In its efforts to rebuild an economy that has been stagnant for decades, South Africa is looking to attract foreign investment from China and other countries.
According to Rob Davies, South Africa’s minister of trade and industry, the country is keenly looking to its biggest trade and investment partner.
“We are looking at growing a trade relationship with China so it can increase investment in our country,” he says.
Much change will be seen when the pledged $14.7 billion (12.9 billion euros; ￡11.4 billion) investment by China come into force, he said.
According to Control Risks, a global risk and strategic consulting firm headquartered in London, China is South Africa’s biggest trading partner, with bilateral trade growing 11.7 percent to $39.2 billion in 2017.
Chinese foreign direct investment in South Africa reached $15.2 billion in 2017, making the country the second-largest recipient of Chinese FDI in sub-Saharan Africa after Nigeria.
However, South Africa’s GDP growth for the past five years has averaged 1.5 percent. Given that population growth is 1.5 percent per year, there has been no real GDP per capita growth at all, according to the World Bank.
Additionally, youth unemployment exceeds 55 percent, and general unemployment has been stuck at around 25 percent for the past decade. Inflation has been close to 6 percent for the past five years, and the International Monetary Fund forecasts that it will remain at that rate going forward.
Since his election as president of South Africa in February, Cyril Ramaphosa has been working on various initiatives to improve the situation. A key one is restoring investor confidence to attract foreign investment.
Toward that end, South Africa held an inaugural investment conference in Johannesburg in October, attracting 1,050 delegates.
During the conference, Ramaphosa said his government had taken a number of decisive measures to improve the investment environment.
“After thoroughgoing consultations with various players in our economy? we have been addressing policy uncertainty and regulatory obstacles that have impeded investment in a number of industries,” he said.
He said the country is working with the World Bank to improve the process of doing business in South Africa and crafting a new FDI strategy.
He said Invest SA, a division of the South African Department of Trade, is intensifying its aftercare service in terms of international best practices. It’s also working on fast-tracking investment projects and reducing red tape.
“One of the decisive measures that we have taken is to confront challenges in some of our largest and most strategic state-owned enterprises? which have experienced years of poor governance? a decline in financial and operational performance, and corruption,” he said.
As South Africa puts in place the pillars of sustained growth? Ramaphosa said, it is working to address immediate concerns? specifically the effects of two consecutive quarters of negative economic growth.
In September? the South African government announced an economic stimulus and recovery plan that aims to stimulate growth? save existing jobs and create new ones.
“As part of this plan? we are taking immediate steps to finalize reforms in key sectors such as mining? oil and gas? tourism and telecommunications – all of which are sectors that have great potential for growth but which have been constrained by policy uncertainty,” the president said.
He noted that the government is drafting separate legislation for the oil and gas industry? settling a long-standing dispute that will provide direction and certainty to an industry with great potential.
Ramaphosa called on enterprises to invest in the country’s mines, factories? farms, game parks? call centers, technology hubs? refineries and solar installations. This is in addition to investing in citizens to harness their energy and unleash their latent capabilities.
“As South Africa emerges from a period of great difficulty and uncertainty? and as it confronts challenges that are immense but not insurmountable, we can declare with confidence that South Africa is a land of untold opportunity,” he said.
(China Daily European Weekly 11/02/2018 page26)