The following is the “Executive Summary” to the CIS

Since the dawn of democracy, South Africa’s nation has been at work to rebuild and reconstruct the country towards shaping its future. Whilst significant strides have been made since 1994, the triple challenges of unemployment, poverty and inequality remain. The ongoing impact of the Covid-19 pandemic on countries across the globe has had significant and unprecedented effects in terms of its wide-reaching repercussions from a policy perspective. Governments around the world are facing increasing risks and uncertainties as a result of the heightened uncertainty pertaining to emerging debt crises and thus, growing uncertainty in the capacity to implement reforms required for balanced and sustainable economic growth and development.

The developmental agenda for a country like South Africa requires a more rigorous model that integrates cross-cutting principles and fiscal instruments, which in turn lays the basis for a more effective and innovative configuration of fiscal options within alternative investment scenarios that will enhance the country’s development prospects. With this milieu, and now more than ever, one of the most important considerations is that of establishing meaningful and effective partnerships for development, between the public and private sectors working in conjunction with the academic community; donor and multilateral organisations; organised labour and local communities.

South Africa’s inaugural Country Investment Strategy (CIS) aims to position South Africa as a key preferred African investment destination by attracting and facilitating quality Foreign and Domestic Direct Investment into the country, in a well co-ordinated manner, anchored by quality institutions and robust economic infrastructure networks. This is in the country’s important endeavour of advancing its National Development Plan (NDP) target of 30 percent of Gross Fixed Capital Formation (GFCF) to Gross Domestic Product (GDP) by 2030.

The CIS aims to achieve this through: (i) catalysing a new investment model to address current under-investment; (ii) attracting quality greenfield investments into South Africa; (iii) identifying high-impact and high-growth industries which will accelerate contributions to GDP; (iv) supporting existing industries and developing new industries; (v) consolidating and strengthening existing capacity in identified priority sectors through enhancing policy certainty; and (vi) targeting areas of intervention, accompanied by the mobilisation of resources and improved institutional co-ordination. The CIS is importantly underpinned by and aligned to the aspirations and objectives articulated in the NDP, the country’s Economic Recovery and Reconstruction Plan (ERRP), the Re-imagined Industrial Strategy (RIS), Sector Masterplans and the National Infrastructure Plan (NIP) 2050.

Section 2 articulates South Africa’s vision and mission statement as it pertains to the country’s envisioned investment trajectory. Section 3 addresses how the strategy engenders growth and outlines how the strategic objectives of the CIS translate into actionable initiatives from an investment attraction perspective, whilst Section 4 describes South Africa from a political governance perspective in addition to providing a brief overview of the country’s economic and socioeconomic characteristics. The CIS also zooms into the critical role of urban regions with a focus on the country’s eight metropolitan cities. Section 5 clearly establishes the country’s strategic objectives and goals, which are fundamentally based on consolidating and strengthening existing capacity in identified priority areas through enhancing regulatory consistency and policy certainty.

A country’s ability to attract, facilitate and retain investment will play a critical role in advancing its developmental goals. In this regard, Section 6 provides a detailed overview of the determinants of investment and the factors that constitute quality investment; some of which include technology transfer, technology spillovers, employment and employment quality and boosting local firm competition. This section concludes that transparency between government and investors is of critical importance in addition to developing techniques to better measure the various impacts of investment. The categorisation of quality investment is aptly followed by a recommendation to develop a socio-economic maximisation methodology, in Section 7, which considers local conditions, including existing business; local assets; access to resources; local skills and competencies with efforts made to preserve and protect cultural practices, social and political heritage and environmental endowments. This must also include a measurement criterion to better quantify the socio-economic impact of investment over longer time horizons. The country’s priorities and industrialisation ambitions to develop local small, medium and micro enterprises are also articulated.

FDI, in addition to the presence of and investment by globally competitive local firms, plays an important role in strengthening the integration of South Africa into the global economy, improving the country’s international competitiveness and facilitating improved access to foreign markets. In this regard, South Africa has several international agreements that provide an export platform, geared towards driving investment access into local and global markets; further discussed in Section 8. A notable development in this regard is the ratification of the African Continental Free Trade Area (AfCFTA), in 2020; making it the largest free trade agreement since the establishment of the WTO, creating a market of over 1 billion people with a combined GDP greater than USD 2 trillion (UNECA, 2020). A number of important elements of the agreement are underway and South Africa is considering various policy amendments to create an enabling regulatory environment.

Section 9 discusses South Africa’s approach to investment promotion and facilitation within the context of national plans and strategies as well as available services to investors. Critical in this regard are the country’s efforts to create a more competitive business environment, including efforts underway to improve South Africa’s investment climate including the optimal provision of network infrastructure in addition to anti-corruption efforts, as investment enablers. In relation to the country’s investment competitiveness, consideration is also given to research pertaining to incentives in addition to measures recommended to improve the transparency, efficiency and effectiveness of existing incentives schemes. It is important to note that the CIS is not an investment retention and aftercare strategy and an action is recommended to devote further attention to this critical endeavour, particularly in the unprecedented times posed by Covid-19.

A data-driven sector prioritisation model was developed to determine the sectors that should be prioritised from an investment-growth perspective within the context of limited fiscal resources. It is important to note that the aforementioned data-driven sector prioritisation approach is combined with identified strategic investment opportunities by government, known as South Africa’s 5 Big Frontiers; in addition to an alignment with government’s articulated policy priorities. This section also provides an overview of the comparative advantages and relative strengths of South Africa’s nine provincial and eight metropolitan economies. Synergising the results of these three areas have culminated the country’s prioritised sectors to drive investment and economic development, which include (i) finance, insurance, real estate and business services; (ii) transport and logistics; (iii) manufacturing; (iv) mining and quarrying; (v) electricity, gas and water; and (vi) agriculture and agro-processing. This is aptly complemented by South Africa’s 5 Big Frontiers; elevated as Country strategic investment programmes and range from placing South Africa at the global forefront of green hydrogen production to commercialisation opportunities for cannabis production.

Due to the critical importance of quality institutions, Section 10 concludes with an overview and rigorous analysis of South Africa’s regulatory landscape and considers mechanisms to improve investment co-ordination in and amongst the country’s Investment Promotion Agencies (IPAs). Sections 11 and 12 reflect on implementation and risk identification and mitigation mechanisms. The implementation framework outlines the actions required to realise the CIS goals and objectives in a coherent, diligent and systematic manner. The CIS seeks to close the gap in South Africa’s investment efforts by addressing the absence of structured co-ordination across various mandates and processes relevant to mobilising and enabling investment. Marketing and communicating the CIS is of critical consequence and will be tailored to various audiences, across sectors and geographies. The CIS gives effect to the NDP, which recognises investment as a prerequisite for inclusive growth.


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