Building a foundation  for investment

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Normally, this is the time of year when we bring together investors from across the country and around the world for the annual South Africa Investment Conference.
 We held the first Invest-ment Conference in 2018 as part of our ambitious drive to raise R1.2 trillion in new investment over five years. The conference was atten-ded by over a thousand delegates in 2018 and 2019, and in 2020 was held in a hybrid format due to the COVID-19 pandemic. Together, these confe-rences raised just over R770 billion in investment commitments across a wide range of economic sectors. The fourth South Africa Investment Conference would have been held in November 2021, but we decided to move it to March 2022 due to several other events taking place at this time. These include the local government elections, the COP26 climate conference and the Intra-African Trade Fair. Another important reason for holding it next year is that there will be far greater COVID-19 vac-cination coverage by then, making both travelling and gathering easier.Although the fourth Investment Conference has been held over by a few months, our ambitious investment drive conti-nues. Even in the midst of the challenging economic environment caused by the COVID-19 pandemic, which was exacerbated by the vio-lence and destruction that occurred in parts of Kwa-Zulu-Natal and Gauteng in July, companies continue to make good on their commit-ments and to look for other investment opportunities in South Africa. In the last year alone, nearly R120 billion of investment commitments flowed into project con-struction or expansion. This means that around 38% of the total investment com-mitments – or R290 billion – have to date flowed into the economy. Some invest-ments have been delayed due to COVID-19, particu-larly in hard-hit sectors like property development and tourism. Pharmaceuticals is an exciting new area of growth. Aspen Pharmacare recently launched its R3.4 billion expansion, which it announced at the 2018 Investment Conference. This investment has turned Aspen’s Gqeberha manu-facturing facility into one of largest global manufac-turing hubs for general anaesthetics and has also provided capacity over 100 million doses of the Johnson & Johnson COVID vaccine have been produced under contract.The World Health Orga-nization also chose South Africa to host an mRNA vaccine manufacturing hub with the Biovac Institute, which is a public-private partnership with govern-ment. South African-born Dr Patrick Soon-Shiong and his company Nant-Works recently announced an ambitious initiative to build capacity for advanced health care in Africa. In addition to the investments they will bring, these developments will also contribute to our collective ambition for the continent to manufacture 60% of its vaccine needs by 2040.Energy is another area of growth. The 25 prefer-red bidders in the fifth round of our Renewable Energy Independent Power Producer Procurement Programme are together expected to invest around R50 billion into the eco-nomy. The increase of the licensing threshold for embedded generation to 100 megawatts is likely to result in substantial private investment in electricity generation projects. South Africa has recently secured an initial commit-ment of around R131 billion to fund a just transition to a low carbon economy by investing in renewable energy, green hydrogen and electric vehicles. This commitment by the United States, United Kingdom, France, Germany and the European Union is in line with the Paris Agreement, which obliges wealthier countries to support decar-bonisation in the developing world. These energy investments will help us overcome the debilitating load shedding that the country is currently experiencing, as new elec-tricity generation capacity comes online. Several new investments in datacentres and undersea cables will not only bring in new investment, but will provide the infrastructure needed for the growth of technology and telecommu-nications industries. An important part of our investment drive are the far-reaching structural reforms we are undertaking in areas such as energy, telecommu-nications, water and ports and rail. These reforms will improve efficiency and competitiveness, bringing down the cost of doing busi-ness in South Africa, and encouraging greater private investment in our economic infrastructure. We now have 13 special economic zones across the country, providing investors with targeted investment incentives, preferential tax rates and export sup-port. These provide an attractive manufacturing base for companies seeking to supply both local and international markets. Their value has increased further with the establishment of the African Continental Free Trade Area, which officially commenced trading at the beginning of the year. While the rate of invest-ment has slowed due to the effects of the pandemic, and several projects have been delayed, the investment drive is beginning to gather pace once again. As we make progress with the implementation of the Economic Reconstruction and Recovery Plan – with its focus on infrastructure, industrial development, employment and structural reform – the environment for investment will improve further.
