globally the environment was clearly more fragile for growth, but within that environment there were opportunities.
The projections for growth globally was for 3.5 percent, but with “significant variations” across the world economy, he said.
“Globally, foreign direct investment is down, in fact quite sharply. If you take the global storyline it is down by 19 percent, but if you take the South African story, it has been a significant increase. If you take developed countries as a whole it is down by something like 40 percent, but if you take developing countries it is up by 3 percent,” Patel said.
“Within this more complex environment and given that the aggregates are more fragile, we need to find opportunity. What South Africa has done is put its focus on attracting foreign direct investment. There has been an investment gap that we are addressing now and there has been a little bit of traction that we can play on for probably the next three or four years.”
Patel added: “There is a broadly tougher environment, but within that, the trick is to find the tailwinds that can power our economy.”
Absa group chief executive Maria Ramos said the investors’ mood at WEF last year was one of optimism, but this year the mood was cautious.
“We have a lot to build on,” she said.
Discovery Group chief executive, Adrian Gore warned delegates that South Africa had lost R1trln in investments over the past nine years, but stated that he was extremely positive about investment opportunities in South Africa.
“Discovery will invest substantially in South Africa in the years to come,” he said.