South Africa needs to cultivate socioeconomic energy and political stability, with a special emphasis on education and skills development, if it wants to attract additional investment from businesses originating in the European Union (EU). Marc Van Pelt, vicechairman of the EU Chamber of Commerce and Industry of Southern Africa, said that traditionally, the EU bloc of 28 countries had been the largest direct foreign investor in South Africa, accounting for a total of 78% of all foreign direct investment (FDI). “In South Africa, there are about 2 000 EU firms, which employ 500 000 people directly and generate 250 000 indirect jobs. The vast majority are employed in manufacturing and in the automobile industry,” Van Pelt said. Of these EU firms, a significant portion emanate from Germany, the United Kingdom and the Netherlands, and are responsible for a sizeable sum of the country’s export revenues. Van Pelt said business investors were concerned about energy stability and the threat of future load-shedding, as well as the government’s land expropriation without compensation (EWC) policy. An added concern is the difficulties involved in hiring local and foreign skilled workers, and complying with B-BBEE scorecards, given that an important percentage relates to ownership and management. “The world economy is shivering at the moment. The trade wars between US President Donald Trump and China’s President Xi Jinping, along with the recent bombing of the oil refineries in Saudi Arabia, are not helping us move forward – and we aren’t even factoring Brexit into the equation,” he said. “But the situation in South Africa is amplified by local factors such as immigration, EWC and elements like B-BBEE. “We believe that inclusive growth, with representation of the country’s demographics, is a justified approach. But what we are battling with, as EU companies, is that the vast majority of the 600 German companies in South Africa are family-owned businesses and they are not looking forward to transferring shares to local people because of B-BBEE regulations. About 45% of the scorecard is related to ownership and management. “We want to have EU investors coming to South Africa, but we tell them: ‘you can’t own more than 49% of your company.’ And, while land EWC has gone quiet, obviously, if you tell investors after a while that you cannot guarantee that the land on which their factory is built is still going to be their land, the situation will be problematic. It is worrying,” he said. Van Pelt said the country’s immigration policy was also not business friendly as it was difficult to import technical skills required by Industry 4.0, and finding skills locally was problematic because of a mismatch between industry requirements and the skills of graduates that local universities are producing. “We need to be able to bring in technologically skilled people from abroad, and the immigration rules are not always favourable for us to do so. South Africa also needs to get education under control and align it with industry requirements. Education is the cornerstone of future technologies and future investment,” he said. Van Pelt said EU firms had not yet contributed towards the goal, announced by President Cyril Ramaphosa last year, to attract $100 billion in FDI. So far, India, China, the United Arab Emirates and Saudi Arabia have made contributions. He said Ramaphosa had met with German Chancellor Angela Merkel in November last year to discuss FDI. Concerns raised by EU businesses regarding the socio-economic and political situation were also discussed. “If we assume that the EU is ready to invest more than $76 billion in South Africa, the pertinent question that needs to be asked is: where are the skilled blue- and whitecollar workers who can make it happen? It’s nice to say, ‘let’s build a new factory,’ but we need local people to take up the jobs because we don’t want to bring in foreign nationals to do the work that South Africans should be doing,” he said.
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EU business investors are concerned about load-shedding, expropriation without compensation and complying with B-BBEE scorecards. – Mark Van Pelt