Heroes of SA economy can revive it from its slump

Friday, November 2, 2018

By Sihle Manda

Every blockbuster movie is characterised by two certain features: the good and the bad.

From the onset, once both the hero and villain have been identified, the audience ascertains who will emerge victorious when the credits start rolling up. The unfolding suspense and thrill just helps weave the plot’s predetermined outcome. 

Often the heroes are portrayed as these superhuman beings who overcome adversity and conquer their nemesis after severe torment.

If South Africa today was to depict a movie, business would be the heroes of which the entire populace looks up to, with renewed optimism, to catapult the state from the doldrums of economic hardship, prompting growth and sparking a flurry of job opportunities.  

This much was stressed by President Cyril Ramaphosa during an address at the recent inaugural South African Investment Conference.

“We should treat our entrepreneurs as heroes and move away from what we had been fed and accustomed to, where we mistreat our entrepreneurs and businesspeople and called them all sorts of names, like white monopoly capital. That must end today,” he said.

Maybe the enemy is not always who society – like in the movie theatres – always assume it to be.

One by one, business representatives from conglomerates from across various sectors took to the stage at the inaugural South African Investment Conference, pledging to invest R290 billion into the country’s stagnant economy.

The investments are a culmination of a six-month investment drive led by the four envoys tasked by President Cyril Ramaphosa to globetrot in search of over R1 trillion worth of investments over the next five years.

Former Finance Minister Trevor Manual, Former Deputy Finance Minister Mcebisi Jonas, businesswoman Phumzile Langeni as well as retired banker, Jacko Maree, form part of the team of envoys searching for investors with deep pockets. Presidential economic advisor Trudi Makhaya is also part of the team. The journey has seen the team secure a further R400 billion in investments during a six month international drive.

Investment commitment announcements at the conference ranged from companies with interests in mining, forestry, manufacturing, telecommunications, transport, energy, agro-processing, consumer goods, pharmaceuticals, infrastructure, financial services, energy, ICT and water.

Investment commitments were received from the likes of  Sanral, which pledged R9.5 billion, R40 billion was committed by NAAMSA, Aspen with R3.4 billion, Vodacom R50 billion, Acwa power R9.6 billion and R29 billion from the New Development Bank. Anglo America and Vendata Resources were among the highest investment pledges with R71 billion and R21 billion, respectively.

Hugo Pienaar from the Bureau for Economic Research lauded President Ramaphosa for embracing business, saying government and business needed to mend relations if the country’s economy was to improve.

“The bigger, positive story, is that you now have a president that is certainly trying to mend relations with the private sector and understand that the government needs the private sector for faster investment.

“Given that the public finances are under so much strain, government can’t finance these big infrastructure projects on their own and they really need the private sector to participate and revive a lot of the financing,” he said.

If the two move closer together, that will have the country on a good stead, he said.

“I still think more can be done on the regulatory side to create a favourable environment for the private sector to flourish but this is a very good start. In the last few years, the private sector has been seen as the enemy and that narrative has certainly changed and that is excellent.”

Pienaar was less optimistic about the R290 billion worth of investments announced, saying it was not clear if these were new commitments or those previously announced. The announcements, he said, were lesser than the R872 billion fixed investment in 2017.

“I think the R290 billion, if you look at just that, there’s a couple of caveats. The one is that [that amount] is not investment that have been only announced now. Not all of that is new money. For example, the R71 billion that Anglo-American announced, that is ongoing projects that we know about already. The R10 billion rand from Mercedes-Benz was announced previously,” he argues.  

“If the R290 billion was in excess of what these companies would have done in any event, then I think it can start to make a bit of a difference. It is certainly welcomed but it is not clear how much of this is actually new and, secondly, if you look at what we invest per year, it may not actually be that significant.”

North West University economics Professor Raymond Parson was equally pragmatic, warning that the outcomes of the conference should not be seen as a magic wand that will create an immediate economic boom.

But rather, he argued, the outcomes should be regarded as an important stepping stone towards rebuilding investor confidence in tangible ways.

“It will be necessary to unpack the investment pledges made in detail to see exactly what will be their net impact on capital formation and job creation in the years ahead and in meeting the overall target of $100 billion over five years,” he said.

But the omens look good, he admitted.

“Taken together with the recent Jobs Summit and the Medium Term Budget Policy Statement, these may become a turning point in perceptions about SA's economic outlook and to improve growth prospects. The conference again emphasized the extent to which the solutions to SA's socio-economic challenges lay in promoting inclusive growth and strong investment and by making the right policy choices,” he said.

Even more important than the investment numbers given at the conference, he concurred with Pienaar that the conference was an opportunity to forge a more collaborative relationship between business and the government – and maybe one should not only look at it as a numbers game

“As President Ramaphosa highlighted at the conference, businesspeople and entrepreneurs should be treated as heroes if their aim is to develop and grow the economy. The investment conference therefore succeeded in both informing and influencing the participants as to their key roles on the tough economic road ahead,” he said.

This also helped to create a positive vibrancy in the conference discussion, he said.

“There was clearly a meeting of minds between the public and private sectors on the importance of reducing policy uncertainty and removing regulatory obstacles which inhibit the levels of investment needed to enable the SA economy to break out of its current 'low growth trap. Turning the SA economy around is a marathon, not a sprint - but a useful start has been made on which to build further,” he said.

And as the heroes of this script recuperate and prepare to take down Goliath, struggling South Africans can cheer on in adulation knowing that ordinary people can stand to benefit.  – SAnews.gov.za

 

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