Investment Paper identifies key challenges, European Union opportunities for trade

Johannesburg: 29 October 2019 – Some of the key issues faced by European Union businesses in South Africa have been highlighted in an Investment Paper, looking at sentiment and highlighting enormous opportunities for trade with the EU.

The Investment Climate in South Africa Discussion Paper was released today at a forum at the Maslow in Sandton under the auspices of the European Chamber of Commerce and Industry Southern Africa.

According to Chamber President Diego de Radigues, the paper affirms the deep commitment of EU businesses in the country to South Africa, as well as exploring the potential to further enhance capital inflows especially from smaller EU companies, contributing to know-how transfer and the widening of skills base of South Africans.

“EU business acknowledges the improvements achieved so far and remains ready to work together with the South African Government to find solutions to the challenges identified in this paper,” he says.

The paper identifies five key investment climate issues:

  1. South Africa could dramatically improve investor confidence through a set of measures enhancing investment protection.
  2. A re-shaping of certain B-BEEE requirements would trigger increased FDI flows; especially from smaller EU companies and at the same time promote skills and technological transfers into SA.
  3. A re-calibration of procurement policies should be considered to achieve the intended policy goals related to transformation without hurting productivity and South Africa’s competitiveness. If EU businesses have a level playing field, they can boost local manufacturing capabilities all along the value chain.
  4. Skills constraints can be tackled through a combination of short-term solutions such as the easing of immigration regulations and long-term reforms in education.
  5. South Africa should remove regulatory hurdles for the benefit of Independent Power Producers (IPPs) and Public Private Partnerships (PPPs) to resolve infrastructure constraints.

De Radigues says the EU remains South Africa’s first trading and investment partner, accounting for 25% of SA’s trade and 75% of its FDI. EU Business has created 500,000 direct jobs.

“EU business acknowledges the progress made by South Africa, in particular with the advancement in addressing governance issues in critical State-Owned Enterprises (SOE) as well as the recent publication of the revised IRP Update plan,” he adds.

But EU businesses remain concerned with regard to the conditions of doing business in SA.

The Paper was prepared for the Southern Africa Europe CEO Dialogue 2019 (Ambrosetti Forum) and to coincide with the South Africa Investment Conference 2019.