Driving investment in a time of turmoil
Gauteng is defying the gloom of the global economic meltdown that has led to slow growth and investment in most parts of the world.
But Koketso Tamale, manager of the Gauteng Investment Centre (GIC) — who has the daunting responsibility of attracting investment to the province — says the local economy is upbeat.
“Even as many indictors of globalisation continue to stagnate, global FDI [foreign direct investment] flows into Gauteng and South Africa are still very strong,” she says.
Located in Sandton, the affluent business hub dubbed “the richest square mile in Africa”, the GIC’s main goal “is to make Gauteng become the preferred location for investment”. A business unit of the Gauteng Growth and Development Agency [GGDA], the GIC is also tasked with “the responsibility to provide an investment and export facilitation mechanism where relevant organs of state and state entities or agencies are brought to one location, co-ordinated and streamlined to provide prompt, efficient and transparent services to investors and exporters”.
Tamale says global business executives are united in the view that FDI will become increasingly important to corporate profitability and competitiveness in the near medium term. “Given the size of the Gauteng economy and the above national economic growth rate of the province, investors continue to select Gauteng as a location for new and expansion investments,” she says.
Tamale points out that Gauteng is preferred by investors for the size of its economy, market share, good infrastructure, availability, educated workforce and ability of sourcing input within the province, among other factors.
The International Monetary Fund’s Regional Economic Outlook for Sub Saharan Africa survey published in October forecasts a gloomy picture for the region: “Economic growth in sub-Saharan Africa this year is set to drop to its lowest level in more than 20 years, reflecting the adverse external environment, and a lacklustre policy response in many countries.”
Delivering his mid-term budget in Parliament last month, Minister of Finance Pravin Gordhan also cautioned about slow national economic growth: “Global growth has slowed, affecting investment and trade in many developing economies. Our economic growth will be just 0.5% this year, rising to 1.7% in 2017. If we do the right things to support investment and confidence, our economic recovery will be more rapid.”
But in a time of adversity and uncertainty, hard-nosed businesspeople often see opportunities where others see only disaster. “Serious investors look at opportunities, including the ones [that come] out of bad stories,” Tamale says, explaining why the GIC still manages to attract investment to Gauteng even during such uncertain times.
“And if they see the economic viability for business they still invest. The secret resides in the selection and identification of sectors, and the ones that have the capability of contributing to the economy of Gauteng and [that] generate work opportunities,” she says.
Tamale says the fact that Gauteng’s export trade forms an impressive 64% of all the country’s exports is because “export trade is at the heart of our [GIC’s] manufacturing and industrial development agenda”.
About 42% of the export trade from Gauteng comprises manufactured products, says Tamale: mainly chemicals, auto, consumer products, and capital equipment.
“Besides, a lot of the businesses in the manufacturing sector are small, medium and micro enterprises [SMMEs], which contribute significantly to employment creation and innovation.