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President Cyril Ramaphosa focused heavily on justifying land reform on his recent trip to the US to drum up investment and participate in the United Nations General Assembly debate.
US President Donald Trump’s recent hostile tweet slamming Pretoria for “seizing land from white farmers” and neglecting “large scale killing of farmers” was very much on his mind.
But with his big investment summit coming up at the end of October, Ramaphosa should be focusing more on reassuring potential investors that South Africa will protect their intellectual property and on informing them where he intends taking the Gupta-tainted state-owned enterprises (SOEs).
These were some of the pointers from US business leaders Ramaphosa engaged with in New York.
The business leaders were all impressed with Ramaphosa personally and felt he was much more in tune with their needs than his predecessor Jacob Zuma had been.
“Cyril Ramaphosa did very well … His presentation was good. He came across as genuine, humble and a good listener. He answered every question one by one as it came up,” said one of the CEOs following a closed, off-the-record meeting Ramaphosa had with business bosses in New York.
“Several companies noted they’d like to expand their operations in SA, either as a domestic market, or regionally, using SA as a base,” another executive said.
“They effectively asked for more engagement to better understand SA’s plans in some key sectors to aid their decisions – and Cyril responded positively in each case, with studied, substantive reactions, and pointing to a team member to follow up.”
Ramaphosa had also invited companies to consider taking specific steps to increase their investment, or partner with South African government entities or private companies to explore new opportunities.
Participants were sure that some investments would flow directly from the engagement with Ramaphosa, in particular a $1.3bn investment from a company which said it was still waiting for official approval.
Ramaphosa said he would look into it, which was likely to seal the deal, the participant said.
On the debit side, though, one participant expressed concerns that Ramaphosa’s big investment conference, scheduled for 25 to 27 October “doesn’t seem the best publicised yet“.
Government also hadn’t done enough to connect potential investors with his four investment ambassadors who are leading his drive to attract at least $100bn worth of investment over the next five years.
“SA might want to look at how some other countries have done it in terms of setting up very effective investment offices,” one participant said, adding that Invest SA “could significantly step up its game, as it’s all but unknown.”
Throughout his visit to New York, Ramaphosa defended his government’s intentions on land reform, trying to allay the concerns provoked by the ruling ANC’s decision to amend the Constitution to allow expropriation of land without compensation.
He frequently repeated his message that land reform would be done constitutionally, would enhance agricultural production and food security and promote economic development.
“There will be no land grab,” was his constant motto.
But he also stressed that maintaining stability demanded that the government address historical land dispossession.
He also hinted that he was just starting to see a solution to the land question “on the horizon”, but did not elaborate, except for suggesting it would entail giving the landless huge tracts of government land, would include land for housing and not just farms, and that several companies were ready to give land.
One CEO said there had been some questions about land reform in Ramaphosa’s closed meeting with them. Some companies had offered agricultural technology to help make land reform more efficient – though also seeking assurances of the security of land tenure.
However, one business leader felt that Ramaphosa had over-emphasised the assurances on land reform and that most CEOs present – and most US companies overall – were not so concerned about land reform as they were about policy uncertainty in other areas.
Ramaphosa did partly address that issue. He told the Council on Foreign Relations, for example, that several policy problems which had been causing uncertainty and discouraging investment and growth were now “done and dusted”, so investment should now flow.
These included improvements to the Mining Charter after wide consultation, the imminent allocation of the delayed telecommunications spectrum, improvement in the granting of visas for foreign business people and the lowering of electricity prices to attract companies which use a lot of electricity.
But some would-be investors were looking for more detail in other policy areas, particularly around investment in SOEs and protection of intellectual property to boost the knowledge economy.
“The one issue he passed off perhaps too quickly was a well-intentioned question on what his vision was for developing a knowledge economy that would foster greater investment in patent-friendly industries,” one business leader said.
Ramaphosa referred the question to the minister of trade and industry, Rob Davies, who gave a rather “threadbare” answer, repeating dti’s now rather old intellectual property framework which will focus first on patents in the health sector, later expanding to other parts of the economy.
“There’s an intent to balance the interests of multiple groups of society, and SA also wants to set up its own independent patent examination capacity. This will both strengthen the ability to issue patents, while also preventing ‘evergreening’ of patents, by which Davies means that drug companies change the colour or shape of a pill and apply to extend the original patent for another 20 years.”
The problem was that Davies had been saying the same thing for at least two years, raising questions about why it was taking so long to set up a framework for a sector “that should be creating thousands more jobs each and every month”.
This executive added that the dti vision was rather unambitious compared to the department of science and technology’s “well-articulated, ambitious set of policies to develop a knowledge economy in SA, focusing on several sectors, including advanced manufacturing and the pharmaceutical/medical sector”.
By contrast, foreign investors were not clear where the dti would like to take these sectors.
The pharmaceutical industry was concerned that the dti seems to have targeted them in particular, and health in general, while holding off on comments about other patent-related sectors.
“Their point is that a real ‘framework’ for a knowledge economy should be much broader than one sector. The narrow focus on drugs also tends to feed suspicions that dti is actually trying to replicate what India and Brazil have tried previously to do on drugs.
“India used a very similar approach on ‘substantive examination’ to effectively block registering any Western drugs for IP protection, while also not protecting the test data submitted, leading to a huge grab of data by their domestic generics industry.”
This business leader added that some of the CEOs had also recommended that the SA government should define what it would like to do with some of the SOEs, “which would make it easier for companies to know how best to engage with them – either as commercial partners, or as potential investors”.
The problem with these sorts of questions, though, is that privatising even parts of SOEs risks alienating Ramaphosa’s political allies, both within the ANC but more particularly its tripartite alliance partners, Cosatu and the SACP – as a Bloomberg commentator remarked after Ramaphosa addressed a Bloomberg business forum.
Though it didn’t figure prominently in the meeting, one business executive said many in the business community more broadly “are obsessing with the broader macro situation globally, including when the big correction is coming, and what a ‘return to normalcy’ will do to emerging markets”.
“South Africa figures very prominently in this discussion because of the volatility of the rand. Company execs will be aware that SA’s rating is now junk or teetering on that precipice, depending on which agencies you follow. There are lots of worries about commodity cycles, still, and I think there’s a growing awareness of the importance of generating jobs in key emerging market economies.”
The US companies represented in the meeting included Boeing, Pfizer, Walmart, Coca-Cola, Pepsico, Citibank, NBC Universal/Comcast, Motorola Solutions, ExxonMobil and GE as well as the US Chamber of Commerce and the Corporate Council for Africa, among others.
*This journalist travelled to New York as a guest of the department of international relations and cooperation.
Peter Fabricius is a consultant to the Institute for Security Studies (ISS) and a freelance foreign affairs journalist.
This article originally appeared in the 25 October edition of finweek. Buy and download the magazine here or subscribe to our newsletter here.
