Foshan shows what municipalities mean in investment quest
As the second instalment of President Cyril Ramaphosa’s SA Investment Conference takes place this week, a proper view of who is an investor is necessary.
There is a notion that investors are visitors waiting to come to the country once certain things are in place. That may be true of international investors who come and go, affecting the stock market and of foreign investors who have never done business in SA.
But investors who set up factories in Ladysmith KwaZulu-Natal are SA citizens. They need the rights and privileges of citizenship. They must comply with citizen responsibilities as individuals or businesses. Investors who are citizens are the most important as they contribute directly to society’s livelihood and vibrancy.
Environmental, social, and governance imperatives require that investors indeed become citizens by relating sustainably to environment and people and put in place proper governance systems for their businesses in compliance with the law.
SA has been hosting global multinational groups and brands for a long time, more than other African countries. It is important to maintain these citizens, as they comply too. The quality of their citizenship before 1994 has been controversial, often going against the aims and objectives of the liberation movement at the time. Most did not emigrate as democracy was setting in but were willing to adapt and contribute positively to the new political environment. Several new investor citizens from other countries have since joined us, including companies from Asia, Eastern Europe, and South America.
So it is not only in the announcement of big dollar/rand commitments that the value of the investment conference lies, but in the satisfaction that what seem like small things could generate trillions of rand for SA. I say so aware of the perception that the private sector has been on an investment strike, allegedly clogging cash to the value of more than R700bn. I would want to argue that investors as citizens, including workers’ pension funds and any citizen with savings, are not motivated to invest only because of what the president or politicians say, but by lived experience.
Yes, policies and regulations at national level do get a lot of mileage and tend to get media reaction, often in as far as they affect the bottom line. But less is often said about the lived experience, especially at municipal level where people interact daily.
We know local government is seen as a launch pad for political careers.
Developing countries that have had unprecedented growth for 20 years, such as China, however, show that municipal’ call China s leadership growth is the most important for any country to grow aggressively. Guangdong’s Foshan, a city in the south of China, is an example, leading scholars to phenomenon the Foshan growth model. Its municipal leadership a little more than 20 years ago created an environment conducive to all citizens being investors. Indigenous citizens are investors as they own land, as a point of departure even for the proletariat.
Other citizens eventually attracted to reside in Foshan were happy to see clarity being provided by the local leadership on property rights, government commitment to building infrastructure, quality of services in local institutions such as the courts, municipal services, including quality of local and regional planning, and even restaurants.
FOSHAN IS CHINA’S LARGEST EXPORTING CITY ... CONTRIBUTING 62.5% TO THE GUANGDONG REGION’S ECONOMY
Today, Foshan is China’s largest exporting city, enjoying proximity to Hong Kong and the sea, and pulling top private export groups. Foshan contributed 62.5% to Guangdong’s economy. The cities of Shanghai, Beijing, Shenzhen and Guangzhou contributed altogether 10trillion yuan (R21-trillion) to output in 2017, according to available data, indicating the significance of local government.
A municipal leader and politician must account and compete on service delivery, attracting new investor citizens, infrastructure improvements and so on. How are your water supply, potholes, municipal office queues, service at the counter and peacefulness of protests?
Similarly, investors as citizens can be asked: how are you treating your workers, and are you contributing to worker education? How are you upskilling workers for the future? Do you pay taxes on time? By introducing this type of orientation and investor citizenship in our quest for increased investment, we should be able to see how small things done correctly generate huge returns for SA.