Policy certainty the key to $100bn target

President Cyril Ramaphosa’s $100bn investment drive over the next five years hinges on greater policy certainty, according to investors.

President Cyril Ramaphosa’s $100bn investment drive over the next five years hinges on greater policy certainty, according to investors.

Ramaphosa, along with a business delegation, headed to Canada to participate in the Group of Seven (G-7) leaders’ summit after a seven-year absence by SA. His aim was to woo investors on the sidelines as part of his drive to attract investment to grow the economy, create jobs and tackle poverty and inequality in SA.

On Friday, the SA-Canada round-table investment engagement took place in Toronto to unpack investors’ concerns.

SA has made strides recently, including leadership changes at key state-owned enterprises and the South African Revenue Service, and a cabinet reshuffle that resulted in a number of new deployments. However, the country is still facing headwinds around land policy and the Mining Charter, which have spooked investors.

“Both issues were raised as concerns, but we contextualised both issues,” Business Unity SA board member Cas Coovadia, said. While the country’s change in leadership and steps taken to tackle governance issues were viewed positively, investors want to see policy certainty and consistency, he said.

Mining has continued to take strain with persistent uncertainty that has hampered confidence and investment.

“The ongoing engagement between the Minerals Resources Council and the current minister is positive and should reach a reasonable outcome,” he said.

In February, the National Assembly adopted a resolution brought by the EFF to begin a process to amend the Constitution, allowing land expropriation without compensation.

“We also contextualised the land issue, with the president assuring the meeting land reform will take place within the Constitution and will be undertaken pragmatically, to promote and grow agriculture and food security,” said Coovadia.

Land is a concern for foreign investors and they are watching that very closely, said John Morris, a strategist at Merrill Lynch.

“Importantly, it is still a muted environment at the moment for investors. This will probably be more of a 2019 story than a 2018 story,” he said.

SA’s foreign direct investment fell from 24% of GDP in 2008 to 19%. The goal is to reach 30%, in line with the National Development Plan.

“In recent years, the South African economy has been struggling with a fundamental lack of private-sector capital expenditure, including maintenance capex,” said Stanlib chief economist Kevin Lings.

The Presidency could not be reached for comment.