PwC gives Ramaphosa's investment drive the thumbs up

President Cyril Ramaphosa’s investment drive is expected to give GDP a meaningful boost and make a dent on the unemployment figures, PwC says.

According to a PwC report released on Wednesday, the R290bn influx in investment will add R338bn to GDP over the next five years, create 165,000 direct and indirect jobs per year, and will generate an estimated R59bn in additional government revenue.

At an investment conference at the end of October, Ramaphosa announced that SA will receive a surge in investment of more than R290bn over the next five years from local and international companies. R400bn in investment pledges were also announced.

This comes after Ramaphosa set an ambitious goal of raising $100bn over the next five years in April.

“The investment pledged is expected to support long-term economic benefits for SA, including stronger real GDP growth, the creation of jobs and generation of additional tax revenue,” the report read.

“The continued investment in SA would assist in reducing unemployment, poverty and improve people’s lives, which, in turn, would also support long-term economic growth.”

The report also estimated that the investment would enable about R468.8bn in potential production from 2025 to 2035 which would then add an estimated R505bn to SA’s GDP, create and/or sustain an estimated 116,000 direct and indirect jobs per year, and generate an estimated R133bn in government revenue.

In April, Ramaphosa said the investment initiative was a response to the drop in total fixed investment in SA from 24% of GDP in 2008 to 19% of GDP in 2017, and foreign direct investment (FDI) inflows dropping 77% in rand terms over the same period.

“This is indicative of the fact that the South African economy needs significant investment stimulus,” the report said.

The National Development Plan aims for total fixed investment to rise from below 20% of GDP at the start of the current decade to 30% of GDP by 2030.

“The most important factors affecting South Africa’s FDI inflows over time were the quality of governance, political stability and property rights — all hot topics in the country at present. Other key factors explored in the report include trade openness, efficiency of government regulation, safety and security, quality of infrastructure, control of corruption and policy continuity,” PwC said.

It warned, however, that this analysis is based on the assumption that all investment pledges are translated into real investments.

“Investment pledges will only translate into actual investments if a supportive business environment, policy certainty and political stability are in place.” 

menons@businesslive.co.za