Eskom concerns foreign investors

2009-11-02 08:42

Johannesburg - The availability and cost of electricity supply, skills and transport infrastructure cause the greatest concern when persuading investors to invest in South Africa.

These were the problems expressed to Sake24 this week by various officials concerned with marketing trade and investment in their respective provinces at the Department of Trade & Industry's annual Trade & Investment Conference in Johannesburg.

The unrelenting economic crisis and a lack of finance are still keeping investors away, making these institutions focus largely on retaining existing investments and jobs.

South Africa's inability to attract new investment this year is evident in Treasury's medium-term budget framework announced this week. The Department of Trade & Industry's budget speech shows that very few of the targets for new projects, investments and jobs will be achieved by the end of the current fiscal year in March 2010.

The industrial development zone in East London annually targets five new projects worth R250m and 360 new job opportunities. But in the first six months of this financial year not a single investment was pulled in.

The Richards Bay industrial development zone is struggling. Although it aims for four new investments worth R1.9bn a year, the year to date has seen no successes.

Coega, the development zone at Port Elizabeth, was able to attract one investment of R265m (compared with a target of 10 projects and R5bn in investments), but in October Rio Tinto decided to abandon the $2.6bn aluminium smelter it had planned for Coega because of the country's electricity problems.

Indian investors who were intending to invest R1.3bn in manufacturing in KwaZulu-Natal have put off making a final decision because of the spectre of electricity price hikes, Sake24 was told.

"We have to create more jobs and for that we need more factories, more industries. It is necessary for us to increase the processing of natural resources in South Africa ourselves."

"The big challenges are electricity and the transporting of resources to the industrial zones where processing needs to take place, as well as finance and support for the development zones," said a Coega representative.

Yunus Hoosen, the Department of Trade & Industry director tasked with promoting investment, said although much is being done to retain investments and expand them, there is still a strong pipeline of new potential investments.

Markets that have a particular interest in South Africa include India, China, Europe, the Middle East and Japan with possible projects in the mining, tourism and service industries, and especially call centres and the outsourcing of business processes.

Manufacturing, especially that of cars and motor components, capital equipment, pharmaceutical and electrical products, is also enjoying attention, declared Hoosen.


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