Letter: Actions speak louder than words - Business Day

Public works minister Dean Macpherson’s proposal to use R200bn of public money to catalyse private sector investment in infrastructure is welcome, particularly given SA’s declining domestic investor confidence and fiscal limits (“State dangles R200bn for infrastructure overhaul”, January 17). However, promises to “turn SA into a construction site” have yet to materialise, and this announcement must not become another unfulfilled pledge.

For all the commitments to boosting economic growth, fixed investment, which is the foundation of an economy, has been declining since 2008. Private sector investment has long carried the weight in driving growth, accounting for about two-thirds of total fixed investment since the 1990s. This contribution has declined with weakening investor confidence.

Amid this decline, SA’s rate of gross fixed capital formation (GFCF) — a tangible measure of investor confidence — brings the scale of the challenge to the fore. The National Development Plan set a target of 30% of GDP for GFCF by 2030. Since 1994 the highest level it reached was 21.6% in 2008. The latest available GCFC rate was in 2023 was just 14.9%.

The minister’s proposal to run pilot projects in four municipalities with clean audits is a promising first step to win back investor confidence. But it is insufficient on its own. To attract R5 from the private sector for every R1 of public sector investment, the private sector needs to be assured it isn’t subsidising failure. It needs an investment-friendly climate that can yield high returns. Such an economic environment is contingent on strong property rights and steering clear of politically charged “transformation funds” and antimarket policies that dilute the efficiency of investments. It will all be in vain should the Expropriation Act be implemented.

We can no longer afford to rely on vague promises of improvements to sell the country as an investment destination. Any financial commitments must be matched with a genuine commitment to substantive reform — and visible action.

Anlu Keeve
Institute of Race Relations

https://www.businesslive.co.za/bd/opinion/letters/2025-01-28-letter-actions-speak-louder-than-words/