New president keen to create a ‘conducive investment climate’ after years of scandal
Cyril Ramaphosa, South Africa’s new president, said he was confident he could attract more than $100bn of investments as he laid out an ambitious business-centred strategy to resurrect the stuttering economy.
“My main blueprint is to get investments going because one of the reasons we are in this low-growth environment is lack of investment, both internal and external,” he told the Financial Times on Wednesday, referring to a growth rate that has been stuck below 2 per cent, barely above the rate of population expansion.
Mr Ramaphosa replaced scandal-wracked Jacob Zuma as state president in February after a ferocious struggle within the governing African National Congress. Asked for his blueprint for reviving the economy, he said he would create a “conducive investment climate”, including through incentives.
In his first weeks in office, the president has overhauled the cabinet, appointed new management teams to run poorly managed state-owned enterprises and overseen a change of atmosphere that has seen state prosecutors go after alleged criminals, including the Gupta family and one of Mr Zuma’s sons.
Last month, Moody’s kept South Africa’s credit rating at investment grade, changing its outlookto “stable” in recognition of what it said was the beginning of a reform push.
“I’m approaching it with a private-sector lens,” said Mr Ramaphosa, who left politics in the mid-1990s to become one of the country’s most successful black business leaders. “When I was in the private sector, you built a book and that’s how I’m approaching it. I want to build a book of investment.”
We are not going to go for a smash-and-grab. We are seeking to create a very good, solid and durable environment for investment
Mr Ramaphosa said state-owned enterprises, some of which fell into disrepute and financial stress under Mr Zuma, had told him they could raise up to $40bn to invest in the next five years without borrowing from the government.
“I may be short-changing myself when I say $100bn,” said Mr Ramaphosa, who has appointed four senior figures, including former finance minister Trevor Manuel, as so-called “lions” to hunt for investments. South Africa will hold an investment conference in the fourth quarter.
Beijing was also prepared to put in money, he said, including for a $10bn dam in Eastern Cape province. “I say, ‘Hell, we need the money’, and I am going to ensure that we get the conditions that are suitable for our needs.”
Mr Ramaphosa, who has inherited a country battered by years of scandal, acknowledged he had to balance business-friendly policies with pent-up demand for social and economic justice.
In an effort to neutralise more radical views, including from Julius Malema’s breakaway Economic Freedom Fighters, he backed a motion to consider a constitutional amendment that would make it easier to expropriate land without compensation. But Mr Ramaphosa said addressing the “gaping and bleeding” wound caused by land hunger need not threaten either business or the white minority.
“We are not going to go for a smash-and-grab,” he said. “We are seeking to create a very good, solid and durable environment for investment.” That could only be achieved through inclusive growth, he said. Responding now to people’s “yearning for land”, he added, would insure against “policy mishaps” in future.
Ramaphosa said the same principle held for the mining charter, where it was possible to balance the concerns of mining companies with those of workers and mining communities.
Mining investment has all but dried up in recent years because of fears that a new charter would dilute ownership on a continuous basis by transferring shareholdings to black owners. Miners, though, have welcomed the appointment of Gwede Mantashe, former ANC chairman, as mining minister, saying he can negotiate a charter acceptable to both sides.
As evidence that he could heal deep divisions within the ANC, Mr Ramaphosa said he was prepared to welcome Mr Malema back into the party. The firebrand youth leader whose EFF led the assault on Mr Zuma’s presidency had his “ideological home” in the ANC, Mr Ramaphosa said.
However, the president said that party unity would not trump the fight against corruption, including by punishing those who had allegedly helped Mr Zuma to “capture” organs of the state for private gain. State capture would be investigated “without equivocation”, he said, adding that some leaders would be “caught in the web” and “held accountable”.
