President Cyril Ramaphosa. (File photo)
The days of Ramaphoria are long over. And although we may not look back at that time fondly — its golden sheen scuffed by what has been a horrible couple of years — it certainly came with a glint of hope. At the very least, we had closed a very bad chapter.
At the time, the Mail & Guardian ran a cover with the headline “It’s the new, new SA”, Cyril Ramaphosa’s face surrounded by cartoon cupcakes and unicorns, clearly lampooning the fanfare around the new sunshine-and-rainbows president.
Last week’s South Africa Investment Conference, the last in a five-year cycle, reflected the now far more sober times. Despite the drive having pipped its R1.2 trillion target — which back in 2018, as the country emerged from the doldrums of the Zuma years, was considered ambitious — any optimism the one-day conference might have hoped to rouse seemed to be bogged down by the prevailing uncertainty about the country’s economic prospects.
The president’s new investment target also seems to reflect this more down-to-earth position. The new R2 trillion target, which Ramaphosa hopes to raise over the next five years, does not carry the same weight as the R1.2 trillion did in 2018, especially considering that the rand’s value has lost considerable ground over the last five years.
There is good reason for Ramaphosa’s administration to give the impression that it is now more pragmatic — the president’s newfound realism coming up more and more, especially when referring to the country’s energy crisis.
The president’s opening address last Thursday was almost apologetic in its tone, of course not relinquishing all hope that the structural reforms he and his administration has hung his hat on will actually deliver.
“Since April 2018, we have had to contend with a devastating global pandemic, damaging social unrest, several natural disasters and a cost-of-living crisis worsened by the ongoing conflict in Ukraine. In addition, we are now confronted with the consequences of years of under-investment, mismanagement and corruption in our electricity, rail and logistics sectors,” Ramaphosa said.
“Given all that has taken place in the intervening years, it is understandable that investor confidence has been sorely tested. Doubters have had reason to be sceptical.”
The president also underlined that the journey to rebuild the country’s economy will be a long one, as we attempt to recover the ground lost during the last five years. “Our recovery is a mission that will take time to accomplish,” he said.
“We are on the recovery path, we refuse to be daunted by the challenges we face, we are confident that we will recover.”
In a note published on Monday, the Bureau for Economic Research (BER) said the energy crisis was a cloud over the conference, which attempted to muster the usual fanfare. “If nothing else, the event, hosted in Sandton last week, is useful in the sense that it illustrates that notwithstanding the many business constraints in SA, the private sector continues to seek out opportunities to invest in the country,” the BER said.
“However, the level of overall fixed investment remains vastly inadequate to achieve faster rates of real GDP growth.”
Although increasing from a paltry 13.1% of GDP in 2021 — and reversing several years of decline — the ratio of nominal gross fixed investment to nominal GDP was still only 14.1% in 2022, the BER noted. “This remains a far cry from the 30% of GDP target (by 2030) set in the National Development Plan.”
The need for a more realistic outlook came up in a panel discussion on the country’s energy crisis, a key topic of conversation for investors who — if they do end up putting money into South Africa — could see their businesses being load-shed until 2027.
Kgosientsho Ramokgopa, the president’s new electricity czar, probably best expressed why getting rid of some of the polish is probably the administration’s best move.
The electricity minister was speaking about why he thought it is important to revise some of the commitments made in the energy action plan. He emphasised that, although the targets should still be ambitious, they also ought to be grounded in reality.
“We did say … that we are going to be brutally honest, frank and transparent to the South African population and also to the investor communities on where we are in reaching a resolution to the load-shedding question,” Ramokgopa said during the panel discussion.
“And we’re beginning to have those conversations with industry and also communicating on a regular basis … on where we are so that there is a greater level of appreciation that we are indeed making progress. There are justified levels of anger, despondency and just not believing what government is saying. But I think the more we’re transparent, and we’re able to illustrate that we are keeping to the timeline, I think we’ll be able to close that gap.”
Ramaphosa’s administration faces what is stacking up to be a tough election for the ANC. It will be the first that will actually take stock of the president’s grand promises of recovery and how they measure against reality, which — at least for the next year — is looking pretty dire. The 0.1% growth, projected by the International Monetary Fund, means the economy will basically reach a standstill in 2023, a predicament that threatens to foment social tensions and put investors off even more.
The last five years, which Ramaphosa and others rightly point out have been marred by events well out of the president’s control, have put South Africa’s economic ambitions (especially under the current order) into focus. Ignoring this will be detrimental to the ANC’s prospects at the ballots next year, where voters will be calculating how much trust they still have left in the party.
And so here is the balancing act that was on display at last week’s conference — and which, if we were to really look into it, was probably a consideration in 2018: manage expectations. Try not to inspire too much hope, but don’t kill it altogether.