Mboweni has a mountain to climb at Davos summit

Ex Afrika semper aliquid novi (Out of Africa, always something new) reads finance minister Tito Mboweni’s Twitter bio, and he will certainly have to pull something out of his hat at the UK-Africa Summit and Davos if he hopes to bring investors home with him.

Mboweni, International Relations and Cooperation Minister Naledi Pandor and Trade and Industry Minister Ebrahim Patel’s Sisyphean task will be trying to convince investors that electricity supply was stable while the performance of the economy, widely estimated not to go above 1% in 2020, was growing despite the International Monetary Fund dropping SA’s GDP growth to an expected 0.8% this week from 1.1%.

Earlier this month, the World Bank raised its estimation from 0.4% in 2019 to 0.9%.

Economist Thabi Leoka said she believed Mboweni needed to be honest about the state of South Africa’s economy and fully explain the deep issues hampering economic growth.

“This sets the tone. I then expect him to lay out the plan to get the SA economy out of the hole it finds itself in,” Leoka said.

“Many of the issues are in the National Treasury’s policy document. These include developing network industries – Agriculture, Manufacturing, Transport and Mining, the reduction of youth unemployment, rebuilding the SOEs and dealing with youth unemployment.”

Leoka noted she would like Mboweni “to speak in unison with other African leaders so the continent is viewed as a market versus just SA.

“He should mention the Africa Free Trade Agreement which will create the largest trade union in the world,” Leoka said.

“There are great opportunities for business and trade for the UK and African countries. As the UK is exiting the EU this year, I expect him to emphasise on forging new trade partnerships with the UK.”

Bureau for Economic Research (BER) chief economist Hugo Pienaar said there was a lot of negativity surrounding South Africa, “and of course for good reason most of the time”.

“Of course, some of that is second-hand information or rumours, so I think it is good for investors to interact with the actual policy makers, or the decision makers, and hear their story of what government and the business sector is doing to improve SA’s fortunes.”

Profile Group MD Nic Oldert noted this week when South Africa “entered the new millennium in January 2000 there were over 650 companies listed on the JSE”.

“Today, excluding suspended counters, that number has fallen to below 340,” Oldert said in a newsletter.

As for why this was so, there was no simple answer, Oldert maintained.

“The relatively onerous requirements and costs of listing are just two of the challenges.

“One problem for the exchanges might be that there is plenty of risk capital to be had nowadays – a whole industry has developed, in fact, encompassing angel investors, venture capitalists and private equity firms,” said Oldert.

In November, President Cyril Ramaphosa managed to secure pledges of R200 billion from local and international business at the second South African Investment Conference.

SA is looking to raise R1.2 trillion in new investment over the next five years.

Pienaar said it would be good for policy makers to hear investors’ concerns and why they were not investing to a greater extent in SA.

“There is a lot of competition for investment,” Pienaar said.

“Our strengths are having a president who understands we need lots of foreign investment for growth, the two investment summits show we are open for business, fairly good infrastructure, and using us for a gateway into the rest of the continent.”

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