Blog

South Africa’s much-awaited Investment Conference: What will it tell us?

By Gerhard Erasmus
24 Oct 2018
Share on
8 minute read
South Africa’s much-awaited Investment Conference: What will it tell us?

In September this year, President Cyril Ramaphosa announced that an international investor conference will be convened as part of his drive to get $100 billion in new investment into South Africa over the next five years. This conference now takes place between 25 and 27 October in Johannesburg. Over 800 delegates from around the world are expected to attend.[1]

This initiative is part of President Ramaphosa’s strategy to boost the ailing South African economy. He has also taken steps to crack down on corruption and to tackle policy uncertainty as part of an effort to restore investment and business confidence, which were seriously undermined during the presidency of his predecessor, Jacob Zuma. The country’s credit rating was slashed and in September 2018 it was announced that the South African economy had slipped into recession.[2]

The Investment Conference is the second initiative this month to deal with South Africa’s crises – it follows the Jobs Summit of early October. South Africa’s official unemployment rate stands at 27.2%. The Jobs Summit saw government, business and labour coming together but specific steps for immediate relief action are a difficult matter. Weak economic growth makes it impossible to reduce unemployment, inequality and poverty, as one commentator noted: “Clearly extremely strong, sustained economic growth that results in both a tripling in the size of the private corporate sector and includes the majority of South Africans currently outside of the formal employment net (into formal employment) is the solution for South Africa.”[3]

This week’s Investment Conference is an important event and obviously related to longer-term efforts to tackle the unemployment crisis. It will provide indications about how South Africa’s potential as an investor destination is perceived, the direction which future reforms should take, and what needs to be done to clean up corruption and the political mess in which Government finds itself. Most investors will adopt a wait and see attitude. The ball is clearly in the Government’s court. Some will take note of the fact that local business is reported to sit on substantial amounts of funds which can be invested locally, if investor confidence can be restored.

Events like these tend to generate their own positive spin and the mere fact that the Investment Conference takes place on the scale announced, is of significance. However, no immediate real results should be expected. The nature of the political challenges facing the President (a divided African National Congress (ANC) leadership, declining voter support, and a general election next year) as well as questions about how he will respond to the findings of the investigations into state capture and corruption, pose formidable challenges. The problems of South Africa call for urgent remedial action, but the solutions require careful strategizing and strong leadership; while the political landscape around him is wrought with danger. Many in senior ANC positions will resist plans to clean up the rot in a comprehensive manner.

South Africa faces formidable systemic challenges. Basic skills are in short supply, while the educational system fails to equip school leavers with the skills necessary to ensure competitiveness in a technologically sophisticated global economy. Organized labour will oppose reforms called for by many; to address youth unemployment in particular.

Those who will attend the Investment Conference can use the opportunity to inform themselves about some bigger picture features of the South African economy and about development which may offer signs of hope. Here are a few:

  • The South African economy is the engine of growth in Sub-Saharan Africa. By investing in South Africa (more specifically, in the Southern African Customs Union – SACU[4]), access to many important regional markets can be secured. The Southern African Development Community (SADC) accounts for 70% of intra-African trade in goods. South Africa is the top intra-African exporter and importer, with shares of 35.4% and 20.9% respectively.

  • South African businesses are also prominent traders in services. These include retailing, banking, insurance, communications and construction.

  • Important negotiations are underway to boost intra-African trade and integration. The Tripartite Free Trade Area (TFTA) was launched in June 2015 and consists of the 26 member states of the East African Community (EAC), the Common Market for East and Southern Africa (COMESA) and SADC. This agreement is expected to inter into force early next year. South Africa has already announced plans to ratify the TFTA.[5]

  • The African Continental Free Trade Area (AfCFTA) was launched in March 2018 and will cover trade in goods, trade in services, investment, competition and intellectual property rights. It is expected that the 22 ratifications required for entry into force will be deposited by the end of this year.[6] South Africa has indicated that it will be part of the early ratification initiative. All 55 African Union members are participating in the AfCFTA negotiations, which will continue in 2019 when investment, competition, intellectual property rights and service sector commitments will be deliberated.

  • Historically South Africa has been one of the largest investors in Africa. There are signs that it is facing growing competition from other investors – both from outside Africa (China in particular) and from other African countries. South African investments are primarily in the telecommunications and chemical sectors, producers of industrial goods and services, banks and retailers. Service-oriented (and secondary/manufacturing) sectors, rather than resource-based sectors, have attracted South African investment to the rest of the continent.[7]


[1] https://ewn.co.za/2018/10/18/investment-conference-about-repositioning-the-way-sa-does-business

[2] http://www.statssa.gov.za/?p=11507

[3] Investec Chief Economist Annabel Bishop. https://www.fin24.com/Economy/Labour/five-possible-solutions-for-sas-unemployment-crisis-as-job-summit-nears-20181003-2

[4] SACU (consisting of Botswana, eSwatini, Lesotho, Namibia and South Africa) goes back to 1910 and is a well- integrated commercial space. The Common Monetary Area adds to the ease of doing business.

[5] Parliamentary approval under Section 231 of the South African Constitution has already been obtained. See a related tralacBlog at: https://www.tralac.org/blog/article/13467-south-africa-to-ratify-tripartite-fta-and-continental-free-trade-area-agreements.html

[6] For a discussion of the TFTA and AfCFTA initiatives, see tralac’s various publications at: https://www.tralac.org/publications.html

[7] See GEGAfrica Policy Briefing, The dynamics of South African investment in the rest of Africa: https://www.tralac.org/news/article/13588-tralac-s-daily-news-selection-friday-19-october-2018.html#south-africa

About the Author(s)

Gerhard Erasmus

Gerhard Erasmus

Gerhard Erasmus is a founder of tralac and Professor Emeritus (Law Faculty), University of Stellenbosch. He holds degrees from the University of the Free State, Bloemfontein (B.Iuris, LL.B), Leiden in the Netherlands (LLD) and a Master’s from the Fletcher School of Law and Diplomacy. He has consulted for governments, the private sector and regional organisations in southern Africa. He has also been involved in the drafting of the South African and Namibian constitutions. He grew up in Namibia.

Leave a comment

The Trade Law Centre (tralac) encourages relevant, topic-related discussion and intelligent debate. By posting comments on our website, you’ll be contributing to ongoing conversations about important trade-related issues for African countries. Before submitting your comment, please take note of our comments policy.

Read more...