Greenfield foreign investment into Africa has been hit hard by the pandemic. Data tracked by fDi Markets shows that annual project announcements across the continent have more than halved since the onset of Covid-19. But investment into its biggest recipient of foreign direct investment (FDI), South Africa, has remained relatively steady.
Yunus Hoosen, acting head of Invest South Africa, spoke with fDi about the programmes and reforms helping the country buck the regional trend, and how the agency supported investors through the July 2021 riots — the worst civil unrest in South Africa in decades.
Advertisement
Q: How has South Africa defied the continent’s recent FDI slump?
A: We’ve been working on the government’s ambitious programme announced in 2018 to mobilise R1.2tn ($78bn) in investment over the following five years. Domestic and foreign investors have already pledged around R776bn across 152 projects, and some 40% of those commitments have been funded, which is great given two years of Covid challenges.
During the pandemic, South Africa kept its global business services sector open and continued servicing international markets. That enhanced our value proposition as a reliable destination and allowed us to attract further investment.
Q: Since 2018, the government has pursued reforms to ease doing business. What are the most significant to-date?
A: We’ve developed an online platform called BizPortal that allows entrepreneurs to register companies within a day. The city of Johannesburg has launched an online construction permitting system that replaces the need to queue at different government agencies. And tax collection has become simpler, faster and more digital.
As part of the economic response to Covid-19, the government unbundled energy utility Eskom into an independent transmission and market operator, which will scale-up and fast-track investment into grid capacity and generation. It also made the Transnet Port Authority an independent subsidiary of the state logistics firm Transnet, meaning it is now able to attract investment into ports.
Advertisement
Having regular, personal contact with CEOs makes them know there is someone in government they can call, email or WhatsApp and get a response that assists them ASAP
Q: Studies show that social unrest is rising worldwide, yet South Africa has endured this for decades. How do you support business continuity against this backdrop?
A: We’ve deepened investor facilitation and aftercare, and became a focal point in the government and private sector. We’ve established virtual one-stop-shops in each of South Africa’s nine provinces through which we can provide updated information, including on disaster management, by the hour.
During the July 2021 unrest, we set up investor hotlines and contacted companies directly to understand their issues and how to mitigate them. Critical plants were destroyed; so, for instance in the packaging industry, we introduced companies to alternatives that we brought up to speed to ensure production continued. For other companies, it was about unblocking and fast-tracking things at the port. It’s getting down to that minute detail and working for the company, but from a government perspective. Having regular, personal contact with CEOs makes them know there is someone in government they can call, email or WhatsApp and get a response that assists them ASAP.
Q: South Africa topped fDi’s African tech ecosystems of the future ranking. How important is this sector to the country’s economic development?
A: It’s a critical component in our post-industrial aspirations and important in terms of start-ups, women in business and youth job creation. South Africa has a deep venture capital network, cyber security and data laws in line with global standards, and hubs like Cape Town and Johannesburg that have the infrastructure and talent. Naspers has founded a fund to support tech start-ups, and other companies are looking to do something similar. Multinationals are also establishing data centres here. The most recent is Oracle, which in January opened its first African cloud region in Johannesburg.
Yunus Hoosen is the acting head of Invest South Africa, a branch of the Department of Trade, Industry and Competition.
Follow the links to find the full archive of the fDi Diaries and Virus Diaries series.
If you are a member of the economic development and investment promotion community and would like to be part of the next iteration of the fDi Diaries series, please reach out to fDi@ft.com.