While President Cyril Ramaphosa has achieved some measure of success in attracting investment to South Africa, he will need to spell out the role of the commercial sector very clearly in his State-of-the-Nation (Sona) address this week.
“He should also highlight the factors that undermine this sector’s contribution to the economy and the country’s progress in general,” says Christo van der Rheede, executive director of Agri SA.
Some of the solutions presented in his previous address focus, among others, on building a competent state and restoring the economy by focusing on critical areas and the right basic principles of growth, planning and implementation by government. “The question remains whether any progress has been made in this regard. The answer is yes, there have been successes, but also no – there are areas where no progress has been made.”
According to Agri SA, successes include progress made with the integrated resources plan and, among others, investment in the economy by international companies such as Ford, which intends to invest R14.8 billion. PepsiCo, which earlier this year bought Pioneer Foods, will invest R5.5 billion, while Telkom intends to invest R8 billion in infrastructure throughout the country. Google has confirmed that they will spend R2.2 billion to expand their optic internet connections across South Africa.
“This is good news, but there is an even bigger opportunity – that is, to heed the call of the commercial sector to address the factors that discourage large-scale local investment and involvement in the rollout of commercial and development projects.
“These factors include political stability, policy certainty, affordability and labour flexibility, as well as safety and security, property rights, competitiveness, and the state’s capacity to deliver services.”
Agri SA has also warned against the uncertainty caused by the Expropriation Bill and proposed amendment of section 25 of the Constitution. “Economic theory and history confirm that certainty in terms of property rights plays an important role in attracting investment, which in turn leads to economic growth and widespread prosperity in the long term.”
