BLSA calls on members to ramp up their local investment

As business and the government work to rebuild their relationship, Business Leadership SA (BLSA) is talking to its members as it seeks to encourage local investment.

This comes after President Cyril Ramaphosa announced the appointment of special investment envoys as part of his plan to attract $100bn (or R1.2trillion) in new investment over the next five years.

The envoys have been tasked with convincing local and foreign businesses to invest in SA.

Since 2008, foreign direct investment (FDI) has fallen from 24% of GDP to 19%.

The government aims to push FDI to 30%, in line with the National Development Plan.

“Part of the investment we want to eke out is from local companies. We want companies sitting on large reserves on their balance sheets to invest in our country,” Ramaphosa said on Monday.

While BLSA CEO Bonang Mohale has denied that business has ever been on an investment strike, the University of Johannesburg’s Centre for Competition, Regulation and Economic Development said about R1.4trillion was sitting as reserves on the balance sheets of large JSElisted companies in 2016 compared with R242bn in 2005.

“We support the envoys that have been appointed by the president,” Mohale said on Thursday. “We want to demonstrate that, as business, we are not on an investment strike and to ask our members to put their money where their mouth is. That would be a major vote of confidence,” he said.

The team of envoys includes former finance minister Trevor Manuel, former deputy finance minister Mcebisi Jonas, former Standard Bank CEO Jacko Maree and businesswoman Phumzile Langeni.

“Our understanding as BLSA is that the president is looking for $200bn: $100bn in FDI and $100bn in local investment. So that’s double,” Mohale said. Achieving these figures could double GDP growth and add 4% into the country’s FDI capability.

Mohale added that a report prepared for BLSA by Intellidex last year found no evidence of cash hoarding, concluding that the overall growth of SA’s companies and the depreciation of the rand explained much of what was deemed an investment strike. According to BLSA, 57 of its members contribute R1.9-trillion to the economy.

The relationship between business and the government was strained under former president Jacob Zuma.

The barriers to greater investment last year were related to political uncertainty and business confidence, which had fallen to a 30-year low, according to Mohale.

However, confidence has recently soared to a three-year high following recent political developments.

The election of Ramaphosa and the cabinet reshuffle in which 10 ministers were fired and Nhlanhla Nene reappointed as finance minister have renewed hope, said Mohale.

Trade union federation Cosatu has argued that the investment envoys need to focus on local investment. “We call on the president to also deal with the ongoing investment strike by local investors. Cosatu appreciates foreign direct investment but has also consistently argued that it is not a panacea to all of our economic problems,” Cosatu spokesman Sizwe Pamla said.

He said: “Foreign direct investment reinforces external dependency because investors are unable or not interested in transforming the domestic economies.”

“We have had major successes,” he told Parliament’s portfolio committee on health.

Claims for loss of earnings for miners with tuberculosis had been fast-tracked and constituted a significant portion of the payouts in 2017-18, he said.

Compensation benefits for new claimants would increase by 33.8% as of April, he said, noting that the last time benefits were increased was in 2009.

Kistnasamy said the commission’s budget allocation from the Treasury was insufficient for the task at hand and posed a risk to its performance.

Its allocation rises to R200.2m in 2018-19 from R194.6m in 2017-18, a nominal increase of 2.9%.

Over the medium-term expenditure framework its allocation from the Treasury is, however, expected to keep pace with inflation and is set to rise by on average 6% a year between 2018-19 and 2020-21.

The budget of the Compensation Commission for Occupational Diseases was supplemented by the revenue it raised from controlled mines and works, but the levies were too low and many mines did not pay their dues, said Kistnasamy.

As a result, the commission was heavily dependent on the support it received from the mining industry, he said.

The Chamber of Mines has seconded medical doctors to the commission and provided staff and technical resources.

A total of 28% of the 252 registered controlled mines and works did not pay levies in 2016-17, according to the commission’s annual performance plan, which has been tabled in Parliament.