Promoting South Africa as an attractive investment destination amid a pandemic that has battered global economy is a Sisyphean task at best. But Trade, Industry and Competition minister Ebrahim Patel believes that the task of getting the boulder up the hill without it rolling back down is not impossible.
Speaking at a briefing on Monday, Patel said South Africa’s third investment conference, which takes place on 17 and 18 November, will put the country on track to achieving its goal of attracting R1.2-trillion in investment over five years.
This year’s conference takes place when the global economy is set to contract by 4.4% in 2020, according to the latest forecasts from the International Monetary Fund (IMF). The IMF estimates that South Africa’s gross domestic product (GDP) will shrink by 8% in 2020, with a slight recovery of 3% in 2021.
The pandemic has caused foreign direct investment to fall by 49% to $399-billion in the first half of 2020, as governments reprioritised their budgets to fight against the virus, according to the United Nations Conference on Trade and Development.
In an environment in which the sentiment is bearish and investors are less likely to take on risks, Patel says, “We want to make sure that South Africa stands out and opportunities are identified.”
These opportunities include the easing of trade relations among African countries as envisioned by the African Continental Free Trade Agreement (AfCFTA), which is expected to be implemented in January 2021, and the growth and development opportunities outlined in President Cyril Ramaphosa’s economic reconstruction and recovery plan (ERRP).
AfCFTA is expected to add $450-million to Africa’s GDP, and the ERRP is expected to grow the country’s economy by 3% over the next 10years. Patel added that this year, the government will seek to find investors in sectors that can take advantage of the opportunities of the AfCTA.
The two previous conferences, held in 2018 and 2019, mobilised more than R664-billion in investment commitments from investors. This year’s conference aims to consolidate the commitments made by investors at the previous conferences, as well as generate new commitments.
The country is expected to cumulatively add on the investment commitments made in the previous two years, bringing the total amount committed to R720-billion, Patel said.
At the conference, Ramphosa is expected to reveal how South Africa is doing in terms of this year’s target, and the extent to which the pandemic has hindered the country’s efforts to attract investment, “because we are still in discussions with investors to finalise pledges”.
“The conference is an opportunity to assess what progress we’ve made with getting that R664-billion from an idea from the mind of an investor to the point where bricks and mortar are hitting the ground,” Patel said.
Although Covid-19 has impaired investments globally, Patel said only 9% of commitments made over the past two years have been stalled by the outbreak of the pandemic.
This year’s conference will be scaled down in line with the Covid-19 regulations.
Ramaphosa’s economic adviser, Trudi Makhaya, said more than 1 000 potential investors have shown interest in attending the conference so far.
Investors will participate in panels on energy, land reform, mining, impact investing, the digital economy, hospitality and tourism, and manufacturing.