Investment envoy Jacko Maree says investors are continually stressing the need for political and policy certainty and simpler regulations.
Companies were “sitting on their hands”, awaiting the outcome of the general elections before putting money into the South African economy, says one of the country’s special investment envoys.
Jacko Maree, who was appointed by President Cyril Ramaphosa nearly a year ago to help raise $100 billion in fixed investment to boost the stagnant economy, said: “We spoke to hundreds of companies and what did we find? (They wanted) political stability, leading to institutional stability over at least 10 years.”
The former Standard Bank chief executive and current Liberty chairperson was the guest speaker at the signing of a $10 million United States government loan guarantee in Durban on Tuesday.
He told the audience that investors were continually stressing to him and his fellow presidential envoys the need for political and policy certainty and simpler regulations.
“There was a call for certainty. We can’t keep changing our rules,” said Maree, pointing out that multinational corporations could choose between countries.
He said it was “sad” that General Electric had picked Nairobi to site its Africa head office rather than a city in South Africa, the continent’s most industrialised economy.
Expropriation without compensation had not spooked investors to the extent they feared losing their factories, but he said it had made them question whether agricultural land reform might be “the thin edge of the wedge”.
Maree said the government was working on “quick wins” in problem areas, including:
- Work permits and visas – an impediment to foreign investment – “we haven’t solved it yet”
- The mining charter – “much improved”
- Radio frequency spectrum allocation policy – “positive developments”
But he said the country was “hugely underperforming in terms of numbers of high-value tourists that we are attracting”.
Concern over corruption was a serious issue with investors, he said, while Eskom’s latest bout of outages had dominated discussion.
“Everyone was sitting on their hands with the elections coming up,” Maree said of his recent interaction with investors. But he was hopeful investment would pick up in the second half of the year and was
heartened by initiatives like the $10m loan guarantee.
The $10m, channeled through the United States Agency for International Development (USAid), was intended to encourage private investment in small enterprises. USAid has committed to providing 50% cover on losses incurred by investors in start-up technology and black-owned enterprises in a fund managed by Kingson Capital, the Durban-based venture capitalists.
Jessye Lapenn, chargé d’affaires at the US mission in South Africa, told guests that compared with other countries SA’s small and medium-sized enterprises contributed a relatively small slice of gross domestic product and employment.
USAid hoped to help change this and so stimulate job creation, especially among young people, through its guarantee.