SA in search of global investment partners to boost economy

FIFI PETERS: The SA Tomorrow Investor Conference kicked off today. It happens every year. I think it’s been happening since 2018 or so, so this year is its fourth time, and it has been positioned to boost international investor confidence in South Africa and also position South Africa as a prime investing destination.

Valdene Reddy, the director of capital markets at the Johannesburg Stock Exchange joins us for a bit more detail. Valdene, thanks so much for joining the Market Update – always a pleasure to speak with you. I believe today was Day 1. Can you give us a sense of how things went?

VALDENE REDDY: Good evening, Fifi. Thanks for having me on your show. Yes, it was another great session of the SA Investor Conference. This is actually the 10th edition of the SA Tomorrow Investor Conference, but previously it had a US focus, and what we did last year was expand that reach to the UK, Middle East and Singapore. This year it went even further to include China, as the Chinese investor makes up quite a big and growing space in the investor landscape globally.

We’ve had over 180 institutional investors sign up to the conference, and more than 215 participants logged on today. The conference kicked off, opened up by President Cyril Ramaphosa. He opened the session today, and took us through reiterating our government’s strategy in terms of pursuing sound macroeconomic fiscal policies, and generally continuing to encourage the international investor community to support and invest in our country.

We also had an address by the Reserve Bank governor, Lesetja Kganyago. He walked us through some of the key initiatives from the Reserve Bank in terms of positioning South Africa better to withstand the global challenges.

There were some really good panels between Daniel Mminele, head of the Presidential Climate Finance Task Team, André de Ruyter, CEO at Eskom, Portia Derby, CEO of Transnet – just to name some of the representation today. So we really kicked up in a strong session and representation.

FIFI PETERS: So the 10th time this has been happening. Often when we talk about the number 10 in terms of South Africa’s history, it’s referred to in terms of the ‘lost decade’, from the 10 years that we are coming from, where we saw a marked slowdown in growth, a slump in business confidence and all other unfortunate economic indicators ticking higher, like unemployment and poverty.

How would you say South Africa tomorrow looks like today, compared to 10 years ago?

VALDENE REDDY: It actually comes to very troubling times, and what we can showcase through this investor conference over the past decade is some of the cyclicality we’ve been through, and how South Africa has been quite deliberate. Post Covid there’ve been some real stretched commitments that we needed to make; the pandemic just exacerbated that need. So at this conference it’s really an opportunity for us to showcase some of those initiatives and the progress we have made, from an economic reform as well as positioning for investment into our country.

What has also changed at this conference is [that] the time and the global economic picture are quite different from what it was a decade ago. We’re now operating in a global environment where things like interest rates and inflation are even more vulnerable than what they look like in South Africa. There’s a global risk of a recession or an overhang.

So South Africa has come out actually quite strong from the fundamentals. We’ve had a commodities boom that has brought many benefits for South Africa and are rich with opportunities. So I think this continent showcases some of the turbulent times we’ve come out of in the past decade, and some of the deliberate efforts that we’ve been positioning for probably the past three to four years [which are] now coming right to fruition, especially in the time of a turbulent global economy.

FIFI PETERS: You are right. A whole lot less turbulence, it would seem, is facing South Africa right now. We’re looking a lot less risky than other parts of the world. If you look to the left, you’ve got the Ukraine crisis there with Russia, and Europe and the UK still getting over the overhang of Brexit and what their new terms of trade look like. You’ve even got the US – the relationships with Asia and China that continue to remain strained.

So South Africa is looking a lot less risky, according to most experts. But we also have things that are holding us back, perhaps from being the paradise in terms of an investment destination. You mentioned two of the individuals that run the entities that are seen to be holding us back – André de Ruyter of Eskom and Portia Derby of Transnet – not the individuals, but the entities; Eskom in terms of the lack of power security right now, and Transnet in terms of the lack of efficient ports. We’re not exporting as much as we could because of the inefficiencies there at Transnet.

What was the message shared by these particular individuals and perhaps even the asks from investors in terms of improving the state of Eskom and Transnet right now?

VALDENE REDDY: Absolutely. I think that is why this conference is so critical at getting in front of the desperate and critical components of our economy, Eskom and Transnet, the two of them, and giving them an opportunity for investors to hear directly in terms of the conviction of the trajectory of change that’s ahead of all of us at the moment.

With regard to André de Ruyter and some of the comments, I think it was quite good in terms of Eskom now showcasing what their recent restructuring looked like, and giving progress to the market in an accountable fashion of where we are at.

There has been a lot of reform in the energy space, so that was really a focus for us, even at a government level where the cap has been increased in terms of renewable energies, and that was part of the discussion today, in terms of how South Africa is speeding up on issues such as global warming, renewable energy projects, more stability to our state-owned enterprises in terms of our own transitions.

Portia Derby spoke about how the entity is capacitating the rail and port infrastructure, which is crucial for the economy.

She also spoke about the recovery from previous mismanagement, and I think it’s really important to own that and to chat about it directly to investors – and what the impact of Covid and the floods as well have had on some of our own logistics and network issues.

So there are still vulnerabilities. The network issues really come to a point in terms of issues that we need to tackle, [which were] covered by even the Office of the Presidency, through Anthony Costa [investment lead in the private office of the president], where they were really highlighted. These are challenges we have to unlock for South Africa to really mobilise its growth.

What was quite good is that these key representatives were available. They were quite frank with investors.

Investors just really want to know [about] accountability and progress, and how we are delivering on execution. So I think the fact that we are owning the conversation and we are quite transparent about what South Africa has been collaboratively [doing], is quite testament to the commitments we’ve made.

FIFI PETERS: Sure. Valdene, I see that it’s going to be a busy week of conferencing for you. You’re also attending the Moneyweb Better Investor Conference that’s starting tomorrow [Wednesday, 22 June]. Can you tell us a bit more about the role that you’ll be playing there?

VALDENE REDDY: Yes. Thank you. It is a good opportunity for us to speak. What we really wanted to do from that conversation was to highlight just some of the trends we are seeing in the marketplace [that] relate to a broad-based audience to make a showcasing of some of the key focus areas for us as the JSE, as well as the opportunity for investors in terms of how they can find ways to save and invest. So it’s really a different tone. It’s really more at a macro level and on a generalist level to show how awesome our markets are, and to engage and create conversation around investment opportunities and awareness.

So I look forward to the turnout for that tomorrow, and also to further engagement thereof in terms of better investor awareness.

FIFI PETERS: All right. We look forward to hearing a lot more about what the JSE has in store for this year. But Valdene, we’ll leave it there for now. Valdene Reddy is the director of capital markets at the Johannesburg Stock Exchange.