What was missing from the South Africa Investment Conference 2018?
1 November 2018 CURRENT AFFAIRS
By Mpumelelo Mkhabela
The investment summit succeeded in two ways. Firstly, it was a necessary public relation exercise to reset investor sentiment on South Africa after years of negativity. To a certain extent this was achieved, not only because of the pledges that were made, but also the fact that business and government came together to endorse South Africa as a desirable investment destination.
Secondly, the investment pledges made by business are significant because they will ensure continued dialogue between the companies that made the commitments and government. It is true that some of the pledges made were investments already in the pipeline anyway.
But this does not mean the investment summit was not a success. Having made the commitments in public means the investing companies and government will hold each other to account. The government also undertook to remove regulatory blockages to potential investments. Neither party would want to be seen to dithering.
But two things were missing from the summit. The first was a pledge by South African commercial banks to make it easy for small businesses to access credit. All over the world, small businesses are renowned for their potential to create jobs. Yet, the summit was dominated by big companies. This is not say big companies are not important. They are because they have massive capabilities – financially, technically and otherwise.
The dominance of big companies in our economy means they are indispensable. So, framing their sentiments towards the country is important. But a healthy economy would benefit from a thriving small business sector too. And this is where the banks missed an opportunity. It took e-commerce and media giant Naspers to announce a R4 billion fund for tech start-ups at the summit. This was wonderful news. The banks must come to the party by providing necessary capital for investment by small businesses.
The second issue of concern was the failure of the government itself to pledge to pay service providers on time and to punish officials who sit on invoices even when there is proof of services and products having been delivered. It is strange that corrupt service providers often get paid millions of rands without demonstrable proof of having delivered anything while the hardworking service providers have to wait longer. This hinders their ability to plan and create jobs.
While the jobs summit and the investment summit were both hailed as early success stories of President Cyril Ramaphosa’s administration, it did not make sense to hold these gatherings separately. In future the government should consider holding an “investment jobs summit”, combining both initiatives. Investment and job creation are not mutually exclusive.