At the second South African Investment Conference, South African President Cyril Ramaphosa said his administration is on track to lure $100 billion in new investment within five years, with more than $16 billion already committed and many more projects in the pipeline. Ramaphosa welcomed the investment commitments, which outstrip 2018’s figures by 17%, as a “vote of confidence” in the country.
With an unemployment rate sitting at just under 30%, according to Statistics South Africa, he said that the investments would create over 400,000 much needed jobs in the next five years.
To further encourage a stagnating economy, Ramaphosa is doing more than this investment drive - there are several economic developments underway. Special economic zones are being opened up and industrial parks are being given a new lease of life. Meanwhile, digital and hubs and small business incubators are being set to support a new generation of entrepreneurs.
The conference was a platform for the investment drive, giving the government a chance to engage with international businesses and investors and make a case for investing in South Africa, the continent’s most-industrialised economy.
Investment pledges announced at the conference include:
- Toyota Motor Corp. intends to invest 2.4 billion rand building a new hybrid model passenger car in South Africa from 2021.
- The New Development Bank will earmark a minimum of $1.6 billion for infrastructure development projects next year.
- Seven vehicle manufacturers, including BMW AG, Ford Motor Co. and Volkswagen AG plan to establish a 6 billion-rand fund to encourage more black South Africans to participate in the industry over the next decade.
The conference also marked the announcement of a Japan-South African Business Council. Japanese companies committed to investing more than R6.8 billion at last year’s inaugural South Africa Investment Conference. Japan’s Ambassador to South Africa, Mr Norio Maruyama said at SAIC 2019 Japanese government and private sector investors would commit to a further investment of US$20bn across the African continent, a proportion of which would be committed to the South African economy.
But despite these encouraging signs of increasing investor interest, the National Treasury projects that South Africa will expand an average of just 1.5% over the next three years as electricity shortages constrain output. Disappointing growth has curbed tax revenue, causing debt and deficit levels to soar. Moody’s Investors Service has warned it may downgrade its assessment of the nation’s debt to junk unless urgent action is taken to turn the situation around.