As we settle down and adjust to the reality of the political, economic and social instability and uncertainty engulfing the country subsequent to our investment rating downgrades it is important and incumbent upon us that in our conversations and attitudes we do not take a ‘brace-for-impact’ posture but rather put on our life-jackets and paddle to shore instead of lamenting; despite recent concerns by the Reserve Bank regarding the risk of further downgrades to local currency debt and the impact thereof on the stability of the domestic financial system.
This could have a significant impact on the cost of funding and investment flows upon which our sector also depends for its sustainability exacerbated by the low growth global environment we are mired in.
Notwithstanding the foregoing Ernst and Young’s latest Africa Attractiveness report asserts that South Africa remains the largest foreign direct investment (FDI) hub in Africa over the last 10 years. The continent-wide surge in capital investment was primarily driven by capital intensive projects, namely real estate, hospitality and construction, and transport and logistics.
The continent’s share of global FDI capital flows increased from 9.4% in 2015 to 11.4%. This made Africa the second-fastest growing FDI destination by capital. This is something positive around which to build our resilience and outlook as we chart our way through the stormy seas we find ourselves in.
“Investor sentiment towards Africa is likely to remain somewhat softer over the next few years. This has far less to do with Africa’s fundamentals than it does with a world characterised by heightened geo-political uncertainty and greater risk aversion,” says Ernst and Young Africa CEO Ajen Sita.
In yet another study South Africa has been ranked as the fourth most attractive economy for investments flowing into Africa. This is according to the latest Africa Investment Index 2016 by Quantum Global’s independent research arm. South Africa received the number four ranking on the Index because it scored well on the growth factor of GDP, ease of doing business in the country and significant population.
Head of Quantum Global Research Lab, Professor Mthuli Ncube, said Africa offered significant opportunities to invest in non-commodities sectors such as financial services, construction and manufacturing amongst others. Ncube also pointed to structural reforms and greater private sector involvement as crucial factors to unlocking Africa’s true potential.
It is therefore not all ‘doom-and-gloom’ and the foregoing research shows that there is a silver lining out there somewhere. We can only go up from here and it is crucial and critical that as we do so we grow the pie for wider and inclusive socio-economic participation and emancipation through a genuine commitment to transformation, skills development, SMME development and formation of capacity-building partnerships across all sectors and industries.
Master Builders South Africa also supports the National Dialogues that are being mooted by various social and political commentators as we seek to forge a common nationhood for a better and prosperous future.
It is only through constructive engagement that we can build our country so that we become one winning nation that is able to solve its own problems and come up with new and lasting solutions for the progressive realisation of the South Africa that our Constitution and its drafters envisioned. This is a duty we should not take lightly as the vanguard generation.
Bafikile Bonke Simelane