When President Cyril Ramaphosa announced in 2018 the country’s ambitious drive to raise R1.2 trillion worth of investments over five years, many thought South Africa’s number one was biting off more than he could chew.
At the time of the announcement, the country was coming out of a decade of state capture, low business confidence and a dampened investor confidence, among other woes. In addition, no one predicted then, that in the years to follow, the world would be hit with a global pandemic. For some, the target set would have appeared unrealistic.
Fast forward to five years later. That target has not only been met – but surpassed by 26 percent. An elated President announced at the recent annual South Africa Investment Conference (SAIC) that the country had reached R1,51 trillion in investment pledges, surpassing the initial R1,2 trillion target.
Propelled by this success – a courageous President kept his foot on the pedal, and announced that he was setting a new target of R2 trillion worth of investments for South Africa to achieve over the next five years.
Investment lions
Putting his plan in motion five years ago, the first step the President took was to appoint a team of special envoys on investment, whose task it was to spearhead his ambitious investment project.
At the time, a cheeky President said the country was “unleashing a pack of lions tasked with hunting down investment.” And so the roaring pack set off – mobilising investments, resolving challenges faced by different companies and addressing investor concerns on a number of key policy areas, among others.
Despite the challenges faced at the time, the country in 2018 began the first of what would become the annual South Africa Investment Conference – or SAIC. The first conference amassed pledges of approximately R300 billion. By the end of the first two conferences, about R664 billion of investments had been pledged.
The arrival of the COVID-19 pandemic which threw the world into disarray, did little to help the world economy. According to the 2020 United Nations World Investment report, foreign direct investment was projected to drop by 40%. At the same time, decision makers needed to make tough decisions on investments, expansion and entry into new markets.
Once again the country pressed forward with the 2020 edition of the conference which was held in a hybrid format ensuring that COVID-19 regulations were followed.
At the time, the country was monitoring the implementation of the 102 projects announced at the last two conferences. The third annual conference saw 50 companies making investment commitments valued at R109.6 billion. This brought the total value of investment commitments over the three years to R773.6 billion.
These investments were spread across mining, manufacturing, agriculture and the digital economy, among others.
Progress
Vedanta Resources Limited was among the companies who put up their hand following the call to invest in South Africa’s economy. At the 2018 inaugural conference, the company pledged a total investment of R21 billion in the Gamsberg mine and associated projects. Of the R21 billion, over R6 billion was allocated towards completing Gamsberg Phase I.
President Ramaphosa would later officially open the mine located in the Northern Cape. Speaking at the opening of the zinc mine in February 2019, the President said it was gratifying to see commitments made at the conference taking form and shape across the country.
Fast-forward to August 2022,Vedanta Zinc International (VZI) officially broke ground for the construction of Gamsberg Phase II which is a R7 billion investment expansion project of their open cast zinc mine.
VZI is the custodian of Vedanta Limited’s zinc assets in Africa. The construction phase of Phase II is tipped to create over 2000 jobs while a further 800 to 1000 permanent jobs are expected to be created during the peak operations phase.
At the end of the first three conferences, a total 152 pledges had been made of which 45 had been completed or would soon be completed while 57 were under construction.
The fourth edition of the conference raised R367 billion in investment commitments, bringing the five-year investment target firmly into sight.
A great feat indeed that the final leg of the five-year drive saw the target exceeded.
Speaking at the closing address of the conference, the President said achieving that feat was not easy, given the challenges facing the country.
Commitments
An array of pledges were made in key areas in the economy. Among them were pledges made in the digital economy, which saw R3.8 billion pledged by Equinix to develop new data centres in South Africa. Meanwhile, Teraco made their fourth announcement this year, investing a further R2 billion to expand their data centre capacity and developing renewable energy projects to supply their data centres in Gauteng, the Western Cape and KwaZulu-Natal.
In the manufacturing sector, Alpha Manufacturing is investing R2 billion in recycling, packaging and manufacturing facilities in Gauteng and KwaZulu-Natal and Defy pledged for the third time by investing R288 million in their white goods manufacturing facilities in KwaZulu-Natal.
Several companies have also pledged to invest in the country’s Special Economic Zones (SEZ).
At the Richards Bay Industrial Development Zone located in KwaZulu-Natal, Alusouth is investing R373 million in an aluminum rod plant, while Bote Industries is investing R220 million in the production of rubber hoses. In addition, South East Bulk operations is investing R452 million in a logistics hub.
At the Coega Development Zone, Coega steels is investing R160 million in an automated rowing mill while Newlyn Group is investing R4 billion in a manganese storing facility. In addition, Kict Energy is investing R500 million in the production of smart LPG cylinders.
Like Vedanta companies who have made pledges at the conferences over the years, others have also made good on their promises.
Vodacom is among the companies that have pledged to invest in the global business services, ICT and digital services category. At the fifth conference, the company announced that it has pledged an additional R60 billion over the next five years.
This after it delivered on its promise to invest R50 billion over five years in 2018.
“As part of the fifth SA Investment Conference, Vodacom has pledged to invest a further R60 billion in South Africa over the next five years. Five years ago we heeded the call from President Cyril Ramaphosa to play a central role in his investment drive aimed at attracting R1.2 trillion over a five year period.
“Looking back over the past five years, we believe that our initial R50 billion pledge has played a significant role in fostering digital inclusion for all and helping to unlock economic and social opportunities for South Africa,” said Vodacom Group CEO Shameel Joosub.
The President said government had honoured the undertaking it had given that it would attract new investment, support the growth of local businesses and create more jobs.
“When we set out on this ambitious path five years ago, none of us could have foreseen that the world would be struck by a deadly pandemic.
“Nor could any of us have imagined the lingering impact on investment, businesses, jobs, and livelihoods, even years after the existential health threat has passed,” said the President.
Building on success
He described the achievement of the target as a “stellar” one and something the country should be proud of.
This is despite the challenges that currently face the nation including the ongoing electricity crisis which is receiving attention.
While investment decisions often take some years to reach fruition, commitments made to date have already resulted in substantial investment in the productive economy.
Almost 70% of the total number of projects announced since 2018 have either been completed or are on their way to completion. Approximately R460 billion of capital has been invested in building new factories, purchasing equipment, constructing roads, sinking mine shafts and rolling out broadband infrastructure.
Not taking the foot off the pedal, South Africa is looking towards attracting R2 trillion over the next five years.
Five years since the initial conference, it is clear that the country did not bite off more than it could chew, but brought home the bacon instead.