Ramaphosa courts investment as South Africa faces Iran war headwinds

President Cyril Ramaphosa pitched South Africa as a reform-driven investment haven at a time of increasing global uncertainty, as he set a target off attracting R2 trillion ($117 billion) of capital to the country over the next five years.

Improving economic growth, slowing inflation and sweeping reforms position the country as a “credible” destination for investors, Ramaphosa said at the South Africa Investment Conference in Johannesburg on Tuesday.

“We are meeting at a time of uncertainty for the global economy. Geopolitical fragmentation, supply chain disruptions from conflicts and wars and trade tensions are radically impacting global capital flows,” he said. “In such conditions, South Africa presents a favorable proposition as a resilient, credible and reform-oriented investment destination.”

Read: Opportunistic price gouging amid rising fuel prices in SA

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The US-Israeli attack on Iran has jolted South Africa’s economic outlook. The war erupted days after Finance Minister Enoch Godongwana presented a budget that forecast debt will peak this fiscal year after rising for almost two decades, along with accelerating economic growth and slowing inflation.

Godongwana separately said in an interview on the sidelines of the conference that he will reduce a tax imposed on fuel by R3 ($0.18) per liter in April for both gasoline and diesel.

The conflict has also derailed expectations for monetary policy to ease this year, with an almost 50% surge in oil prices expected to lead to a spike in domestic fuel prices. Higher borrowing costs risk weighing on investment just as the government intensifies its push to crowd in private capital.

The conference is the sixth iteration of a forum first introduced in 2018 and which has drawn pledges totaling about R1.5 trillion, with about R600 billion deployed into the economy, according to the government.

Read: Government cuts fuel levy by R3 to curb price shock

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Over that time, Ramaphosa’s administration can point to progress on reforming the economy, including ending chronic power outages that once constrained output, with efforts underway to overhaul freight rail and port infrastructure, key bottlenecks for exporters.

Read: Iran conflict clouds South African economic outlook, Sarb says

“As we seek to deepen our trade and investment relations as South Africa, we remain committed to maintaining policy certainty and to accelerating the momentum of the structural reform agenda that we are on,” Ramaphosa said.

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