US investors are committed to the Rainbow Nation
While the journey ahead will not be easy, SA is seen by the US as a country on the rise, writes Scott Eisner
The story of US investment in Africa is often overshadowed by the large sums of foreign capital arriving from China, the EU, and Turkey. We hear billion-dollar figures being tossed around, but it is hard to pinpoint who, exactly, is benefiting from these large investments.
However, when the American private sector invests in a market, it is for the long haul and directly benefits the people of Africa, providing much-needed skills transfer, job creation, and certainty.
That is why US companies have, historically, maintained a strong presence in SA. For more than 100 years, GE has helped build power and transportation infrastructure. John Deere has significantly boosted the region’s agriculture market for more than 50 years; and Pfizer has been providing South Africans with life-saving drugs for decades.
Today, more than 600 US companies are investing in SA, generating more than 10% of the country’s GDP.
Billions of dollars of foreign direct investment (FDI) from the US have flowed into SA over the past 25 years, creating tens of thousands of jobs, adding value to an already impressive manufacturing sector, and helping lift thousands out of poverty. But, this is only half the story: we must not overlook the investments being made in the US by SA companies, such as Sasol, amounting to billions of dollars.
According to an African proverb: “If you want to go fast, go alone. If you want to go far, go together.” These words still ring true. Truth be told, we can do more to increase trade and investment opportunities in SA, but it will require a lasting commitment from both the public and private sectors in both countries.
The US Chamber of Commerce, representing the interests of more than 3-million companies, is taking up this call through the revitalisation of its US-SA Business Council. As a long-term commitment by the business community, the goals of the council are three-tiered: to enrich investment and trade between the US and SA; to serve as a platform for commercial engagement at the most senior levels of business and government; and to enhance investment across Southern Africa.
By 2025, the council will be working to expand the presence of US companies operating and investing in SA to more than 1,000, surpassing 15% in overall GDP contributions.
While optimism is on the rise in SA, we must be pragmatic about the journey ahead. Every market has its challenges and SA is no exception. Poverty, income inequality, and unemployment have taken a toll on the country for far too long.
The nation needs to clarify laws regarding property rights, broad-based BEE, and its visa policy, to name a few. Furthermore, the SA government has an opportunity to take a fresh look at long-standing issues that impact FDI, such as improving the rule of law and strengthening intellectual property (IP) and ownership rights.
Despite these challenges, the outlook for future investment and opportunity in SA is bright. Under President Cyril Ramaphosa’s leadership, there is renewed interest in SA by investors around the globe, and US companies are no exception. Buoyed by its well-developed physical infrastructure and strong capital markets, SA has all the markings of an economy on the rise.
• Eisner is the president of the US-Africa Business Centre and senior vice-president of the US Chamber of Commerce.