EDITORIAL: SA is uninvestable right now, but that can change

“Business investment in SA is on strike until things improve,” Sibanye-Stillwater CEO Neal Froneman said this week in his usual blunt style.

Technically, as it turns out, he was not quite correct. The private sector upped its plans for new investment projects last year, according to Nedbank’s latest survey of capital spending. That was even though the value of new projects plummeted overall, because the public sector cut back dramatically.

But almost all of those private sector investment plans were in new renewable energy or other “green” projects. There, business is desperate to do more, and faster. For the rest, it is hardly expanding. And as speaker after speaker at this week’s Investing in African Mining Indaba emphasised, the opportunities are there — but SA is all but uninvestable right now.

That is starkly evident in the figures for mining, where investment has hardly picked up despite a commodity boom that has seen prices for SA’s metals and minerals soar to highs in the past couple of years. To the extent that the industry has been investing, it is in backup power or in modernising and automating machinery. It is not in expanding the capacity of the industry — or SA’s economy.

Across the economy, fixed investment spending has fallen in real terms for three of the past eight years. It has shown a mild post-Covid bounce but not nearly enough to offset years of decline.

The reasons are plain for all to see. President Cyril Ramaphosa can try to deflect the blame by accusing business (and labour) of “moaning”, as he did at the indaba. But it is the public sector not the private sector that is to blame. SA and its mining sector are uninvestable because of a power crisis which, the Minerals Council estimates, is causing mining operations to run at 20%-30% below capacity. Why would miners invest in more capacity under those circumstances?

It is uninvestable because of a transport logistics crisis which slashed an estimated R75bn off SA’s exports last year, at a time when export prices were booming. It is uninvestable because of pervasive crime which directly affects mining operations, and operations in other sectors too. Add to that an unpredictable policy environment, and a regulatory environment which is cumbersome at best, obstructive at worst.

SA is competing for scarce capital with many other jurisdictions, and that is nowhere more the case than in mining. Froneman and Anglo American CEO Duncan Wanblad were among those who signalled this week that they would be able to invest a lot more if the climate in SA were improved.

Instead of accusing business of moaning, Ramaphosa might want to listen to them and to act with speed and courage to fix everything about SA’s investment climate that is broken.