South African pilgrimage to Switzerland was ‘very successful’, but corruption and dysfunctional SOEs remain obstacles to growth.
The South African delegation to the World Economic Forum (WEF) in Davos, Switzerland, returned home on Friday with a “bag full of investment commitments”, said Deputy President Cyril Ramaphosa.
“Many of the business leaders I have met here have said they are buoyed by this new mood in the country. We want to hear the investing world saying that your message is clear, positive and forward looking. It is the type of message that you can have confidence in and correct some of the missteps in the past,” he said during a session at the WEF this week.
He said team South Africa had a “very, very successful pilgrimage” to Davos.
“Our journey here has paid enormous dividends. We are going back home, filled with a great deal of confidence.
“International investors have demonstrated that South Africa is still an important destination for investment. In all the meetings we have had, we have had nothing negative that has been said about our country. All we have had is encouragement.”
They were told they were on the right track and to keep going.
“I go home a very satisfied deputy president of the republic.”
The rand strengthened to 11.79 against the dollar this week – its best level since 2015.
Investec economist Annabel Bishop said this was because of positive comments from South African government officials about ending corruption, repairing state-owned enterprises and the health of public finances, maintaining key institutional strengths and promoting economic growth.
By 4.30pm on Friday, the rand was quoted at 11.91 to the dollar.
Economic Development Minister Ebrahim Patel said they had seen a positive mood among South African businesses and that investors in Davos had noticed this.
“They see a South African delegation that has come here that is buoyant and confident about growth prospects for this year.
“In our engagement with investors here, there is a growing appetite for them to expand their operations in South Africa.”
Some said they were ready to do so and saw the country as a great base for markets in the rest of Africa, he said.
Turning to the country’s nuclear plans, Ramaphosa said government needed to look at the state of the South African economy.
“We have excess power right now and we have no money for major nuclear plant building.
“We have said this nuclear process will be looked at in the broad context of affordability. It doesn’t really make sense as we don’t have the money.”
On the topic of growth, Ramaphosa said some of the things impeding growth included corruption and dysfunctional state-owned enterprises.
Once those things were addressed, then investors would find the country attractive.
He said the mining industry charter would be discussed with all role players to “unlock” the industry.
“We do not want to miss out on the commodity boom. If the Mining Charter is holding us back, we should deal with it and find commonality of views with potential investors.”
Ramaphosa welcomed the issuing of the terms of reference for the inquiry into state capture.
He said the process, headed by a judge, would allow them to determine the depth and extent of corruption at state-owned enterprises.
This process would run in tandem with efforts by the criminal justice system to identify those who were implicated in wrongdoing, to ensure they were brought to book, he said.
Business Leadership South Africa (BLSA) CEO Bonang Mohale said the South Africa delegation got a warm welcome in Switzerland.
“We have never been so warmly received. We came carrying a message of unity, promotion of foreign direct investment and to tell the world that South Africa is open for business.”
Mohale said he kept to his word that the BLSA would, along with members of the delegation from El Salvador, boycott US President Donald Trump’s speech. This followed Trump’s alleged reference, in a meeting with US legislators on January 11 to discuss immigration, to Haiti and African nations as “s**thole countries”. He denied saying it.
Mohale said the South African delegation discussed the long list of problems plaguing the country. He said Trade and Industry Minister Rob Davies had highlighted a number of major foreign investments in various sectors.
“It was definitely a worthwhile trip,” he said.
Colin Coleman, head of Goldman Sachs’ South African office, said the trip to Davos: “Had been a very successful mission for team South Africa. The objective was to get the message across that we are laying out the red carpet for foreign investors.”
The mission had been ‘impressively lead’ by Ramaphosa, he added.
Regarding the mining charter, Coleman said that one of the items of ‘low hanging fruit’ was to restore confidence in mining.
Earlier in January, Goldman Sachs, in a report, identified South Africa as the “big emerging market story” of 2018.
Coleman said the report had got the attention of the global institutional community and corporate South Africa.
International Monetary Fund managing director Christine Lagarde met Ramaphosa for talks in Davos.
She said in a statement afterwards that they agreed that long-standing structural challenges continued to weigh on growth in South Africa.
Bold and timely reforms were needed to create jobs and reduce inequality, she said. “Recent initiatives to improve governance and strengthen public institutions are steps in the right direction.”
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