President Cyril Ramaphosa brought his branding of a “new dawn” in South Africa to London as he promised to unveil incentives to attract $100 billion in investment.
Ramaphosa, 65, has been working to convince investors that he’s committed to reverse years of economic stagnation, policy uncertainty and looting of state funds since succeeding Jacob Zuma as president two months ago. So far he’s fired some ministers and replaced the boards of several troubled state companies.
“We will have well-crafted incentives that will attract people,” Ramaphosa said Wednesday in an interview with Bloomberg Television in London, where he’s attending a Commonwealth Summit and met with Prime Minister Theresa May and Queen Elizabeth II. “Some of them may well be tax incentives or general industrial incentives.”
Ramaphosa is seeking $100 billion in new investment and this week named four “envoys,” including former Finance Minister Trevor Manuel and ex-Standard Bank Group Chief Executive Officer Jacko Maree, to travel the world seeking commitments.
Earlier at a lunch with investors at Bloomberg’s offices, he said his government is determined to fight corruption.
“We are putting in place measures to clean up,” Ramaphosa said. “It’s going to take some time, but we are at it.”
Yet his effort to sell South Africa as an investment destination has been hindered by the ruling party’s decision to back land seizures. He repeatedly addressed the issue, saying hunger for farmland is rife but his government will respect the constitution as it works to redress the imbalance of ownership.
More than two decades after the end of apartheid, whites still own most of South Africa’s profitable farms, and about 95% of the country’s wealth is in the hands of 10% of the population. The governing African National Congress decided in December to amend the constitution to allow for expropriation without compensation. A parliamentary committee is considering the changes and is due to report back by the end of August.
“We won’t damage the economy,” he said at the lunch. “The land drive should not lead to a reduction in agricultural production or endanger food production.”
A 2017 land audit by AgriSA, a farmers’ lobby group, found that the government and racial groups that were discriminated against under whites-only rule owned 26.7% of South Africa’s agricultural land in 2016, up from 14.9% in 1994. A separate government audit found that whites owned 72% of farmland.
“We want round-table dialogue, a full discussion on the question of land because we want the protection of property rights not to be a protection of property rights to a few people only, like it has been in the past,” Ramaphosa said in the television interview, the first with an international broadcaster since he became president. “Our economy has also been constrained by the fact that the land, which is a powerful resource, has just been reserved for a few. Let us share the land.”
The president said he’s getting positive feedback from investors, and recent gains in the value of the rand indicate improved confidence. After Ramaphosa met May on Tuesday, the UK committed 50 million pounds ($72 million) in funding over the next four years.
“Attracting more investment in the economy is key to boosting growth,” Ramaphosa said.
Total fixed investment in South Africa declined to about 19% of gross domestic product last year, from 24% in 2008, with foreign direct investment dropping to R17.6 billion ($1.5 billion) from R76 billion over the period, government data show.
‘Open For Business’
“The pitch is going to be: ‘we are open for business, we are embarking on reforms that are going to lead to South Africa becoming even more attractive than it has been’,” Ramaphosa said.
He said he’s sticking to his target of 3% growth for this year, which is more than double the 1.4% forecast by the World Bank.
Read: Ramaphosa woos investors with vow to tackle corruption
The rand extended gains as Ramaphosa spoke, advancing 0.4% to 11.927 per dollar by 2am in Johannesburg, the strongest level in two weeks. The currency is up 10% since Ramaphosa was elected as leader of the ruling ANC in December, the best-performing major currency over that period.
“The rand where it is now reflects a level of confidence that the world has in South Africa,” Ramaphosa said. “They can see that South Africa is going somewhere. The exporters from our own country, the stronger rand is not so positive for them, so we need to find a balance. It’s near the balance, not yet quite there, but near the balance.”