The government delegation attending the World Economic Forum (WEF) annual meeting in Davos, Switzerland, this week will present a strong investment case for South Africa.
In the briefing before the trip, Finance Minister Tito Mboweni said he was confident they would.
Of course he should be.
At the highest levels, our government has become really good at telling a good story.
Successive ministers, especially those in vital posts such as finance and even those good guys who might not have actually believed it, have been telling a good story for years.
Treasury said ministers attending will be on the charm offensive pushing “the message that while South Africa faces challenges of weak economic growth and fiscal pressures, the country remains open for business as one of the best investment destinations in the world”.
The problem has never been the telling of a good story.
Many, many nations around the globe – all competing for the same pool of capital – are capable of telling a good story.
What international investors have seen right through in South Africa’s case is the lack of a credible plan.
This is clear from the divergence in performance between our currency and bond yields versus emerging market peers.
They are moving in near-unison, while the rand and our bonds have decoupled noticeably.
I am very surprised that we have been able to keep the likes of Moody’s at bay for so long.
Growth forecasts from Treasury and the South African Reserve Bank (SARB) have consistently been too optimistic.
When an already low 1.4% SARB forecast for this year is cut to 1.2% not even a month into the year, there is clearly trouble.
The International Monetary Fund (IMF) this week adjusted its growth forecast for South Africa to just 0.8% from 1.1%.
It sees this reaching only 1% next year, which is arguably more worrying.
As a country, we currently face the material challenge of attracting direct foreign investment, while at the same time trying to keep our ship afloat.
Unfortunately, the barbarians are at the gate and we need a plan.
No more rhetoric. We need a tactical, where-the-rubber-hits-the-road plan that will start creating traction in the direction of economic recovery – something that the international market will start believing.
This is the only way we will restore credibility and begin to change international investor perceptions.
Until we have that, the days of sub-1% annual growth will stay.
These investors are all too aware that creaking state-owned enterprises threaten to plunge our economy into further chaos precisely because they are so far in debt that they could ruin our fiscus.
At least President Cyril Ramaphosa has succeeded in forcing South African Airways (SAA) into a structured business rescue process.
That SAA was forced to consolidate certain domestic flights and cancel a number of domestic and international ones in the same week as government leaders were trying to take our “good story” to the world is notable.
The hunt for the billions needed to help keep the airline operating is taking a lot longer than anticipated.
In years gone by, Treasury would have rubber-stamped guarantees or advanced bailouts. The cupboard looks bare.
It is Eskom, though, that is the great unknown. Mboweni said he would be frank about our challenges at Davos and at the UK-Africa Investment Summit in London.
Already, there have been positive signs from the utility as new CEO Andre de Ruyter offered some insight into his pragmatism.
It’s easy to be negative about the outlook for South Africa, more so given the negative sentiment from overseas.
Every day we (and those international investors) are bombarded by negative statistics and news.
Just look at those growth figures!
But these negative statistics represent our reality. I believe this is a great place to start.
Is Eskom a challenge? Absolutely.
But are successful businesses still trading despite these challenges? Yes.
Is the reliability of power a challenge in other developing markets? Definitely.
As business owners, we can’t simply sit around and hope for the challenges at Eskom to go away soon.
Concerns around issues such as reliable power supply, labour and policy certainty have existed for years.
I recall international acquirers flagging certain of these in our engagements as far back as 2013.
Let us rather educate the international market around our ability to trade despite these challenges.
This doesn’t sit on the shoulders of government only. As business stakeholders in this country of unlimited potential, we have an obligation to make ourselves more competitive internationally.
And we must accept that there may be short term pain to trade through this phase and step up to the plate to play our part in rebuilding this economy.
We must realise that there are many very attractive investment opportunities in other developing economies, so if we don’t really make an effort to truly analyse and understand what is scaring people away and start mitigating these concerns, then we need to live with the lack of new investors in our markets.
Let’s move beyond the stage-managed headline figures such as the R1.2 trillion committed at the president’s second investment conference last year.
We – and foreign investors – know a lot of the capital being committed by business South Africa is not new investment.
We need new, fresh capital. Increases in sustainable employment can only be driven by business (through growing the economy).
These investments don’t have to be billions or tens of billions at a time.
Believe me, the tranches of a few hundred million at a time add up very quickly.
Perhaps the subtle change in messaging telegraphed by Mboweni signals a new approach by government.
We can only hope.
Let’s embrace our challenges and focus on what’s next!