• Monday, 08 November 2021 •
Dear Fellow South African,
Normally, this is the time of year when we bring together investors from across
the country and around the world for the annual South Africa Investment
Conference.
We held the first Investment Conference in 2018 as part of our ambitious drive
to raise R1.2 trillion in new investment over five years. The conference was
attended by over a thousand delegates in 2018 and 2019, and in 2020 was
held in a hybrid format due to the COVID-19 pandemic.
Together, these conferences raised just over R770 billion in investment
commitments across a wide range of economic sectors.
The fourth South Africa Investment Conference would have been held this month,
but we decided to move it to March next year due to several other events taking
place at this time. These include the local government elections, the COP26
climate conference and the Intra-African Trade Fair, which starts in eThekwini
next week. Another important reason for holding it next year is that there will
be far greater COVID-19 vaccination coverage by then, making both travelling
and gathering easier.
Although the fourth Investment Conference has been held over by a few months,
our ambitious investment drive continues. Even in the midst of the challenging
economic environment caused by the COVID-19 pandemic, which was exacerbated
by the violence and destruction that occurred in parts of KwaZulu-Natal and
Gauteng in July, companies continue to make good on their commitments and
to look for other investment opportunities in South Africa.
In the last year alone, nearly R120 billion of investment commitments flowed
into project construction or expansion. This means that around 38% of the total
investment commitments – or R290 billion – have to date flowed into the
economy. Some investments have been delayed due to COVID-19, particularly in
hard-hit sectors like property development and tourism.
Just two weeks ago, I attended the launch of Toyota’s expanded production line
in eThekwini, which will produce South Africa’s first locally-made hybrid car. This
investment was the result of a R2.4 billion commitment the company made at
the 2019 South Africa Investment Conference. Also in KwaZulu-Natal, Tetra Pak
is expanding its operations with an investment of R500 million.
Pharmaceuticals is an exciting new area of growth.
Aspen Pharmacare recently launched its R3.4 billion expansion, which it
announced at the 2018 Investment Conference. This investment has turned
Aspen’s Gqeberha manufacturing facility into one of largest global manufacturing
hubs for general anesthetics and has also provided capacity over 100 million
doses of the Johnson & Johnson COVID vaccine have been produced under
contract.
The World Health Organization also chose South Africa to host an mRNA vaccine
manufacturing hub with the Biovac Institute, which is a public-private partnership
with government. South African-born Dr Patrick Soon-Shiong and his company
NantWorks recently announced an ambitious initiative to build capacity for
advanced health care in Africa. In addition to the investments they will bring,
these developments will also contribute to our collective ambition for the
continent to manufacture 60% of its vaccine needs by 2040.
Energy is another area of growth. The 25 preferred bidders in the fifth round of
our Renewable Energy Independent Power Producer Procurement Programme are
together expected to invest around R50 billion into the economy. The increase
of the licensing threshold for embedded generation to 100 megawatts is likely
to result in substantial private investment in electricity generation projects.
South Africa has recently secured an initial commitment of around R131 billion
to fund a just transition to a low carbon economy by investing in renewable
energy, green hydrogen and electric vehicles. This commitment by the United
States, United Kingdom, France, Germany and the European Union is in line with
the Paris Agreement, which obliges wealthier countries to support decarbonisation
in the developing world.
These energy investments will help us overcome the debilitating load shedding
that the country is currently experiencing, as new electricity generation capacity
comes online.
Several new investments in datacentres and undersea cables will not only bring
in new investment, but will provide the infrastructure needed for the growth of
technology and telecommunications industries.
An important part of our investment drive are the far-reaching structural reforms
we are undertaking in areas such as energy, telecommunications, water and
ports and rail. These reforms will improve efficiency and competitiveness, bringing
down the cost of doing business in South Africa, and encouraging greater private
investment in our economic infrastructure.
We now have 13 special economic zones across the country, providing investors
with targeted investment incentives, preferential tax rates and export support.
These provide an attractive manufacturing base for companies seeking to supply
both local and international markets. Their value has increased further with the
establishment of the African Continental Free Trade Area, which officially
commenced trading at the beginning of the year.
While the rate of investment has slowed due to the effects of the pandemic,
and several projects have been delayed, the investment drive is beginning to
gather pace once again.
As we make progress with the implementation of the Economic Reconstruction
and Recovery Plan – with its focus on infrastructure, industrial development,
employment and structural reform – the environment for investment will improve
further.
Through the investments that are now underway, through the work that social
partners are doing to expand local production and through the progress we are
making on key reforms, we are building a firm foundation for the success of the
fourth South Africa Investment Conference next year.
Most importantly, we are building a firm foundation for a sustained economic
recovery that encourages further investment, creating more jobs and providing
new opportunities for emerging businesses.
With best regards,
Cyril Ramaphosa
