Did the South African Investment Conference yield any successes?

By Sam Rolland, Sub-Saharan Africa director

Last week Thursday, South Africa held its fifth edition of the South African Investment Conference. In the lead up to this conference much excitement was made over the fact that the country had surpassed president Ramaphosa’s initial goal of R1.2 trillion, exceeding it by more than R300 billion. In what has been a difficult 2023 so far, this figure would suggest that South Africa has done well (thus far) in maintaining a high level investment since the end of the pandemic (see chart below). Did the conference, however, yield any sustainable success?

Looking at the documents that came out of the conference, a number of things stood out to me. Firstly, one of the largest investments resulting from the conference was a pledge of R19.7 billion from roads agency SANRAL. At face value, this would appear to be a case of padding the numbers. The mandate of SANRAL is “to finance, improve, manage and maintain the national road network” – unless it is announced otherwise, it is assumed that SANRAL are purely fulfilling their mandate to maintain our critical network of roads”. If I look at recent financial statements, the budget for 2021/2022 for road asset infrastructure management, which includes OPEX and CAPEX was budgeted at R34.2 billion. This is the line item that supports economic growth, the kind of which the Investment Conference is ultimately targeting. At R19.7 billion, it would appear that the pledged investment only accounts for just under 60% of the entity’s infrastructure budget. If further detail is announced, it may turn out that R19.7 billion is over and above the infrastructure budget, which would represent a 57% increase- this may yet be the growth accelerating activities the Conference is aiming to promote.

The second interesting announcement was that the largest investment pledged during the conference was from UK-based firm Hive Energy, at R105 billion. For reference, the next highest pledge was announced at R60 billion by telecommunications firm Vodacom. The investment by Hive is largely centered around the production of a green ammonia facility located at the Coega Special Economic Zone in the Eastern Cape. In broad terms, the plant is expected to harness South Africa’s abundance of wind, solar and industrial raw metals to produce the green ammonia. Even more impressive, government has also given the project Special Integrated Project Status, which suggests all phases of the project will be expedited.

Looking at the two projects above, it remains to be seen whether the Investment Conference could be considered a success. While encouraging to see, many domestic firms pledged investments which were already in the investment pipeline, as failing to invest in upgrading or maintaining infrastructure will result in losing ground to more efficient competitors. However, it is encouraging to see large-scale foreign investment into new technologies heading the investment conference. Many of these are expected to impact multiple sectors, and especially in key rural-dominated economic regions such as the Eastern Cape, with government ensuring the process is expedited. If only all investments pledged could receive this level of attention, we may see many more firms, both domestic and international, coming to the party.