S. African pres­i­dent touts ‘un­told op­por­tu­nity’

China Daily European Weekly - - Business - By EDITH MUTETHYA edith­mutethya@chi­nadaily.com.cn

In its ef­forts to rebuild an econ­omy that has been stag­nant for decades, South Africa is look­ing to at­tract for­eign in­vest­ment from China and other coun­tries.

Ac­cord­ing to Rob Davies, South Africa’s min­is­ter of trade and in­dus­try, the coun­try is keenly look­ing to its big­gest trade and in­vest­ment part­ner.

“We are look­ing at grow­ing a trade re­la­tion­ship with China so it can in­crease in­vest­ment in our coun­try,” he says.

Much change will be seen when the pledged $14.7 bil­lion (12.9 bil­lion eu­ros; £11.4 bil­lion) in­vest­ment by China come into force, he said.

Ac­cord­ing to Con­trol Risks, a global risk and strate­gic con­sult­ing firm head­quar­tered in London, China is South Africa’s big­gest trad­ing part­ner, with bi­lat­eral trade grow­ing 11.7 per­cent to $39.2 bil­lion in 2017.

Chi­nese for­eign di­rect in­vest­ment in South Africa reached $15.2 bil­lion in 2017, mak­ing the coun­try the se­cond-largest re­cip­i­ent of Chi­nese FDI in sub-Sa­ha­ran Africa af­ter Nige­ria.

How­ever, South Africa’s GDP growth for the past five years has av­er­aged 1.5 per­cent. Given that pop­u­la­tion growth is 1.5 per­cent per year, there has been no real GDP per capita growth at all, ac­cord­ing to the World Bank.

Ad­di­tion­ally, youth un­em­ploy­ment ex­ceeds 55 per­cent, and gen­eral un­em­ploy­ment has been stuck at around 25 per­cent for the past decade. In­fla­tion has been close to 6 per­cent for the past five years, and the In­ter­na­tional Mon­e­tary Fund forecasts that it will re­main at that rate go­ing forward.

Since his elec­tion as pres­i­dent of South Africa in Fe­bru­ary, Cyril Ramaphosa has been work­ing on var­i­ous ini­tia­tives to im­prove the sit­u­a­tion. A key one is restor­ing in­vestor con­fi­dence to at­tract for­eign in­vest­ment.

To­ward that end, South Africa held an in­au­gu­ral in­vest­ment con­fer­ence in Jo­han­nes­burg in Oc­to­ber, at­tract­ing 1,050 del­e­gates.

Dur­ing the con­fer­ence, Ramaphosa said his gov­ern­ment had taken a num­ber of de­ci­sive mea­sures to im­prove the in­vest­ment en­vi­ron­ment.

“Af­ter thor­ough­go­ing con­sul­ta­tions with var­i­ous play­ers in our econ­omy‚ we have been ad­dress­ing pol­icy un­cer­tainty and reg­u­la­tory ob­sta­cles that have im­peded in­vest­ment in a num­ber of in­dus­tries,” he said.

He said the coun­try is work­ing with the World Bank to im­prove the process of do­ing busi­ness in South Africa and craft­ing a new FDI strat­egy.

He said In­vest SA, a divi­sion of the South African Depart­ment of Trade, is in­ten­si­fy­ing its af­ter­care ser­vice in terms of in­ter­na­tional best prac­tices. It’s also work­ing on fast-track­ing in­vest­ment projects and re­duc­ing red tape.

“One of the de­ci­sive mea­sures that we have taken is to con­front chal­lenges in some of our largest and most strate­gic sta­te­owned en­ter­prises‚ which have ex­pe­ri­enced years of poor gov­er­nance‚ a de­cline in fi­nan­cial and op­er­a­tional per­for­mance, and cor­rup­tion,” he said.

As South Africa puts in place the pil­lars of sus­tained growth‚ Ramaphosa said, it is work­ing to ad­dress im­me­di­ate con­cerns‚ specif­i­cally the ef­fects of two con­sec­u­tive quar­ters of neg­a­tive eco­nomic growth.

In Septem­ber‚ the South African gov­ern­ment an­nounced an eco­nomic stim­u­lus and re­cov­ery plan that aims to stim­u­late growth‚ save ex­ist­ing jobs and cre­ate new ones.

“As part of this plan‚ we are tak­ing im­me­di­ate steps to fi­nal­ize re­forms in key sec­tors such as 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,” the pres­i­dent said.

He noted that the gov­ern­ment is draft­ing sep­a­rate leg­is­la­tion for the oil and gas in­dus­try‚ set­tling a long-stand­ing dis­pute that will pro­vide di­rec­tion and cer­tainty to an in­dus­try with great po­ten­tial.

Ramaphosa called on en­ter­prises to in­vest in the coun­try’s mines, fac­to­ries‚ farms, game parks‚ call cen­ters, tech­nol­ogy hubs‚ re­finer­ies and so­lar in­stal­la­tions. This is in ad­di­tion to in­vest­ing in cit­i­zens to har­ness their en­ergy and un­leash their la­tent ca­pa­bil­i­ties.

“As South Africa emerges from a pe­riod of great dif­fi­culty and un­cer­tainty‚ and as it con­fronts chal­lenges that are im­mense but not in­sur­mount­able, we can de­clare with con­fi­dence that South Africa is a land of un­told op­por­tu­nity,” he said.

Cyril Ramaphosa, South African pres­i­dent.

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