South African President Cyril Ramaphosa declared himself in economic “repair mode” at a major conference on Friday as he sought billions of dollars from foreign investors to haul the country out of recession.
The former union leader, who inherited a mismanaged economy from the scandal-plagued Jacob Zuma earlier this year, wants $100 billion of new investments over the next five years. He has already secured pledges for around $35 billion, mainly from China, Saudi Arabia and the United Arab Emirates.
South African e-commerce giant Naspers said it would invest 4.6 billion rand ($315 million) over the next three years in its technology businesses and to fund technology start-ups. Drug maker Aspen Pharmacare also said it would invest 3.4 billion rand to manufacture sterile anaesthetics at its Port Elizabeth plant.
Ramaphosa has made reviving the economy a top priority since assuming power in February, but he has been hampered by fiscal constraints and infighting in the ruling African National Congress.
“We are here to build a country driven by enterprise and innovation,” Ramaphosa said in his opening speech to the investment conference which will look at opportunities in sectors including agriculture, manufacturing and energy.
“We are in repair mode,” he added.
Investors welcomed Ramaphosa’s rise to the presidency partly due to his strong ties to the business community. Since then, however, the economy has sunk into recession and faced a series of downbeat data.
His government’s policy of land expropriation without compensation, aimed at addressing racial inequalities that remain more than two decades after the fall of apartheid, has also unnerved investors.
Ramaphosa tried to soothe their concerns about the land redistribution policy. “I want to reaffirm that South Africa is very, very committed to property rights,” he said, without explaining how this could be achieved.
The investment conference follows a jobs summit earlier this month at which Ramaphosa announced a wide-ranging set of deals between government, big business and labour which he said would create 275,000 more jobs a year.
Under pressure over his track record on the economy, Ramaphosa has also unveiled a “stimulus and recovery plan” which earmarked funds for job creation and infrastructure development.
The scale of the challenge facing Ramaphosa was underlined by Finance Minister Tito Mboweni’s bleak medium-term budget speech on Wednesday, when he unveiled weak growth forecasts and deficit estimates.
Compounding the challenge, Moody’s said in a research note that the weaker fiscal outlook outlined by Mboweni was a negative factor in South Africa’s credit outlook.
Moody’s is the last of the top three agencies to keep an investment grade rating on South Africa. The agency is expected to issue a report on this soon.
The rand turned weaker after Moody’s report was released.
“The market is concerned that we could see a possible downgrade from Moody’s but this might present a buying opportunity for long-term investors who can stomach the risk and believe that the economy has a chance of a strong recovery,” said Grant Giburt, portfolio manager at Nedbank Private Wealth.
Ramaphosa said the economy was at investment grade, but it had been much tougher to repair than he first thought.
“I’m willing to argue my case with them and say ‘look at us anew… we are turning this ship around’. Admittedly we will not turn immediately but it is on the way to turning,” he told Bloomberg television, referring to the ratings agencies.