The South African government has had to walk a tightrope this week, between securing new pledges for investment without threatening existing lucrative investment in the economy, because of its stance on solving the energy crisis.
The 5th South African Investment Conference (SAIC) which concluded on Thursday, surprised many when it reached R1.51 trillion in pledges, overshooting the government’s initial R1.2trl target by 26%.
President Cyril Ramaphosa said this had been a watershed conference since the first phase of the national investment mobilisation drive was now concluded, following disruption caused by the Covid-19 pandemic, floods and civil unrest.
Ramaphosa emphasised the importance of the collaboration between the public and the private sectors, adding that the government was working on plans to overhaul the work visa regime to boost investment, and attract required skills into the country.
He said that by leveraging the South African economy’s strengths and unique value proposition, the government would attract higher levels of investment.
“For us to have been able to meet our five-year target despite major challenges and disruptions, including the pandemic, is no mean feat,” Ramaphosa said.
“We need to see the achievement of our initial five-year target as an opportunity to deepen our collaboration to achieve even more ambitious targets in future.
“The success of this first phase must be a springboard towards a recovered, reconstructed, inclusive new economy.
“As government and the private sector, we have proven ourselves capable of moving forward together, of working in unison in pursuit of the common good.
“We did so exceptionally during the pandemic, we have done so with this investment drive, and now aim to replicate this collaboration as we address challenges with energy and logistics.”
Ramaphosa said the investment commitments made to date had already resulted in substantial investment in the productive economy, with almost 70% of the total number of projects announced since 2018 being either completed or on their way to completion.
He said approximately R460 billion of capital had been invested in building new factories, purchasing equipment, constructing roads, sinking mine shafts and rolling out broadband infrastructure to date.
The 2023 conference attracted some of the country’s biggest corporations as well as interest from around the world, including countries like the Gulf Cooperation Council’s members in the Middle East, Canada, Belgium, Turkey, China, Germany, and the Czech Republic, among others.
It saw investment pledges across a range of sectors, including R25.9 billion from the New Development Bank, R1bn investment by Turkey’s Menar Group in thermal coal mining in Mpumalanga, R4.5bn investment by the Seriti Group in a wind energy project in Mpumalanga.
US-based Moove pledged R284 million investment in e-logistics, while Hive Hydrogen pledged a massive R105bn investment in a green hydrogen production facility in Coega in the Eastern Cape.
Hive’s investment in the Eastern Cape will see not only the construction of a green ammonia production plant, but the company also has plans to construct a seawater desalination plant capable of meeting approximately 50% of the water needs of the Nelson Mandela Bay metro.
UK-based Cassava Technologies pledged R4.5bn in investment over the next 2 years to further expand the company’s data centre capacity, grow fibre network footprint, expand our Cloud and cybersecurity capabilities, and bolster clean energy investments.
Cassava president and group CEO Hardy Pemhiwa, said South Africa accounted for the largest proportion of Africa's industrial gross domestic product with a sophisticated and growing ICT sector.
“The country's unique combination of highly developed first-world economic infrastructure and a stable macro-economic environment, affords businesses like ours a conducive investment environment in which we can partner with government to drive economic development and create jobs,” Pemhiwa said.
However, investors remain concerned about the electricity minister Dr Kgosientsho Ramokgopa’s statements about extending the life of Eskom’s existing fleet of ageing coal-fired power stations.
Ramokgopa has identified the Hendrina, Tutuka, and Kusile power stations as the country’s best opportunity to eliminate load shedding, as these power stations have an installed capacity of 8,854MW, equivalent to eight load shedding stages.
Anchor Capital investment analyst Casey Delport, however, said the idea of lighting up old burnt-out coal-fired power stations did not strike her as the most ingenious, light-bulb flickering moment on the minister’s part.
Delport said that in addition to these policies, Ramokgopa’s clear preference for extending the life of the plants could jeopardise the $130bn (R400bn) investment by international donors that was factored into the Cabinet-approved Just Energy Transition Investment Plan (JET-IP), that envisages an investment programme of R1.5trn over the next five years.
“Unsurprisingly, these latest statements or ideas of intent on the part of the electricity minister have unsettled civil society, business and energy experts alike,” Delport said.
“It is important to note that there is no single solution to South Africa’s electricity crisis, and a combination of approaches will likely be necessary to achieve sustainable energy access. However, with careful planning and investment, it is possible to progress towards a more reliable and sustainable electricity system in the country.
“When all is said and done, a country’s economic prosperity is underpinned by firm confidence, rising levels of productivity and constructive physical and human capital investment.”
BUSINESS REPORT