SA provides fertile ground for investment
President Cyril Ramaphosa has assured potential investors that South Africa is working hard to provide a conducive environment for investors.
“Government is working with urgency to guide the economy towards a more sustainable growth trajectory and to restore South Africa to investment grade status at all credit rating agencies,” said the President.
He was speaking at a Business Seminar on Opportunities in South Africa, on the margins of the United Nations General Assembly taking place in New York.
The President also engaged in the Invest in South Africa Private Roundtable discussion hosted by American businessman, Michael Bloomberg, on investment opportunities in South Africa.
Addressing investors, the President told delegates that South Africa, in a bid to revive its economy, made new investments into the economy a central priority for government. To achieve this, President Ramaphosa outlined government’s ambitious investment drive to raise $100 billion in new investment over five years.
As part of improving South Africa’s investment service to investors, the President highlighted that government established Invest SA to focus on investment promotion and facilitation.
Invest SA brings together key government departments in a single location to provide specialist advisory services, fast track investment projects and reduce regulatory burdens for investors.
President Ramaphosa also reiterated measures announced as part of government’s stimulus package to reignite the economy.
On mining, President Ramaphosa told investors that government has finalised a new Mining Charter in consultation with the mining industry, labour, affected communities and other stakeholders.
A significant part of South Africa’s economic development agenda is to promote greater economic cooperation among African countries, Ramaphosa added.
“It is through increasing intra-African trade and investment that we will grow, develop and diversify African economies, and make them more attractive to investment,” he said.
Invest in South Africa Private Roundtable
Opening Remarks by President Cyril Ramaphosa, New York, 26 September 2018
I wish to express my sincere gratitude to Michael Bloomberg for hosting this discussion with such an important group of people, and to appreciate his great interest in South Africa’s development as a valued investment destination.
As the country emerges from nearly a decade of low growth, declining investment and faltering employment, we are determined to forge a new growth path.
Earlier this year, I announced an ambitious investment drive that aims to generate at least $100 billion in new investment over the next five years.
As part of this drive, we will be hosting an Investment Conference in Johannesburg on 26 October, which will bring together investors from within South Africa and internationally.
We have appointed four Presidential Investment Envoys, who have been travelling to major financial centres around the world, to promote investment in South Africa ahead of the conference.
We are also working to improve the investment environment by, among other things, ensuring policy certainty and consistency, improving the performance of state owned enterprises and consolidating fiscal debt.
As we put in place the pillars of sustained growth into the future, we are also working to address immediate concerns, specifically the effects of two quarters of negative growth.
In response to recent news that South Africa is in a technical recession, government last week announced an economic stimulus and recovery plan that aims to restore growth, save existing jobs and create new ones.
The stimulus and recovery plan has five broad parts:
Firstly, implementation of growth enhancing economic reforms.
Secondly, reprioritisation of public spending to support job creation.
Thirdly, the establishment of an Infrastructure Fund.
Fourthly, addressing urgent and pressing matters in education and health.
Fifthly, investing in municipal social infrastructure improvement.
We are taking immediate steps to finalise reforms in key sectors like mining, oil and gas, tourism and telecommunications – all of which are sectors that have great potential for growth, but which have been constrained by policy uncertainty.
We are reprioritising our budget – within the existing fiscal framework – to invest more in those activities that are most likely to boost growth, including agriculture, township and rural businesses, and infrastructure.
We see infrastructure investment as a critical enabler of growth and job creation, and are therefore consolidating government infrastructure resources into a single Infrastructure Fund.
We intend to use that Fund to leverage investments from development finance institutions, multilateral development banks, asset managers and commercial banks.
A dedicated team located in the Presidency will oversee the implementation of an extensive infrastructure programme covering areas like water, transport, energy, telecommunications and social infrastructure.
Resources are being made available to provide basic needs and hire essential personnel in the public health and education systems.
Despite the challenges of the present, the South African economy has several fundamental strengths that makes it a suitable destination for investment.
South Africa has established a diversified manufacturing base that has shown its resilience and potential to compete in the global economy.
Companies like Ford, Microsoft, GE and IBM, among others, have established operations in South Africa.
Multinationals with a presence in South Africa cite numerous advantages, from excellent financial systems to world-class infrastructure.
South Africa is a regional manufacturing and services hub on the African continent, and, for many companies, serves as a base to export products globally.
Recent investments by companies such as Ab Inbev, Caterpillar and Marriot Hotels are testament to the diversity of opportunities.
We have done much work in recent years to improve investment incentives, establishing, for example, several special economic zones across the country, each having unique offerings for investors.
These include ready infrastructure for business development, reduced costs for key inputs such as land, water and electricity, and reduced corporate tax rates.
We are determined that our economic policy must facilitate inclusive growth.
Given our country’s history of dispossession, and the continued economic exclusion of millions of our people, we have a responsibility to bring all our people into the economic mainstream.
We are therefore building a robust and effective education and skills development system that equips our youth for the workplace of the present and the workplace of tomorrow.
We have implemented policies to promote black economic empowerment, to provide black people, women and people with disability with the assets and opportunities they need to participate more meaningfully in economic activity.
One of the key instruments for black economic empowerment are Codes of Good Practice, which assess companies in terms of levels of black ownership and the promotion of previously disadvantaged groups through enterprise, supplier and skills development.
This is sometimes seen as a barrier by multinationals that have global practices preventing them from complying with the black ownership element of the codes.
In such instances, the codes provide for an Equity Equivalent Investment Programme, which enables international companies to contribute to transformation through enterprise and supplier development, critical skills development and research and development.
Currently some of the approved multinational companies that successfully participate in this programme are Caterpillar, IBM, Dell, Microsoft and Hewlett Packard.
Another area that is critical to economic transformation is land reform, which is currently a focus of intense debate across South African society.
There is general agreement among most South Africans that we need to accelerate land reform not only to redress a historical injustice, but also to effectively unlock the economic potential of the country’s land.
We are committed, as government to pursue a comprehensive approach to land and agrarian reform that ensures transformation, development and stability, while providing certainty to those who own land, to those who need land and to those who are considering investing in the economy.
South Africa’s strategic position at the tip of Africa, makes it a key investment location, both for opportunities that lie within its borders and as a gateway to the rest of the region.
Earlier this year, African heads of state agreed to the establishment of an African Continental Free Trade Area that will provide access to a market of more than 1.2 billion people and a combined GDP of more than US$3.4 trillion.
This will fundamentally transform the economies of many African countries and will further enhance the attractiveness of South Africa – with its diverse manufacturing base, advanced infrastructure and sophisticated financial sector – as a compelling investment destination.
It is for all these reasons that we invite you to invest in South Africa – or invest more in South Africa – and we look forward to hosting you at our Investment Conference in Johannesburg on 26 October.
Business Seminar on Opportunities in South Africa
Opening Remarks by President Cyril Ramaphosa, New York, 26 September 2018
Thank you very much for this opportunity to have a discussion on the South African investment experience.
It is through such engagements that we, as the South African government, are able to understand what motivates, energises and worries investors.
And it is through such engagements that investors can gain greater insight into government’s plans and prospects.
In the State of the Nation Address that I delivered in February this year, I announced that a central priority for my government is to encourage significant new investment in our economy.
This is a necessary condition for the growth of our economy and the creation of jobs on a scale that will significantly reduce current levels of unemployment.
Foreign direct investment is critical to this effort, because it strengthens productive capacity through transfer of technology and knowledge, the creation of job opportunities, improvements in human capital and enhanced production processes.
Greater capital inflows generate greater trade flows, and with it the opportunity for a country like South Africa to derive greater value from its mineral, agricultural and other resources.
It is for this reason that, earlier this year, we launched an ambitious investment drive to raise $100 billion in new investment over five years.
An important milestone in this initiative is an Investment Conference to be held in Johannesburg on 26 October.
The Investment Conference, which will involve domestic and international investors, provides a platform for would-be investors to seek out opportunities in the South African market.
In preparation for the Investment Conference, I appointed four Special Envoys on Investment, who have spent the last few months engaging both domestic and foreign investors on the opportunities that exist in South Africa.
They have travelled to major financial centres in Africa, Asia, Middle East, Europe and the Americas to meet with potential investors.
Through this work, we are establishing new investment relationships and strengthening existing ones.
Many US companies have a long and successful history of involvement in South Africa.
South Africa is the second largest destination of US investments in Sub-Saharan Africa after Mauritius.
Total bilateral investment, comprising FDI, portfolio and other investments, stood at approximately R2.2 trillion in 2016.
Investments by US companies into South Africa accounted for about 22% of total inward investments from the world.
There are over 800 US companies doing business in South Africa, accounting for 10% of GDP and employing over 220,000 people.
It is our intention, through this investment drive, to substantially expand the presence of US companies in South Africa.
Among other things, this requires that we improve the investment environment in the country and that we take decisive measures to address the key structural challenges in our economy.
We are therefore investing significantly in our education and skills development programmes, using our competition policies to create opportunities for new market entrants, reducing the cost of business and developing our economic infrastructure.
Government is working with urgency to guide the economy towards a more sustainable growth trajectory and to restore South Africa to investment grade status at all credit rating agencies.
Government, private sector, labour and civil society are working together on a social compact to create jobs, particularly for young South Africans.
As part of improving our investment service to investors, we have established Invest SA to focus on investment promotion and facilitation.
Invest SA has established ‘one stop shops’, which bring together key government departments in a single location to provide specialist advisory services, fast track investment projects and reduce regulatory burdens for investors.
We also have a good track-record in generating private investment to meet key infrastructure needs.
Our independent power producers programme has unlocked significant investment in renewable energy generation, while contributing to a more diverse energy mix and advancing our efforts to mitigate climate change.
We are also working closely with our neighbours in Southern Africa on regional opportunities to exploit natural gas, coal bed methane and shale gas.
We are giving renewed attention to mining, an industry that has been in decline over many years, but which still holds huge potential for job creation, growth, beneficiation, transformation and empowerment.
We have finalised a new Mining Charter in consultation with the mining industry, labour, affected communities and other stakeholders.
This provides clarity on how we will balance the imperatives of growth, sustainability and transformation.
Our aim is to unlock the economic potential of our country, which has been constrained for decades by policies of racial exclusion.
For generations, black South Africans were denied opportunities to own assets, establish businesses, acquire skills and enter professions.
Nowhere was this more apparent than in the patterns of ownership and usage of land.
The extreme concentration of ownership of land is one of the great impediments to the full realisation of our country’s potential.
We have taken a decision to accelerate land reform, including land redistribution and ensuring security of tenure for the rural poor.
We are determined that this should be achieved in a manner that is consistent with our Constitution, enhances agricultural production and food security and promotes economic development.
A significant part of our economic development agenda is to promote greater economic cooperation among African countries. [...]
It is through increasing intra-African trade and investment that we will grow, develop and diversify African economies, and make them more attractive to investment.
South Africa has embarked a new path of renewal and growth.
We are hard at work to remove the constraints that have held us back and to create new opportunities for growth.
We are determined to change the economic fortunes of our people through partnership and cooperation with investors here in the United States and across the world.
We invite you to be part of the regeneration of our country and of our continent.
I thank you.