South Africa still attractive to investors – for now

With all its constraints and challenges, South Africa still represents an attractive emerging market opportunity, said Aspen Pharmacare senior executive Dr Stavros Nicolaou.

Nicolaou’s comments come in light of South Africa’s annual investment conference on 13 April, where the country exceeded its target by securing R1.51 trillion of new investment pledges over five years.

Aspen Pharmacare was among the many companies that made investment pledges at this year’s conference. 

Aspen is a large-cap multinational pharmaceutical company and Africa’s largest drugmaker. Its headquarters are based in South Africa, with manufacturing operations on six continents. 

Nicolaou told eNCA that the company’s experience investing in South Africa has been good but challenging. 

However, whenever the company encountered a problem regarding its investment, the government was “very accommodating” and attempted to resolve it.

Despite the country’s challenges, it still presents a good investment opportunity and a “gateway into Africa”. 

South Africa has “significant pockets of excellence” and a robust private sector starting to work more closely with the government.

Nicolaou said looking at South Africa in this light turns its constraints into opportunities.

For example, South Africa’s energy crisis, coupled with the government opening up energy into solar, wind, gas, battery and other energy sources, can be seen as an opportunity for the private sector.

“We’re not perfect, but I think we are an important emerging market destination worth looking at.”

Big companies like Vodacom, Anglo American and Heineken SA also pledged billions, with the highest pledge – R105 billion – coming from green energy company Hive Energy.

According to Nicolaou, Aspen has fully executed its previous pledges. The company, therefore, joins 45 completed projects of the 152 investment announcements that have previously been made.

Dr Stavros Nicolaou. SOURCE: World Economic Forum/Jeffery Jones

A warning

Despite the conference’s success, some investors warned South Africa could not rely on its “untapped potential” narrative for much longer.

Anglo American CEO Duncan Wanblad said the untapped potential story “will start to wear thin” unless South Africa can demonstrate tangible actions “in closing the gap between the desire for a country that is growing in an inclusive and transformative way to the one we actually experience today”.

Rand Merchant Bank CEO Emrie Brown also warned that the financial sector has noticed capital moving out of the country.

“The way we see the future of South Africa is that international investment is so important, but it is difficult for us to position the potential of South Africa as an attractive investment destination.”

Brown’s comments echo a recent DFM Global report which found that the latest net foreign purchases of South African equities and bonds reveal substantial capital outflows from local equity and bond markets.

Emrie Brown
Emrie Brown