President Cyril Ramaphosa hosted the third South Africa Investment Conference on Tuesday and Wednesday 17 and 18 November 2020. It was part of expanding South Africa’s efforts to grow domestic and international investment.
The South Africa Investment Conference is an annual event that has run since 2018. Ramaphosa embarked on a US$100 billion five year investment drive to stimulate sustainable, equitable, and inclusive growth as the foundation for socio-economic transformation in the country. In 2018, US $18 billion investment brought South Africa one step closer to achieving its target. The government would track the impact of the investments and their ability to maximize job creation. In a bid to further draw investments, delegates at the conference entered into breakaway sessions where a total of US $650 million was raised collectively. The theme: “Accelerating Economic Growth by Building Partnerships”, was attended by leaders in government and business, members of the diplomatic corps, fund managers, and entrepreneurs who collectively agreed the objectives were met.
In 2019, the South African Investment Conference (SAIC) managed to raise US $13.5 billion. However, areas of improvement included more funding to be channeled to the tourism sector which is a major offering of South Africa. Likewise, the agro-processing and exporting market is busting with untapped potential and more efforts should be put into it by the government. In a report on South Africa, Moody’s Investors Service stated it is subject to frequent climate-related shocks such as droughts, which undermine the agricultural sector’s performance.
As for 2020, The pressure has been amplified by the economic impact of the COVID-19 pandemic, which has seen the economy shrink even more and the government borrowing even more money to keep the public purse afloat. The event was held online with over 1,000 delegates attending. On the conference’s agenda were various subjects, including the energy plan, small business growth, and infrastructure investment. With the opportunity that the African Continental Free Trade Area (AfCTA) provides, investors have an opportunity to participate in the untapped potential of an integrated continent. AfCTA allows African countries to work together in a trade tariff-free environment, making Africa a dynamic force in the international arena. The three biggest economies on the continent have added their combined economic might to the AfCTA with the intention to stimulate Africans to invest in Africa and boost intra-continental trade.
So far, Nineteen investment projects from the last two years have already been completed or launched. A further 44 projects, representing 57% of the total investment commitment, are under construction as I write, with another 12 projects in the early stages of implementation. As the most diversified and advanced African economy, South Africa offers investors a host of unique comparative advantages and unique features as an investment destination and trade partner in Africa. Investors had the opportunity to hear from and engage with government and business leaders on the progress towards political and economic renewal, strengthening the credibility of public institutions and unlocking the potential and innovative spirit of South Africa’s economy.
According to the 2019 World Economic Forum Global Competitive Index, South Africa ranks number 1 out of 141 nations in budget transparency, which is an illustration of the robust and transparent political governance system of the country. South Africa’s macro-economic environment has proven resilient as have its institutions of governance, which continue to advance the interests of good governance and democracy. The catalytic approach taken in South African entails: A focused and purposeful industrial strategy has been adopted and Master Plans are being developed by the government in conjunction with business and labour for sectors with high potential for growth. South Africa provides active support for investors by providing a wide range of incentives, including a comprehensive suite of tax incentives for investment in special economic zones (SEZs). Investment in labour absorbing industries is encouraged through various mechanisms. Financing assistance is provided by state-owned development finance institutions (DFIs) such as the Industrial Development Corporation (IDC), the Development Bank of Southern Africa (DBSA), and the Land Bank.
Lastly, I strongly believe President Ramaphosa will meet the audacious US $100 billion investment targets over his tenure. This will see South Africa’s economy soar and develop multiple industries. Despite COVID-19 increasing unemployment and shrinking of the economy, the 2020 South Africa Investment Conference was a success and promised to better the investment climate and revamp the nation at large. More African governments can learn from the aggressive strategy employed in South Africa to speed up development projects. Moreover, having an open platform for the public sector, private sector and foreign investors to work in synchrony so as to spur rapid economic growth is much needed.