International Relations and Cooperation Minister, Ronald Lamola, has underscored the persistent difficulties that hinder private investment, underscoring political and regulatory volatility as matters of primary concern.
“Frequent policy shifts, coupled with weak institutions and inconsistent regulatory frameworks, create a climate of uncertainty that undermines investor confidence. This unpredictability hampers long-term planning and complicates risk assessments,” he said on Monday.
The Minister was speaking at the 4th International Conference on the Financing for Development Summit, which is taking place in Seville, Spain. The gathering kicked off on Monday.
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Lamola, the head of the South African delegation, delivered a speech at a multi-stakeholder roundtable themed: "Revitalising International Development Cooperation".
The event aims to address new and emerging issues in development financing, emphasising the need to fully implement the Sustainable Development Goals (SDGs).
Lamola called for a unified approach to building institutional capacity, coherence in policy, and independent regulatory bodies.
“We need robust investment protection laws to foster investor confidence. Without these safeguards, we are undermining our own potential for growth.”
The Minister further elaborated on macroeconomic fragility, emphasising that high inflation, currency instability, and unsustainable debt burdens restrict governments’ abilities to provide incentives for investment.
To restore stability, he said leaders must adopt prudent fiscal and monetary policies.
Lamola believes that improving debt management and collaborating with development finance institutions can create an environment where private investment flourishes.
Pointing out the limitations posed by underdeveloped financial markets, Lamola highlighted the necessity of expanding local capital markets.
“Governments must prioritise regulatory reforms and infrastructure improvements to unlock the potential of our economies.
“Supporting fintech innovation and promoting financial inclusion are pivotal in creating a more accessible financing landscape.”
Building capacity to attract investment
The Minister also addressed the significant infrastructure gaps that plague many developing nations, which further deter investment.
“Inadequate transport and energy infrastructure increase operational costs and evaporate profitability.
“We need strategic infrastructure planning, informed by private sector insights, to mobilise the capital necessary for development.”
He noted that many initiatives falter due to weak design and a lack of feasibility assessments.
“We must invest in building technical capacity within the public sector. Establishing dedicated project preparation facilities will significantly increase the attractiveness of investment opportunities,” he urged.
To level the playing field for investors, Lamola stressed the importance of improving governance and regulatory certainty.
“Simplifying investment-related regulations and reducing bureaucratic hurdles can greatly enhance investor confidence.
“We must create an environment where potential investors feel secure in their commitments.”
The Minister also stressed the importance of developing national sustainable finance strategies to align financial flows with environmental, social, and governance (ESG) criteria.
“We must define what constitutes a sustainable investment. Robust taxonomies and disclosure standards can enhance transparency and credibility in the market.”
He also highlighted the crucial role of Multilateral Development Banks (MDBs) in fostering a conducive investment environment.
“MDBs can offer credit enhancements, support project preparation, and co-finance investments alongside private capital.
“Their involvement can significantly increase the viability of projects in emerging markets.”
The Minister expressed optimism about the potential for collaboration in driving sustainable development through private investment.
“Together, we can create a future where every dollar invested unlocks new opportunities, tackles pressing challenges, and builds a more sustainable world.”
The event highlighted a collective commitment from governments, private sector representatives, and development institutions to work together to revitalise international development cooperation and attract the much-needed private investment that can empower developing nations in their growth journey. – SAnews.gov.za
