SA could receive a boost at the African Development Bank’s Africa Investment Forum this week.

This comes on the coattails of the recent investment conference, where President Cyril Ramaphosa announced that SA will receive a surge in investment of more than R290bn over the next five years; R400bn in investment pledges was also announced.

This is in addition to $35bn in pledges from other countries announced earlier in 2018  that have been earmarked for investment in state-owned companies.

According to World Bank data, SA’s investment-to-GDP ratio  is 18.6%, which is low relative to key emerging markets.

The announcement is expected to  significantly affect Ramaphosa's  $100bn investment drive announced in April, particularly as  he comes under intense scrutiny to show tangible results from his plans to grow SA’s battered economy in the lead-up to the 2019 election.

“Ramaphosa would have had private moments with powerful people and would have been able to push his plan and his ambition for a growing, vibrant economy and that was important,” said NKC analyst Gary van Staden.

Despite the euphoria of the investment conference, Momentum Investments economist Sanisha Packirisamy said that while this is a firm step towards improving sentiment, SA  should reduce barriers to entry and increase competition to ultimately lower costs for consumers, create jobs for South Africans, promote inclusive growth and stimulate regional activity.

As Ramaphosa takes to the podium on Thursday, this will be an opportunity to bolster trade and investment with the rest of the continent.

The inaugural forum,  which will take place from Wednesday to Friday at the Sandton Convention Centre, will focus on infrastructure development and is expected to bring together project sponsors, pension funds, sovereign wealth funds, private investors, policymakers, private equity firms and heads of government to raise capital to advance Africa’s economic transformation agenda.

The forum will be 100% transaction-based, according to the African Development Bank. "The focus is on structuring deals, screening and enhancing projects, attracting co-investors and facilitating transactions to unlock Africa's multibillion-dollar investment opportunities.’’

This also comes after African countries signed the AU’s continental free trade agreement in March, with the goals of creating a single market and customs union on the continent. Minister of trade & industry Rob Davies said earlier  in 2018 that this will result in increasing intraregional trade, develop regional value chains and move the continent to higher and more complex levels of production.

According to the African Development Bank’s African economic outlook 2018, although the continent is brimming with investment opportunities, there is an urgent need to bridge the gap between Africa’s available capital and bankable projects.

The outlook outlines that financing Africa’s development needs will require an estimated annual $600-700bn. Notably,  about $130bn-170bn of this is needed annually for infrastructure.

menons@businesslive.co.za

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