February 8, 2018
In the State of the Nation Address in February, I announced that a central priority for government this year is to encourage significant new investment in our economy.
This is a necessary condition for the growth of our economy and the creation of jobs on a scale that will significantly reduce current levels of unemployment.
New investment in productive sectors of the economy is therefore vital to our efforts to reduce poverty and inequality.
Investment in our economy has declined in recent years.
While total fixed investment in our economy stood at 24% of GDP in 2008, it has declined to around 19% last year.
The National Development Plan says we need to increase this to at least 30% of GDP by 2030.
Foreign direct investment declined from around R76 billion in 2008 to just R17.6 billion last year.
This has been driven by low business confidence and regulatory uncertainty; and has resulted in slow growth, along with poor growth in employment.
Economic conditions in the country are changing, however, and we are determined to work with all social partners to seize the opportunities that are opening up for greater investment and faster growth.
In line with our commitment in the State of the Nation Address, we are therefore launching an ambitious new investment drive.
This drive will culminate in an Investment Conference to be held in August or September 2018.
The Investment Conference, which will involve domestic and international investors in equal measure, is not intended merely as a forum to discuss the investment climate.
Rather, we expect the Conference to report on actual investment deals that have been concluded and to provide a platform for would-be investors to seek out opportunities in the South African market.
We are determined that the Conference produce results that can be quantified and quickly realised.
We are aiming through the Investment Conference to generate at least US$ 100 billion in new investments over the next five years.
Given the current rates of investment, this is an ambitious but realisable target that will provide a significant boost to our economy.
In preparation for the Investment Conference, I have decided to appoint four Special Envoys on Investment, who will spend the next few months engaging both domestic and foreign investors on the opportunities that exist in this country.
These are people with valuable experience in the world of business and finance and extensive networks across major markets.
I am therefore pleased and grateful that the following South Africans have accepted our invitation to be the President’s Special Envoys on Investment:
- Mr Trevor Manuel, former Minister of Finance,
- Mr Mcebisi Jonas, former Deputy Minister of Finance,
- Ms Phumzile Langeni, Executive Chairperson of Afropulse Group and a non-executive director of several leading South African companies,
- Mr Jacko Maree, Chairman of Liberty Group and former CEO of Standard Bank.
They will be travelling to major financial centres in Asia, Middle East, Europe and the Americas to meet with potential investors.
A major part of their responsibility will be to seek out investors in other parts of Africa, from Nairobi to Lagos and from Dakar to Cairo.
This is part of a broader push by government to advance economic integration in the Southern African region and across the continent.
In addition to the processes we must undertake within the country to finalise our participation in the African Continental Free Trade Area, we will also be pursuing other initiatives to promote intra-African cooperation on investment, infrastructure development, tourism and agriculture.
I am also pleased to announce the appointment of Ms Trudi Makhaya as my economic adviser. Among her immediate responsibilities will be the coordination of the work of these Special Envoys and a series of investment roadshows in preparation for the Investment Conference.
The engagements that we expect to take place will also be part of a process towards the establishment of a Presidential Council on Investment.
This evening, I will be departing for London to participate in the Commonwealth Heads of Government Meeting.
We will use this opportunity to meet with several major global companies to brief them on recent developments in the country and on our assessment of the economic challenges, risks and opportunities.
We will be communicating a clear and consistent message – that South Africa is an investment destination with significant unrealised potential.
Some of our fundamental strengths are well known. We have a thriving democracy, an independent judiciary and strong institutions. We have an advanced and diverse economy, a sophisticated and well-regulated financial sector, and extensive transport, telecommunications and energy infrastructure.
We also have a youthful population, an improving basic education system and significantly expanded higher education enrolment. In other words, despite the challenges, we are working hard to build our skills base.
We will brief investors on the measures we are undertaking to improve the investment environment.
Further to the announcements we made in the State of the Nation Address, we are making progress in stabilising strategic state owned enterprises, improving the functioning of key institutions like SARS, finalising a new Mining Charter through consultation with all stakeholders, processing legislation for the implementation of the National Minimum Wage and the promotion of labour stability, and launching the Youth Employment Service to increase the employability of first-time job seekers.
In addition, work is underway to rationalise and streamline investment regulations and reduce the cost of establishing and running businesses.
Through the more effective use of industrial incentives, special economic zones and local procurement requirements, we aim to increase investment in manufacturing and related sectors.
We are creating more opportunities for new market entrants through our competition policy, preferential procurement measures and expanded support to small and medium-sized businesses.
After several difficult years, South Africa is emerging as an increasingly attractive destination for investment.
We are encouraged by the growth in business confidence over the last few months, the strengthened rand and improved growth estimates.
We welcome the recent assessment by Goldman Sachs that South Africa is at the top of the list of potential candidates to be the “next big emerging market story” of 2018. It notes that the growth cycle is picking up after an earlier downturn in investment growth. It says that improved confidence is likely to lead to a better outlook for growth and investment.
This is confirmed by the South African Economic Update released this month by the World Bank. While the economy’s performance is improving, it notes that higher growth will require ambitious structural policies. It estimates that a successful conclusion of the Mining Charter deliberations, for example, could increase investment in the sector by 25 percent.
It is for these reasons that we are embarking on an ambitious investment drive alongside the implementation of necessary economic reforms.
South Africa has entered a new era of hope and confidence.
The task we have now is to ensure that this becomes an era of investment, growth, job creation and meaningful economic transformation.
I thank you.
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