South Africa’s fifth Investment Conference, the culmination of a five-year investment drive, just took place in mid-April at the Sandton Convention Centre. The goal of raising over R1.2 trillion ($70bn) set by President Cyril Ramaphosa in 2018 was expected to be met.
This event was the most ambitious investment undertaking in democratic South Africa and involved the participation of major corporations within the country, as well as interest from around the world, including members of the Gulf Cooperation Council in the Middle East, Canada, Belgium, Turkey, China, Germany, and the Czech Republic, among other nations.
Moreover, attention was increasingly focused on the potential of the continent as a massive market and source of investment in the near future, as the African Continental Free Trade Agreement (AfCFTA) takes shape. The week following the investment conference, the AfCFTA Secretariat and the Government of South Africa will host the AfCFTA Business Forum in Cape Town, billed as the continent’s largest such event. This underscores South Africa’s emphasis on the AfCFTA.
The private sector was the focus of the forum, with areas of interest including agro-processing, automotive, pharmaceuticals, transportation and logistics, and digital trade, which have been favored by investors in the past four editions of the South African Investment Conference.
According to InvestSA, the main organizing body of the South Africa Investment Conferences, last year’s event resulted in R367bn ($21bn) of new investment commitments. This brings the country closer to its five-year investment target of R1.2 trillion ($70bn), with R1.4 trillion ($78bn) in commitments since the first conference in 2018.
Investment opportunities span across several sectors, including infrastructure development, healthcare, real estate, logistics, agri-processing, food and beverages, automotive, and creative and artistic industries. Additionally, electricity generation is a promising area of investment as South Africa aims to increase capacity to 6,800 MW within the Renewable Energy Independent Power Producer Procurement Programme and the Just Transition to Green Energy.
The COVID-19 pandemic and subsequent lockdowns have been particularly devastating for small and medium-sized enterprises. This was exacerbated by the energy crisis and other external global shocks. Despite these challenges, South Africa has demonstrated resilience, thanks to its strong financial foundation, which includes the continent’s largest banks and most liquid stock market, a highly skilled and educated workforce, and effective management in its mining, automotive, pharmaceutical, and agri-processing sectors.
Investment Drive and Promising Opportunities
The prevailing opinion is that the worst is over for South Africa, and the country is once again poised to climb and reclaim its position as Africa’s most successful economy in the coming years. During last year’s conference, President Cyril Ramaphosa acknowledged the country’s many challenges, stating, “I am not here to pretend that these challenges are not real,” but he pledged to address them to the best of his ability. This honest acknowledgment of problems resonated with investors, and this year’s commitments are expected to exceed the initial target of R1.2 trillion.
South Africa’s sophisticated and advanced economy, as well as its commitment to developing and expanding its ITC and electronics sectors, positions it favorably to benefit from the constantly evolving technological revolution. As the world resumes travel, the country’s well-developed and diverse tourism, hospitality, and conferencing sectors are poised for a significant revival. Additionally, the country’s world-class hard and soft infrastructure makes it a preferred gateway to the rest of the continent for many multinationals.
The investment drive is a crucial component of the Economic Reconstruction and Recovery Plan announced in 2020. Many of the projects, particularly in infrastructure and power generation, will not only stimulate growth but also spread it into some of the most marginalized areas of the country, creating sustainable industries with high employment potential.
South Africa’s Potential for Green Energy Amid Energy Crisis
South Africa’s vast natural resource reserves, which include gold, iron ore, platinum, manganese, chromium, copper, uranium, titanium, and coal, make it a significant global source of essential industrial inputs. However, the country’s inability to keep pace with the rapidly growing energy demand has prevented it from fully exploiting its potential.
However, even this energy crisis creates opportunities, and a plan is underway, with financial backing from several developed countries in Europe and the Americas, as well as the African Development Bank, to transition to greener energy. Norwegian company Scatec has committed to investing R16bn ($900m) in a solar power plant located in the Northern Cape. InvestSA reports that Scatec will also allocate a portion of its pledge to the production of biogas, photovoltaic generation capacity, and lithium battery technology, which are expected to dominate South Africa’s energy generation landscape.
In addition to renewable sources such as wind, solar, and biomass for power generation, the government places significant importance on hydrogen to help decarbonize the economy. The Hydrogen Society Roadmap is a coordinating framework that aims to facilitate the integration of hydrogen-related technologies across various sectors of the economy.
Major Commitments in Key Sectors Despite Challenges
Despite facing significant challenges, the IMF predicts that inflation peaked in 2022 and the path to full recovery has begun. The demand for commodities and mineral inputs is expected to increase, and major pledges towards mineral beneficiation have been made, including R12bn ($670m) from Implats, R11bn from African Rainbow Minerals, R10bn from Anglo American, and R9bn from platinum miner Sidibelo. The automotive industry, one of South Africa’s critical manufacturing hubs, has also made substantial commitments.
Ford pledged R16bn ($900m), Tshwane Automotive R2bn, Africa Auto Group R550m, BMW R800m, Volkswagen R350m, Daimler Trucks & Buses Southern Africa R190m, Wheel Assemblers R180m, and Fromex Industries R102m. According to InvestSA, the investment drive in the automotive industry “is a catalyst for smaller industry players – predominantly black-owned – to announce ventures within the automotive supply chains, from tyres, to batteries, to components and assembly facilities.”
Vodacom, South Africa’s telecommunications giant, has committed R50bn ($2.8bn) to its fixed and mobile networks over a five-year period. Planned reforms in this sector are expected to see the entry of more players.
During the 2022 investment conference, President Ramaphosa expressed particular pleasure with the investment in the country’s creative arts. “Our creative industries have been given a significant boost by multimillion rand investments in film and television production by the world’s largest media companies like Warner Media and Netflix. After nearly 15 years in the making, the eThekwini Film Studio in KwaZulu-Natal will soon become a reality following a R7.5bn ($420m) investment from Videovision Entertainment.” Netflix pledged R929m, while Warner contributed R350 million.
Ramaphosa summed up one of the primary objectives of the investment drive, stating, “Over the last five years, some R32bn has been invested in nearly 800 black industrialists and entrepreneurs through funding initiatives within the Department of Trade, Industry and Competition, with close to 120,000 jobs either saved or created.”
The positive response to the fifth edition of the SAIC is a clear indication that the country’s most significant and most innovative enterprises have renewed their faith in the potential of one of Africa’s and the world’s most extraordinary countries. The country is preparing for many more investment pledges, including around the intra-African trade opportunity.
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