Many question marks over Cyril Ramaphosa's investment targets
In his statement last week announcing his "new investment drive", Cyril Ramaphosa said he was aiming at generating "at least $100 billion in new investments over the next five years". At an exchange rate of R12 to the dollar that works out at R1 200 billion. That amount over five years translates into R240 billion a year.
President Ramaphosa made it clear in his statement that the investment conference planned for August or September this year would seek to involve both domestic and international investors.
The target of R240 billion a year is strangely modest. In 2017, according to the South African Reserve Bank, "private business enterprises" accounted for R549 billion in "gross fixed capital formation". So Mr Ramaphosa's target is not even half the actual amount invested by the private sector in 2017. In fact, private sector investment has been above the R240 billion target for the last five years.
It is possible that what Mr Ramaphosa really meant to say was that the target is not R240 billion a year, but R1 200 billion a year. In that case, the target would be much more than double the actual 2017 figure of R549 billion. This very much more ambitious target would be more in line with the objective in the National Development Plan (NDP) of increasing fixed investment from its current level of 19% of GDP to 30%. (This figure includes investment by the public sector.)
If, as some commentators have suggested, the $100 billion target refers only to foreign direct investment (FDI), it is stratospherically ambitious. Reserve bank figures show that actual FDI in the last ten years amounts to $38 billion. This means that Mr Ramaphosa's annual target for the next five years is more than five times the actual average for the last ten.