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President Cyril Ramaphosa. (Photo: EPA-EFE / Siphiwe Sibeko / POOL)
At the SA Investments 3rd Annual Conference, which will take place on 17-18 November, the President’s envoys will focus on ensuring that investment pledges worth R664 billion, made by companies in 2018 and 2019, are not destroyed by the Covid-19 pandemic.
President Cyril Ramaphosa’s investment envoys likely had a lot of work ahead of them in marketing SA as an attractive investment destination for potential investors during an economic collapse fueled by the Covid-19 pandemic.
The race to attract new and long-term capital has intensified around the world, with many countries seeking to rebuild their economies and labor markets through large-scale private sector investment. Available capital can be tight as many companies and money managers have decided to defer capital allocations to a later stage until the world is more secure, or worse, to put it aside permanently.
SA has probably experienced both situations.
At the third Annual Investment Conference of SA, which will take place on November 17 and 18, the envoys of Ramaphosa will focus on ensuring that investment pledges worth R664,000 million, made by companies in 2018 and 2019, are not destroyed by the Covid-19 pandemic.
Promise Tracker: Companies back Ramaphosa again, approaching its investment goal of more than one trillion rand
Some of these investment promises, involving companies building roads and other infrastructure, production factories, and investing in research and design, are still in the planning stage and have not translated into demonstrable investments in the economy.
Impact of Covid-19
An estimated 9% of the total pledges (664 billion rand), almost 60 billion rand, have already been derailed by the pandemic, according to Commerce, Industry and Competition Minister Ebrahim Patel, whose department is tasked with create a regulatory environment conducive to investment. .
Patel said that companies that have pledged a combined R60 billion have indicated to Ramaphosa envoys that they will “delay implementation [of investment pledges] due, in part, to the Covid-19 pandemic ”.
“None of the promises that have been made have disappeared. No company has written to us to indicate that they want to withdraw the commitment, ”Patel said at a press conference on Monday, November 9, before the conference.
The conference is part of Ramaphosa campaign to raise R1.2-trillion in new national and international investments over the next five years to boost South Africa’s fragile economy and create jobs. But the world has changed dramatically since the last conference in November 2019, when Ramaphosa attracted pledges of up to R371 billion from local and foreign companies, about a quarter more than it got in 2018. The pledges, Ramaphosa stated, they could lead “conservatively” to the creation of 412,000 jobs.
But the Covid-19 pandemic could undermine Ramaphosa’s drive to attract more engagements in 2020. SA’s economy, like others around the world, is expected to contract by more than 7% in 2020, according to forecasts by the SA. government and business. Public finances have deteriorated further; the fiscal deficit (deficit between revenues and expenditures) increased from 6.4% of GDP in early 2020 to 16%, and the national debt is expected to peak at 95.3% of GDP in 2026.
These numbers could lead investors to ditch SA and seek another investment destination. But Patel is offended by this suggestion.
“The global landscape is challenging. We believe that the SA story has a number of positives and the conference will highlight the positives. We believe that FDI [foreign direct investment] it can pick up the back of the African Continental Free Trade Agreement, ”he said. The agreement promotes greater trade between African countries and aims to create a single continental market for goods and services..
the SA Investment Conference in 2020 is more important to SA’s fortune because aspects of Ramaphosa’s recently released plan, which seeks to restart an economy hit by Covid-19, rely on private sector investments. For example, Ramaphosa’s economic plan proposes that the government spend around R100 billion over the next decade on new infrastructure projects such as roads, water sources and new power generation projects.
The government cannot afford to finance these projects independently and will look to the private sector and pension funds to invest in the country. Patel said the Ramaphosa recovery plan will be presented to investors at the SA Investment Conference. DM / BM
