At a busy investment conference in Johannesburg in October, a procession of international business leaders took to the stage alongside President Cyril Ramaphosa to unveil billions of dollars worth of projects in South Africa.
From factory openings and restaurant chain expansions to support for the crucial mining, auto and telecoms industries, the pledges were tailor-made with one goal in mind--to support Ramaphosa's eye-catching plan to attract $100bn in new investments.
As South Africa flounders amid recession, high unemployment and the resignation of finance minister Nhlanhla Nene, the investment target has assumed critical importance for a president desperately in need of good news to bolster his economic reputation in the run up to 2019 elections. With so much at stake, the government is aggressively promoting the scheme as a way to reignite the waning business excitement that greeted Ramaphosa's accession to the presidency.
Ramaphosa says that the government is over halfway towards its total, with $20bn announced at the Johannesburg conference alone and billions more emerging from bilateral meetings with international partners. The list of planned investments is replete with big names, among them Nestle, McDonald's and Vedanta, all of whom have pledged to expand their footprint in the country in the years ahead.
Are the pledges really new?
Yet critics question whether the target is attracting an inflow of new capital or merely recycling previous pledges to distract from poor growth and slow-moving structural reform. Government ministers have moved to dispel suggestions that many of the investments are pre-existing expansion plans or that the multi-year nature of some of the investments could allow companies to renege on pledges if the growth outlook continues to sour.
"These are firm investment commitments, not just pledges," insisted trade and industry minister Rob Davies in an interview with local media. "A number of business leaders have stood up before the president and made these commitments, and I do not think they would go back on their word."
The reality is likely to be more mixed. While some investments appear set to break new ground--Proctor & Gamble says it will earmark R300m ($21.1m) for a new plant while local drug firm Aspen intends to boost its factory with a $232m investment--other pledges will sound wearily familiar to those with exposure to the South African market. Despite their inclusion in the scheme, the expansion...