THE BOTTOM LINE
Hats off to government for making Mercedes welcome
Unlike in mining and petroleum, the govt’s Automotive Production and Development Programme has been a success
The R10-billion investment by Mercedes–Benz in its East London plant is a breath of fresh air for the struggling South African economy.
Despite being a massive sum, though, it is also only about 1% of the $100-billion that President Cyril Rampahosa wants invested in SA over the next five years.Ramaphosa’s economic adviser, Trudi Makhaya, has told South Africans this target must be driven by local investors, so there is a need for a sea-change in attitudes towards the country – from within.
Inward investment was always going to define the trajectory taken after 1994. But 10 agonising years of state capture under former president Jacob Zuma has led to a mountain of private sector cash being withheld from fixed capital investment in SA.
Makhaya says the past three years have been particularly bad for fixed capital formation. She also says the state cannot be over-prescriptive in terms of new investment and will have to enable the private sector to pursue projects that will yield results.
One of Ramaphosa’s four special investment envoys, former Standard Bank CEO Jacko Maree, says high government debt makes it difficult for it to stimulate the economy. To this end, at least $50-billion has to be raised by SA’s private sector and hopefully foreigners will follow.
But investors need policy certainty, Maree says. Unlike policy in the mining and petroleum industries, the government’s Automotive Production and Development Programme has been a singular success.