The decision by President Cyril Ramaphosa to appoint a team of special envoys to woo investors to South Africa will help turn around the country’s economy, one of the country’s leading economists has said.
“People always ask where you are going to invest in the South African economy, because it is inefficient but I always say that there are pockets of excellence in the economy and we should exploit those,” said Nedbank economist Isaac Matshego.
Speaking to SA News recently, Matshego said opportunities that exist in the South African economy include those found in the automotive sector, clothing and textiles as well as the defence and aerospace industry.
“These include the auto sector and Denel. We have a really promising defence manufacturing industry and we can grow that .Denel is manufacturing components for Airbus. We can attract investment into South Africa along the lines of the Industrial Policy Action Plan [IPAP] which has incentives in place to attract investment,” said Matshego.
In the last iteration of the IPAP, the Department of Trade and Industry reported that the Automotive Production and Development Programme (APDP) incentive which it administers, disbursed R7.8 billion, helping to unlock R28.5 billion in private investments. These investments came from companies like Toyota SA and the Beijing Automobile International Corporation.
Auto industry the new gold
“I am an enthusiastic supporter of our auto industry, it is world class. We are part of the global supply chain, look at the likes of the BMW plant in Rosslyn. We can still expand,” Matshego said. Earlier this month, the German automaker began production of the X3 at its plant in Rosslyn, following its investment announcement back in 2015, a move which was welcomed by government.
President Ramaphosa has asked the investment envoys to go and raise 100 billion US Dollars in investment over the next five years.
The team is made up of finance heavyweights that include former Finance Minister Trevor Manuel, former Finance Deputy Minister Mcebisi Jonas, the executive chairperson of Afropulse Group, Phumzile Langeni and chairman of Liberty Group and former CEO of Standard Bank Jacko Maree.
Matshego predicts that the President is likely to expand the team.
“I see this as a very positive move, attracting investment is a good thing even if the envoys brings only $25 billion, they would not have failed. We have got to attract investment.”
However, Matshego pointed out that attracting investment is not only going to be determined by the work of the envoys, but other factors will be at play.
“However I am a keen supporter of this team. We have got to market the country, we have to sell our country, and we have to sell our story, whether good or bad. The encouraging thing is that this team is made up of people with a lot of credibility.”
Matshego said while South Africa is still experiencing some level of uncertainty, things should start to “take off” after the national elections next year.
He said a lot of positive things are going to happen with momentum in the right direction to attract investor confidence.
“Right now, we are doing the right things, sorting out the South African Revenue Service (SARS) and entities like Eskom, the basics we have to do that will help get the trust back. We are already doing these things,” he said.
Governance is everything
Recently, government announced the appointment of new boards for power parastatal Eskom and Denel as part of immediate measures to strengthen governance and management at the parastatals.
Matshego said the changes at these parastatals were much needed as there was a potential damage to both local and international confidence in these essential entities.
‘Governance is everything. So a change of direction in terms of governance is good. We have to show [the rating agencies] progress and that we are moving forward.”
Fielding questions in Parliament last week, Deputy President David Mabuza said the decision by Moody’s in March to maintain South Africa’s investment grading, as well as changing the country’s outlook from negative to stable, would go a long way in restoring investor confidence in the country.
So what piece of advice would Matshego give to the group of “lions” that have been tasked with hunting down investors for Africa’s biggest economy?
“They must be positive, we are a country with a lot of potential. Advice would be that they have their work cut out for them and it’s not going to be easy because we are competing against other countries and we just have to go out there and sell our story.” - SAnews.gov.za
