Give ‘lion pack’ teeth and claws

THE news that China is willing to invest a R300-million tile factory in the Eastern Cape which will, in turn, create an estimated 1 000 jobs, is good news for this province, where both foreign investment and employment are scarce.

It is a clear and ringing sign that things are changing with President Cyril Ramaphosa at the helm. It shows there is still some international goodwill in the bank and that investor confidence can be re-earned.

The tenure of former president Jacob Zuma was characterised by political scandal, corruption, poor public governance, a collapse in public finances, and policy confusion on major issues.

There were attacks on the independence of the Reserve Bank, much support for wholesale land expropriation without compensation and, of course, confusion around what exactly the term “radical economic transformation” actually meant.

Foreign Direct Investment (FDI) shrivelled up and all the major credit agencies turned jittery, most reducing South Africa to junk or near-junk status. Econometrix analyst Rob Jeffrey pointed out as early as 2016 that South Africa was in trouble.

While the United Nations Conference on Trade and Development (Unctad) indicated that in 2015, world FDI flows increased an estimated 36.5% to $1.7-trillion (R20.4-trillion), FDI flows into SA decreased by 74% down to $1.5-billion (R18-billion).

Foreign investors had lost confidence in SA and were investing elsewhere.

The Chinese investment in the Eastern Cape is only one of many clear signs that people are feeling more upbeat about South Africa’s future. Growth forecasts have improved dramatically and credit agencies have changed our outlook from “negative” to “stable”.

But Ramaphosa is not resting on his laurels. He has appointed what he termed a “pack of lions” consisting of top business and finance experts of international repute to hunt for some $100-billion (about R1.2trillion) in new investments over the next five years.

That would mark a significant boost to our sad economy, to job creation and poverty alleviation in a country with one of the most unequal societies in the world.

The team reportedly includes former finance minister Trevor Manuel, economist Trudi Makhaya, ex-deputy finance minister Mcebisi Jonas and former Standard Bank chief executive Jacko Maree.

But Ramaphosa and his government still need to make it easier for this top team to do its job.

Confidence will remain sketchy until there is at least some vestige of policy and political certainty in South Africa. A stable regulatory framework, certainty around the Mining Charter, better support for agricultural and other exports, and the nurturing of a flailing tourism industry are all vital.

The government also has to create certainty around land expropriation without compensation and what it could imply for the security of property ownership.

Without that, the pack of lions appointed to hunt down investment will be doing so without teeth or claws.