Trudi Makhaya. Picture: TBG
Trudi Makhaya. Picture: TBG

President Cyril Ramaphosa’s ambitious $100bn investment target must be driven by local investors, his economic adviser, Trudi Makhaya, says.

Speaking to business representatives at the Business Leadership SA (BLSA) offices in Sandton on Wednesday, Mkahaya said: "There is an emphasis on foreign direct investment but the basis of it all has to be local investment."

In April this year, Ramaphosa announced that Makhaya would lead a group of four special investment envoys — former Standard Bank CEO Jacko Maree, businesswoman Phumzile Langeni, and former deputy finance minister Mcebisi Jonas and former finance minister Trevor Manuel — who will raise $100bn in investment over the next five years.

"This is an important priority because without investment we can’t achieve what we want in this economy," Makhaya said on Wednesday.

"However, we can’t be over-prescriptive. We have to enable the market and the private sector to pursue projects that will yield results."

Given the level of investment now, she said, the $100bn would mostly be new investment.

"The past three years or so have been particularly bad for fixed capital formation."

While the government was targeting both private and public sector investment, the emphasis would be on the private sector, she said.

"We are reforming SOEs and we expect investment to come from there," she said. This needed to be done without exacerbating their existing debt ratios and debt burden.

Noting that investment had dropped significantly over the past five or 10 years, she said the government was committed to key reforms to ensure barriers to investment were addressed. These would be announced at the job creation summit in October.

But this did not mean the government was adopting a new policy framework, she said.

Maree said the government was highly leveraged, with a debt to GDP ratio of 56% which makes it difficult to stimulate the economy so the only source is the private sector.

At least $50bn had to be raised locally and hopefully foreigners would follow, he said.

"The common thread is that foreign investors want to benefit from our growth, not create it, so foreign investors take their lead from locals."

Investors were still looking for policy certainty and fewer barriers to entry, he said.