Tuesday, January 07, 2020 /2:02 PM / By FDC / Header Image Credit: @PresidencyZA
A second investment summit convened by the president, Cyril Ramaphosa, on December 5th-7th, attended by 1,500 delegates, secured new investment pledges of about R370bn ($25bn). This is roughly 25% higher than what was committed at a first summit in October 2018.
Ramaphosa is, therefore, moving closer to achieving his objective of securing R1.5trn in new investment over five years-from both domestic and foreign sources-geared towards boosting growth and job creation. Specific commitments made at the new summit include R50bn over five years from MTN, one of South Africa's two largest telecoms firms, R23bn over 3-5 years from Transnet, the transport parastatal, and R14bn from Sappi, a paper-maker. In the mining sector, Exxaro and Rio Tinto committed to invest R20bn and R6.5bn respectively, while Anglo American reaffirmed last year's commitment to invest R72bn over five years, of which R19bn has already been spent on diamonds, iron ore, coal and platinum ventures.
A new platinum mine, worth R30bn, will follow. Government investment of R12.9bn in a new agricultural support vehicle, and R6bn to support transformation in the automobile industry add to the tally. The state is also investing R3.5bn to help establish a dedicated special economic zone for vehicles adjacent to Ford's Silverton plant in Gauteng. Amazon Web Services, while giving no specific figures, reiterated its intention to launch a dedicated local data centre in 2020.
Describing the summit as a "vote of confidence" in the economy, with the potential to create more than 400,000 jobs, Mr Ramaphosa and his newly appointed investment envoys-Derek Hanekom for tourism and Jeff Radebe for oil and gas-were also frank about the challenges facing investors, acknowledging the need for more policy certainty, less onerous regulations, greater macroeconomic stability, less corruption and more stable electricity supplies.
The newly made commitments will not necessarily translate into actual investment, although the signs are promising: Mr Ramaphosa says that of the R300bn committed on 31 projects in 2018, R238bn has already been spent, or is assured, with eight projects now complete and 17 under way. The possible loss of South Africa's last remaining investment-grade credit rating poses a threat to foreign portfolio investment, although foreign direct investment is far less vulnerable to credit-rating shifts.
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