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South Africa needs another investment conference — Trudi Makhaya



President Cyril Ramaphosa’s economic adviser Trudi Makhaya said the second investment conference scheduled for this month is important because it shows the world — specifically rating agencies — that South Africa is making strides to grow the economy.

“The investment conference is important because at the core at what the rating agencies have been concerned about is our fiscal stability including our gross domestic product (GDP) debt ratio,” Makhaya said.

Last week Friday, Moody’s, the only agency to have not downgraded South Africa to junk status, changed the country’s economic outlook from stable to negative.

READ MORE: SA escapes Moody’s junk guillotine — for now

Makhaya said the country ramped up its debt profile over the past 10 years but does not have much growth to show for it. “We do not have [to] demonstrate why we did this,” she explained.

Makhaya told attendees there is nothing wrong with the country spending money, but it is problematic when that spending does not translate into economic growth and that is what the country needs to start working on.

“Every rand of government expenditure should yield far more in terms of economic growth than where we are at,” she added.

This investment drive helps because it deals with that part of the equation of having spending that will grow the economy, Makhaya told the panel. “If our growth were to accelerate suddenly our debt will look minuscule relative to GDP. So it’s absolutely crucial.”

Makhaya was speaking on a panel themed ‘Impact Investing South Africa’ which took place at the Sandton Convention Centre on Tuesday ahead of the investment conference drive to help improve confidence in South Africa’s economy.

After the first investment conference that took place in October 2018, Makhaya said the government is making key decisions that will make economic growth to take off.

Makhaya acknowledged that although there has been some activity, it took place with some “contentions”.

“Regarding to the Mining Charter, there is some contention. The point is [things like] the release of spectrum have been gazette. So that is movement. It’s not like it’s going to be perfect. But there has been some movement in the right direction,” she said.

The first conference was attended by 1 500 delegates from South Africa and across the world with discussion points focusing on investment opportunities in Africa’s most advanced economy. The gathering saw over $20-billion investment commitments being made.

Elias Masilela, chairman of specialist economics and development consulting firm DNA Economics, said government cannot afford to prioritise certain economic issues over others.

“The urgency is on everything. Eskom is a matter that needs to be dealt with. Poverty and equality are also equally important because if you do not deal with poverty and equality people will march [previous protests that took place in the township]. They’re all important.”

Masilela said if one issue is given more attention than the other, both international and local investors will be forced to take out money to protect their own investments that will be threatened by these marches.

“If you are an investor in South Africa, and you do not believe that impact investment is important. You do not believe that it’s important to invest to close the inequalities that we have in the economy you will be requested to invest [more money] such that you protect your assets. Because if you do not, you might not have that assets.”

Masilela added that the urgency is of paramount because government has not prioritised through investing policies it promised since 1994.

He said one of those issues is education which he claims that it has not been dealt with in the manner that its supposed to be dealt with in any country. He said resources have not been adequately allocated and backed up through implementation. 

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Tshegofatso Mathe
Tshegofatso Mathe is a financial trainee journalist at the Mail & Guardian

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