New investment pledges sought

SOUTH AFRICA IS IN REPAIR MODE

President Cyril Ramaphosa declared himself in economic “repair mode” at a major conference yesterday as he sought billions of US dollars from foreign investors to haul the country out of recession.

The former union leader, who inherited a mismanaged economy from president Jacob Zuma earlier this year, wants $100 billion (R1.5 trillion) of new investments over the next five years. He has already secured $35 billion pledges, mainly from China, Saudi Arabia and the United Arab Emirates.

E-commerce giant Naspers said it would invest R4.6 billion over the next three years in its technology businesses and to fund technology start-ups. Drug maker Aspen Pharmacare also said it would invest R3.4 billion to manufacture sterile anaesthetics at its Port Elizabeth plant.

He has made reviving the economy a priority since assuming power in February, but he has been hampered by fiscal constraints and infighting in the ANC.

“We are here to build a country driven by enterprise and innovation,” Ramaphosa said in his opening speech to the investment conference which will look at opportunities in sectors including agriculture, manufacturing and energy. “We are in repair mode.”

Investors welcomed Ramaphosa’s rise to the presidency partly due to his strong ties to the business community. Since then, however, the economy has sunk into recession and faced a series of downbeat data.

His government’s policy of land expropriation without compensation, aimed at addressing racial inequalities that remain more than two decades after the fall of apartheid, has also unnerved investors.

Ramaphosa tried to soothe their concerns about the land redistribution policy. “I want to reaffirm that South Africa is very, very committed to property rights,” he said, without explaining how this could be achieved. The scale of the challenge facing Ramaphosa was underlined by Finance Minister Tito Mboweni’s bleak medium-term budget speech, when he unveiled weak growth forecasts and deficit estimates.

Compounding the challenge, Moody’s said in a research note that the weaker fiscal outlook outlined by Mboweni was a negative factor in SA’s credit outlook.

Moody’s is the last of the top three agencies to keep an investment grade rating on SA. It’s expected to issue a report on this soon.

The rand turned weaker after Moody’s report was released.

“The market is concerned that we could see a possible downgrade from Moody’s but this might present a buying opportunity for long-term investors who can stomach the risk and believe that the economy has a chance of a strong recovery,” said Grant Giburt at Nedbank Private Wealth.

Ramaphosa said the economy was at investment grade, but it had been much tougher to repair than he first thought. “I’m willing to argue my case with them and say ‘look at us anew … we are turning this ship around’.

“Admittedly, we will not turn immediately but it is on the way to turning,” he told Bloomberg television, referring to the ratings agencies.

I reaffirm that SA is committed to property rights.