Opening Address by President Cyril Ramaphosa at the Fifth South Africa Investment Conference, Sandton Convention Centre, 13 April 2023
Deputy President Paul Mashatile,
Minister of Trade, Industry and Competition, Mr Ebrahim Patel,
Ministers and Deputy Ministers,
Secretary-General of the African Continental Free Trade Area Secretariat, Mr Wamkele Mene,
Mayor of the City of Johannesburg,
Ambassadors and High Commissioners,
Ladies and gentlemen,
Good morning and welcome to the Fifth South Africa Investment Conference.
Your presence and participation at this investment conference is a clear demonstration that South Africa continues to be an attractive investment destination despite a strained domestic and global economic climate.
The South Africa Investment Conference has continued to evolve and grow over the past five years.
In 2018, we set a bold and ambitious target to raise R1.2 trillion in investment over a five-year period.
This year’s conference is an opportunity to reflect on progress we have made to achieve that goal.
Given the state of the economy in 2018, and given that we were emerging from a decade of state capture, many thought it was an unattainable target.
We moved with speed, appointing the first of our Special Envoys to engage with domestic and foreign investors on investment opportunities in South Africa.
In the same year, the first-ever South Africa Investment Conference took place.
Despite economic headwinds, low business confidence and dampened investor sentiment, the first conference generated investment pledges to the value of approximately R300 billion.
The value of investment pledges has continued to grow.
Since April 2018, we have had to contend with a devastating global pandemic, damaging social unrest, several natural disasters and a cost-of-living crisis worsened by the ongoing conflict in Ukraine.
In addition, we are now confronted with the consequences of years of under-investment, mismanagement and corruption in our electricity, rail and logistics sectors.
Given all that has taken place in the intervening years, it is understandable that investor confidence has been sorely tested.
Doubters have had reason to be sceptical.
We are on a long journey to rebuild our country and recover the ground we have lost. Our recovery is a mission that will take time to accomplish.
We are on the recovery path, we refuse to be daunted by the challenges we face, we are confident that we will recover.
We remain convinced that South Africa is an investment destination with significant untapped potential. We do believe that by leveraging our unique value proposition, we have the ability to attract higher levels of investment.
In the midst of all the challenges we face, our ambition has not been misplaced. We do believe that the target we set in 2018 was not misplaced either.
The four South African Investment Conferences that have taken place to date have attracted R1.14 trillion in investment pledges.
We expect that the investment announcements made here today will take this total beyond the target that we set five years ago.
While investment decisions often take several years to reach fruition, the investment commitments made to date have already resulted in substantial investment in the productive economy.
Almost 70 per cent of the total number of projects announced since 2018 are either completed or on their way to completion.
To date, approximately R460 billion of capital has been invested in building new factories, purchasing equipment, constructing roads, sinking mine shafts and rolling out broadband infrastructure.
What really stands out is the impact of these investments on the lives of South Africans who are now able to earn a decent living and care for their families.
As we create sustainable jobs we are working to tackle poverty and inequality.
Beyond the pledges made inside this conference hall, I have been encouraged by the investments that are happening in our economy and those that are being facilitated via InvestSA, our investment envoys, our diplomatic missions in various countries and our government departments, especially the Department of Trade, Industry and Competition.
Whether it is in business process outsourcing, tech start-ups, the automotive sector, green ammonia, green hydrogen or in the construction of mega data centres, local and international companies are expanding their footprint in South Africa.
It has been a core conviction of this administration that to create jobs we must drive growth, and to achieve growth we must implement fundamental economic reforms.
This Fifth South Africa Investment Conference affirms local and international investor confidence in the structural reforms we have been driving to improve the business environment.
The energy sector remains our foremost priority.
The lack of reliability in electricity supply weakens business and consumer confidence, taints international perceptions about our country and affects investment sentiment and decisions.
With a view to addressing the energy challenges we announced an Energy Action Plan in July last year. The Energy Action Plan presents a clear path to reduce the severity and frequency of load shedding in the short term and achieve energy security in the long term.
The Minister in the Presidency for Electricity, with the support of the Department of Mineral Resources and Energy, the Department of Public Enterprises and the National Energy Crisis Committee, is overseeing the implementation of this plan.
Our immediate focus is on improving the performance of our existing coal fired power stations as they continue to provide the baseload of our energy.
Demand-side management initiatives will receive elevated attention, including through consumer behaviour, rooftop solar and facilitating embedded generation.
We have been implementing wide-ranging reforms in the electricity sector to enable private investment in electricity generation and accelerate the procurement of new generation capacity from solar, wind, gas and battery storage.
One of these reforms regarding the removal of the licensing threshold for embedded generation, has facilitated considerable private investment in the electricity sector.
This reform, together with measures to streamline regulatory processes, has enabled a surge of new projects, with the pipeline of committed projects now representing over 10,000 MW of new capacity.
Several municipalities are making use of regulatory changes to procure power independently.
We have introduced tax incentives for households and businesses to invest in rooftop solar. We have called for financial institutions to support this effort through affordable funding for households and small and medium enterprises. The government will assist poor households through a number of programmes.
The debt transfer package for Eskom, together with the progress made in unbundling the utility, will enable the necessary investment in the transmission network and in maintenance of Eskom’s generation fleet.
We expect the National Transmission Company to be fully operational shortly.
Through our renewable energy programme, we have signed agreements for approximately 2,800 MW from bid windows 5 and 6, with several large projects already in construction and others on track to reach financial close.
We recently released a request for proposals for over 500 MW of battery storage, and will soon open further bid windows for wind and solar, battery storage and gas power.
As we work to close the electricity supply shortfall and end load shedding in the short term, we are laying the foundation for a fundamental reform of the energy sector in the longer term.
Cabinet has approved the Electricity Regulation Amendment Bill, which will soon be tabled in Parliament, to establish a competitive market for electricity generation.
Though load shedding will remain a challenge in the immediate future, its severity will begin to ease as some of the more targeted initiatives recently announced begin to take effect.
What we are witnessing in the energy sector is an undeniable surge of investment that will not only address the electricity supply shortfall in years to come, but will propel growth and create jobs.
Even as we work to improve the performance of our existing coal-fired power stations to address load shedding, we remain committed to a just energy transition and our target of achieving net zero emissions by 2050.
We will implement our Just Energy Transition Investment Plan, which outlines our investment needs to support a just and inclusive transition towards cleaner forms of energy.
We will soon be completing the review of the Integrated Resource Plan to lay the foundation for a fundamentally transformed energy landscape that transitions us along a low-carbon, climate resilient developmental path.
We will undertake this just transition at a pace our country can afford and in a manner that advances our developmental objectives and ensures energy security.
In the long run, investment in green energy will be a huge boost to economic growth.
There are indeed opportunities in this crisis, including for the local manufacture of solar panels, batteries and inverters and the use of our unique natural endowment in resources like platinum and vanadium.
This will open up new opportunities for employment and the skilling and upskilling of workers, especially young people.
We are equally focused on addressing the crisis in the logistics sector.
Transnet’s railway and port constraints are significantly affecting the mining, agriculture, forestry, automotive and manufacturing sectors.
We are prioritising port and rail efficiencies as part of the structural reform process.
Our new National Rail Policy provides for third party access to the freight rail network, which will allow private rail operators onto the network to increase investment and improve efficiency.
To facilitate third party access, Transnet is establishing a separate Infrastructure Manager for the rail network.
In the interim, Transnet is implementing a range of measures to arrest the decline in performance of the freight rail system, including to increase the availability of locomotives for key corridors.
Transnet is also in the process of establishing private sector partnerships at the Durban and Ngqura Container Terminals, which we expect to be concluded in the coming weeks.
Significantly, we have agreed with key stakeholders to establish a National Logistics Crisis Committee to drive the implementation of a comprehensive roadmap for the freight logistics sector.
Just as the private sector Resource Mobilisation Fund is providing support for the Energy Action Plan, we are greatly encouraged by indications from business that they are prepared to support government in our effort to fix the logistics system.
We are confident that working together with the private sector and organised labour, Transnet and government will be able to overcome these constraints to improve efficiencies.
Immigration reform has long been cited by many businesses as an area of concern.
Today, we are able to announce a significant overhaul of the work visa system that will provide a further boost to investment.
This includes decentralising the adjudication of visa applications to foreign missions and streamlining application requirements to reduce the timeframes for obtaining a work visa.
We will introduce a Trusted Employer Scheme for qualifying companies and establish a points-based system to provide more flexible pathways for skilled applicants, in line with global best practice.
We will introduce new visa categories for remote workers and start-ups to attract dynamic entrepreneurs and promote spending in our economy.
In addition, we will be expanding the e-Visa system to include an additional 20 countries over and above the 14 that are currently eligible, and will extend the e-Visa system to cover new visa categories such as study, business and intra-company transfer visas.
These reforms will enable us to attract skills and investment and create jobs while protecting and promoting the employment of South Africans.
As we reform our visa regime, we are investing in the skills development system to ensure that we produce the skills that our economy needs.
The National Skills Fund will soon launch a new model for demand-led skills development, which will provide R800 million to fund training for unemployed young people in digital skills.
The key innovation of this model is that payment will be linked to placement of young people in employment, as opposed to training alone, to incentivise improved outcomes.
The pay-for-performance fund is designed to crowd in funding from multiple sources, and I would like to call on the support of the private sector in taking this model to scale.
Crime and corruption continue to hamper South Africa’s development.
To address this grave challenge, specialised multidisciplinary task teams have been set up by the police to tackle crimes of economic sabotage such as violence and extortion at construction sites, illegal mining, infrastructure vandalism and cable theft.
A number of arrests have already been made, followed by prosecutions and convictions. This steady progress is important as we strive to break up organised crime syndicates.
Our hard work to rebuild state institutions is bearing fruit.
The South African Police Service, the Special Investigating Unit and the NPA’s Investigating Directorate are making notable progress in dealing with cases of serious corruption. This work has resulted in arrests, asset forfeitures, successful convictions and the recovery of misappropriated funds.
Supported by data provided by the South African Revenue Service and the Financial Intelligence Centre, a multidisciplinary Fusion Centre is helping the National Prosecuting Authority to successfully prosecute corruption-related offences and unravel complex financial crimes.
Since its inception the work of the Fusion Centre has led to the preservation and recovery of approximately R1.75 billion in criminal assets.
These developments highlight the importance of South Africa’s efforts to be removed from the Financial Action Task Force’s ‘grey list’ as soon as possible.
South Africa’s inclusion on the list of ‘jurisdictions under increased monitoring’ is intended to raise standards of compliance.
Both our banking sector and our anti money-laundering legislation already meet FATF requirements.
We are working with the FATF to effectively address all outstanding deficiencies and strengthen the effectiveness of our anti money-laundering regime.
Yesterday, I met with business leaders from some of South Africa’s leading companies to discuss the challenges that are holding up growth in our economy.
We agreed to undertake practical joint action in three immediate priority areas: energy, logistics, and crime and corruption.
In doing so, we will be building on the collaborative model that we used so successfully in managing our response to Covid-19 and in our vaccine rollout.
We are confident that if we can address these three issues, we will be able to turn our economy around and unleash its full potential.
This Fifth South Africa Investment conference marks the end of the first phase of our investment mobilisation drive.
As South Africans, we have always believed in our country and its great promise.
We know from our engagements with you as investors, that you see this potential too, a potential that is evident in the investment that we continue to attract.
South Africa’s first Country Investment Strategy is being finalised. It will outline priority areas and sectors to advance our country’s economic interest and will be driven at the highest level with oversight provided by the Presidency.
Investment in our economy is not just about the amounts you have seen on this stage over the years. When we expand the lens and take in the aggregate picture, we see some encouraging trends too.
Following the devastating impact of the COVID-19 pandemic, total fixed investment in nominal terms increased from R756 billion in 2020 to R811 billion in 2021 and to R933 billion in 2022.
From historical data, we know that total investment in our economy over a five-year period comes in at roughly R4 trillion.
Building on this baseline, we will work towards a new target.
As I announced in the State of the Nation Address in February, we are now setting a new target to mobilise approximately R2 trillion in new investments over another five-year period, between now and 2028.
The investments emanating from the four South Africa Investment Conferences held to date have stimulated industrial, technological and institutional modernisation.
These investments have supported the expansion of human capital and knowledge transfer, and created more jobs and learning opportunities.
With the achievement of our R1.2 trillion target today, we now cast our collective eyes to the horizon.
With your support, with your investment, we can realise more growth, offer more opportunities and create even more jobs.
As we work with dedication and focus to overcome our immediate challenges, let us not lose sight of the incredible promise of our country, South Africa.
I look forward our deliberations today and to the new investment pledges that will be announced.
I thank you.
Issued by: The Presidency