LONDON — Foreign Direct Investment in South Africa nosedived under the rule of President Jacob Zuma, from a record level of $8.3bn in 2013 to $2.3bn in 2016. There has been a recovery to $7.1bn dollars in 2018 according to the latest UNCTAD report. President Cyril Ramaphosa has set himself the target of raising a $100bn in foreign investments by 2023 and judging from his appearances at Davos and his visit to India, political leaders and business men are clearly charmed by Ramaphosa. However, it is not going to be enough, he will have to address their concerns about infrastructure, visas, electricity supply and decisive action on corruption and as Daily Maverick’s Rebecca Davis reports in the case of India, ensure direct flights from Johannesburg to Mumbai. This was the route that was ‘stolen’ from South African Airways. – Linda van Tilburg
By Rebecca Davis*
One of the quirks of India’s Sunday newspapers are the pages of classified ads devoted to finding matrimonial matches. Here, the parents of single men and women seeking spouses will buy space to sing the praises of their offspring to the world.
“Highly respectable family invites proposals for their only son, 37 yrs, 6’1, handsome, CEO,” runs one typical advert.
“Seeking fair, beautiful B.Tech/MBA/Dr girl from a high-status cultured family.”
In January, Team SA has been carrying out the diplomatic equivalent of publishing one of those marriage ads in the Indian Sunday newspapers. To Davos and Delhi, officials have lugged suitcases filled with pamphlets extolling the virtues of South Africa as an investment destination.
In 20 bullet points, the pamphlets list all the factors that make South Africa so investor-friendly: sound banks; an advanced financial services sector; a strong legal system; a “large pool of trainable labour” (alternative translation: “spiralling unemployment problem”).
Attracting foreign investment is absolutely key to President Cyril Ramaphosa’s plan to kickstart the sluggish South African economy. It’s a role Ramaphosa was born to play. The president was reportedly fawned upon during his trip to Saudi Arabia in July 2018, where businessmen recognised in him a fellow businessman – and Ramaphosa boarded his plane back from Jeddah with a $10bn investment commitment.
In Delhi last week, Ramaphosa similarly appeared to have an Indian business delegation eating out of his hand. Indian mining magnate Anil Agarwal referred to Ramaphosa at a South African-Indian business forum as “one of the most handsome personalities today”.
Ramaphosa returned the praise in equally hyperbolic fashion at the same event.
“The relationship between South Africa and India is the best in the world,” he declared. “There is no country that relates to us like India.”
But beyond the elaborate compliments, India’s potential investors in South Africa weren’t about to simply shake out their wallets at Ramaphosa’s say-so.
To quote International Relations Minister Lindiwe Sisulu:
“The Indian government did express its concerns,” when it came to foreign direct investment in South Africa.
We now know that the Indian government only took South African state arms company Denel off its blacklist to do business with in 2018, having previously ruled out Denel as a partner on the basis of corruption allegations.
Issues raised by India’s private sector investors with Ramaphosa and his Cabinet ministers, meanwhile, included South Africa’s inadequate infrastructure and internet connectivity, delays in procuring visas and the uncertainty around South Africa’s electricity generation and supply.
At the root of most of these challenges is the corrosive effect of the corruption which flourished under the administration of former president Jacob Zuma.
This is a topic about which Ramaphosa has been upfront with potential investors. In Davos, he reportedly referred to the “nine lost years” of governance under Zuma.
In Delhi, Ramaphosa responded to the concerns of Indian business people by admitting:
“A few years ago, we lost our way. But we have found our way back.” The president continued: “Our institutions were infected by a spate of corrupt activities. We are getting out of that.”
A similarly forthright tone was struck by Public Enterprises Minister Pravin Gordhan, speaking to Daily Maverick and other news outlets on the sidelines of the Delhi investment drive.
When it came to a company such as Denel, said Gordhan, it was clear that there were many international opportunities ahead, but also much work to be done to put the company back on its feet after years of maladministration.
“And again, this is how much damage State Capture has actually done. It’s decimated that institution. We have to rebuild it, reposition it and seize that opportunity,” Gordhan said.
Similarly, business between India and South Africa would be an easier sell if there was currently a direct flight between the two countries — but State Capture put an end to that too.
“There was a direct route. It was stolen from South Africa,” Gordhan said flatly, in reference to the Gupta family’s role in ending South African Airways’ lucrative Johannesburg-Mumbai flight in order to favour a competitor airline.
So what do you do as a South African president trying to convince the world that the effects of State Capture can be reversed and that any current and future investments are totally safe?
You promise them whatever they need to hear.
Want a direct flight from South Africa to India again?
“If that is your dream, we will fulfil it,” Ramaphosa told prospective Indian investors.
Worried about South Africa’s electricity situation?
“At no cost will we allow Eskom to fail,” the president reassured his audience.
In general, said Ramaphosa:
“South Africa is back to good ethical adherence and good governance”.
Those are bold claims, particularly in light of the testimony continuing to be brought before the Zondo Commission.
Yet Ramaphosa has no choice but to give such assurances if he is to meet the ambitious foreign investment target set by his own administration, which aims to see $100bn raised.
“We still have a good $80bn to go in the next four years,” Ramaphosa said in Delhi on Saturday.
Surveying some of India’s wealthiest business people as he spoke, the president added:
“I can see, I can smell, I can almost touch those people who are going to help us. If you want me to go touch them, I will even do that.”
DM
- Rebecca Davis was covering events in India as part of a media delegation invited by the Presidency.
