President Cyril Ramaphosa declared himself in economic “repair mode” at a major investment conference on Friday as the country raised a total of $55 billion from investors to help haul itself out of recession.
The former union leader, who inherited a mismanaged economy from the scandal-plagued Jacob Zuma earlier this year, wants $100 billion of new investments over the next five years.
Investment commitments of almost R290 billion were made at the conference, Ramaphosa said.
He had already secured pledges for some $35 billion, mainly from China, Saudi Arabia and the United Arab Emirates.
Ramaphosa has made reviving the economy a top priority since assuming power in February, but has been hampered by fiscal constraints and infighting in the ruling African National Congress.
“We are in repair mode,” Ramaphosa said in his opening speech at the conference, which looked at opportunities in sectors including agriculture, manufacturing and energy.
Ramaphosa said the promised investments would give the country a lift.
“We have witnessed today the beginning of a new narrative about investing in South Africa,” he said in his closing remarks. “Today I can say the investment strike is over.”
Analysts have said investors held back during Zuma’s rule.
Property rights commitment
Several companies across various sectors made the pledges, including Anglo American, one of the world’s largest commodities miners, which said it would spend R71.5 billion in the country over the next five years.
South Africa’s association of car makers, which includes Nissan, Volkswagen and Isuzu, said its members would invest more than R40 billion over the next five years, while Telecoms firm Vodacom pledged to invest R50 billion over the same period.
Investors welcomed Ramaphosa’s rise to the presidency partly due to his strong ties to the business community. Since then, however, the economy has sunk into recession and faced a series of downbeat data.
His government’s policy of land expropriation without compensation, aimed at addressing racial inequalities that remain more than two decades after the fall of apartheid, has also unnerved investors.
Ramaphosa tried to soothe their concerns about the land policy. “I want to reaffirm that South Africa is very, very committed to property rights,” he said, without elaborating.
The investment conference follows a jobs summit earlier this month at which Ramaphosa announced a wide-ranging set of deals between government, big business and labour which he said would create 275 000 more jobs a year.
Ramaphosa has also unveiled a “stimulus and recovery plan”, focused on job creation and infrastructure development.
The scale of the challenge facing the president was underlined by Finance Minister Tito Mboweni’s bleak medium-term budget speech on Wednesday, when he unveiled weak growth forecasts and deficit estimates.
Compounding the challenge, Moody’s said in a research note that the weaker fiscal outlook outlined by Mboweni was a negative factor in South Africa’s credit outlook.
Moody’s is the last of the top three agencies to keep an investment grade rating on South Africa. The agency is expected to issue a report on that soon.
The rand turned weaker after Moody’s report was released, but recovered later when Ramaphosa announced the pledges made at the conference.
“I’m willing to argue my case with them and say ‘look at us anew… we are turning this ship around’. Admittedly we will not turn immediately but it is on the way to turning,” Ramaphosa told Bloomberg television, referring to the ratings agencies.