IN THIS WEEK’S BOTTOM LINE

CONTRIBUTED BY GIELIE FOURIE | OVERBERG ASSET MANAGEMENT

After the tough Mini Budget by Min Tito Mboweni, followed by Moody’s downgrade of our economic outlook from stable to negative, we needed good news. After the Springboks’ victory in the RWC, Springbok Ramaphoria hit SA. It was followed by Pres Ramaphosa’s second Investment Conference in Sandton. We have a look at some of the discussions.

Business Climate: Ramaphosa addressed local investors and investors from 22 countries at the second SA Investment Conference. He outlined the steady but sure progress being made to make SA a more competitive investment destination. He said government was in the process of implementing several reforms to improve the business climate and attract further job-creating investments. He made specific reference to the liberalisation of our tourist and business visa systems, cited as major constraints to tourism growth and on foreign companies’ ability to bring in international managers and executives. The business-registration process, which currently takes more than a month, is being overhauled. Ramaphosa promised to reduce the process to hours rather than the day outlined in the pilot project. In addition, securing a water-use licence should take three months in future, rather than three years.

Investment Fund: Progress is being made in setting up an Investment Fund, which will draw on both public and private finance to help close ongoing economic and social infrastructure backlogs. Ramaphosa said the fund would seek to draw on the success of the Renewable Energy Independent Power Producer Procurement Programme, which had facilitated hundreds of billions of rands of investment into mostly wind and solar projects since 2011.

Energy Security: Energy security is being prioritised, with investment in new generation technology to be guided by the recently approved Integrated Resource Plan (IRP) and supported by the restructuring and modernisation of Eskom. Ramaphosa said a new Eskom CEO will be appointed within days. Government is also working on a plan to extend debt relief to Eskom, whose debt burden had risen above R450-billion and beyond a point where Eskom could repay the debt without government support. Anglo American CEO Mark Cutifani said Eskom was a risk to investments. However, Cutifani said there is a clear view within the government of what has to be done at Eskom, with SA forging ahead with the split of the power utility into three independent units of generation, distribution, and transmission.

Broadband Spectrum: The process of releasing high-demand broadband spectrum has been initiated, seen as critical to both creating capacity for growth in the information communication and technology sector, as well as lowering the cost of communications and digital services.
Levelling the Playing Field: Ramaphosa concluded: “We are on a path of removing impediments and constraints to inclusive growth. We have embarked on a path that is illuminated by policy consistency and regulatory certainty, fiscal responsibility, and decisive interventions to stimulate economic activity. The Target: The initial target was to raise R1.2tn within five years. We have raised R663 billion in 2018 and 2019. Ramaphosa made a bold announcement that SA plans to feature in the top 50 countries in the World Bank’s annual ease of doing business report in the next three years. Currently SA is in 84th position out of 190 countries.

2018: At last year’s Investment Conference R300bn was promised – 80% (R238bn) of these promises have already been allocated to 31 projects, ranging from adding production lines at manufacturing plants to exploring new mining operations. Eight projects have been completed, while 17 projects are in the implementation phase. The remaining projects are still in the planning phase. R60bn is going through regulatory clearances. It normally takes many years, and not one year, to go from planning to opening a manufacturing factory or new mining operation. There are critics who says that the numbers are vastly overstated. They may be correct. The bottom-line is that we now have a written and measurable program. And if you can measure it, you can manage it.

Ramaphosa’s Little Helpers: Ramaphosa has gathered a strong team around him. He has appointed an 18-member Presidential Economic Advisory Council (a brains trust) with effect from 1 October 2019. The Council constitutes expertise in international economics; macroeconomics (including fiscal policy and monetary economics); labour economics; economics of education and the economics of poverty and inequality and urban development. Ramaphosa’s economic advisor is businesswoman Trudi Makhaya. Makhaya holds a number of degrees in business and economics, including from Oxford University and the University of the Witwatersrand. Raised in Hammanskraal and schooled at St. Barnabas College in Bosmont, Johannesburg, Makhaya went on to study at Oxford where she read a Masters and an MBA. She added a second MSc. Ramaphosa has also established an investment and infrastructure office, to be headed by former Gauteng MEC for Economic Development, Kgosientso Ramokgopa. He has appointed four Investment Envoys: former minister of finance Trevor Manuel, former deputy minister of finance Mcebisi Jonas, executive chair of the Afropulse Group Phumzile Langeni, and chair of the Liberty Group and former Standard Bank head Jacko Maree. There is also the Public Private Growth Initiative of Roelf Meyer, Johan van Zyl and Nick Binedell. A strong team indeed. Compare this with Zuma’s team of three brothers from India. It will be hard work. Nobody has ever changed the world by working from 9:00 to 5:00.

Read More: Overberg Market Report 12 November 2019