South Africa was outdone by peer economies at the recent UK-Africa Investment Summit, and failed to make much of an impression on investors.
This is the view of Peter Attard Montalto, veteran South Africa watcher and head of capital markets research at Intellidex.
South Africa performed poorly partly because it continued to misunderstand that growth would not come through large, one-by-one investment pledges, but through proper structural reforms that made doing business in a country an attractive prospect.
The UK-Africa Investment Summit is regarded as a major investment showcase.
In an article on BusinessLive, Montalto remarked: The pitch was off but there was a strange belief evident in the countability of individual investments: if you just have more individual commitments from individual companies with rand amounts attached, and more hands on which to count them, you will be fine. In this conception, because a certain company is investing in this industry and another in another industry it’s a sign of life in each industry. Never mind if a handful of other investors have turned down opportunities or become frustrated and put plans on ice.’
What was missing, he argued, was the sense of an ‘X factor’ – a particular competitive advantage that embodies opportunities. South Africa, he said, generated very little excitement. In contrast to some of its more energetic peers, South Africa made little appeal when it came to the possibilities presented by continental economic integration. It seemed to hinge much of its pitch on the imperative of undoing the legacy of apartheid; this was something that was unlikely to be persuasive to investors.
The article concluded: ‘Investors respond to countries with an X factor pitch that shows action, reform and shifting the cost-benefit dial. It’s not difficult. Get it right and you won’t be able to count the pledges.’