Getting the private sector to increase investment levels could be a big win in the overall infrastructure effort.

This column first appeaered in Business Day. 

We do a lot of talking about infrastructure investment, but less and less is actually happening. We spent 14% of GDP on gross fixed capital formation in the second quarter, a number made worse by the rebasing of GDP by Stats SA in August.

When broken down, it is clear that both private and public sectors are investing less. Public sector investment was just 3.9% of GDP while the private sector invested 10.1% of GDP. These figures have steadily declined since late 2008 when as a country we hit a democratic-era record 21% of GDP, 14.1% from the private sector and 6.8% from the public sector (though the public sector’s own record was a quarter later when it hit 7%).

There are many reasons. In the public sector these are mostly to do with a big skills shortage, bureaucracy, corruption and fiscal constraints. But the decline in the private sector seldom gets the attention it deserves. If more policy focus was placed on it, we could do more to get overall investment levels up.

Public and private infrastructure investment are deeply linked — factories, mines and shopping centres don’t get built if there isn’t public infrastructure, from roads to sewerage, to service them. SA’s electricity woes are obviously critical — there is no way to build power-hungry factories with no security of supply. Getting public investment right is a precondition to much private sector investment. But that isn’t all there is to it.

Records were set in 2008 because a long bull market had resulted in high levels of capacity utilisation and confidence about the future was high. Factories were running at maximum output, so businesses invested to expand. Of course, the financial crisis soon reached our shores and investment levels plummeted. Public sector investment bumped along in an effort at countercyclical aggregate demand stimulus, but began to plummet in late 2015, in large part due to the collapse in finances of state-owned enterprises. That trajectory has not turned.

But can it be turned in the private sector? There are clear policy levers that can be pulled. One of the most important and frankly visionary steps in this regard is the change to the Electricity Regulation Act (ERA) to allow private businesses to build their own electricity generation plants up to 100MW without a licence. This does two things: it directly enables businesses to invest in generating electricity, an area in which they can reliably anticipate demand, and then it removes one of the greatest uncertainties for investment into core capacity — the lack of energy reliability. It is going to take a year or two before we see its impact in the gross fixed capital formation statistics, but it will come.

The change to the ERA is a good example of how the government can materially shift the needle for private sector investment. The other one that is massively overdue is additional spectrum for increased cellular broadband. Communications infrastructure has been the one area of clear growth in private investment over the last decade as firms have invested in both fibre and cellular networks. But the cellular side of the equation has stalled because networks could not access additional spectrum.

There is a complicated story on why spectrum auctions have not happened despite having been policy since 2007 largely driven by incompetence, vested interests and rent seeking. This remains a huge political challenge as the spectrum in question has to be vacated first by moving television broadcasting to digital, and that is complicated. President Cyril Ramaphosa is committed to making it happen, and he may have the statesmanship to pull it off.

But there is one other area ripe for a dramatic policy-led investment boom: mining. We are sleepwalking into a collapse of the mining sector. There is almost no investment happening into exploration, which means there is no pipeline to replace existing mines when they are exhausted. For an economy built on the back of mining and an industrial base still tightly linked to commodities, this would be a disaster, and one that receives far too little political comment. The reason for the collapse is obvious: huge policy uncertainty driven by over a decade of dithering and confusion about both the mining charter and amendments to the Minerals and Petroleum Resources Development Act.

While energy and mining have found themselves in the same national department, the contrast between the policy-led investment boom in electricity and the investment collapse in mining is stark. If an enabling approach to mining policy was pursued with the same enthusiasm as energy, we could start to see a real change in private sector infrastructure investment.

Getting the private sector to increase investment levels could be a big win in the overall infrastructure effort. We shouldn’t lose sight of it while we work on getting public sector investment levels to recover.

Theobald is chair of research-led consulting company Intellidex.

Intellidex is recruiting an experienced researcher/economist to join our dynamic research team in a mid-level position. The appropriate person will support Intellidex’s political economy research and help drive our policy and reform advisory business to produce reports and insights for a broad range of clients in South Africa and globally (including banks, asset managers, development finance institutions, foreign governments and corporate entities) as well as for public consumption. The research produced in this role will often be in the public domain and contribute to South Africa’s policy conversation.

The work will be extremely varied across sectors and issues, requiring the candidate to be able to track and analyse many topics at once and mange their time and ongoing research around such a shifting agenda. The candidate will be required to look at any issue that affects investors, banks and companies from a growth or doing business environment perspective including but not limited to: the Operation Vulindlela reform agenda, service delivery at municipality level, spectrum and digital reforms, DTIC policies including BEE and competition commission work, SOE-related policy issues and infrastructure. A particular focus will be on climate change issues across all sectors. 

The ideal candidate must have: 

And preferably: 

The role will involve a mixture of ongoing research to develop appropriate policy insights and recommendations for clients in both the public and private sectors, writing reports and contributing to periodical publications that Intellidex produces. It will involve meetings with clients and maintaining a network of relationships to obtain insight into current policy debates. Tracking a multitude of stakeholders and their views is a key part of the job, including understanding and working with parliament, Nedlac and similar bodies.

Intellidex offers a unique environment that draws together top academic skills, financial markets research and insight on South Africa’s policy development. We work with financial institutions and companies as well as domestic and international policymakers to improve outcomes for all South Africans. Intellidex is well-recognised for its high-quality research and you will become a core part of a highly skilled team, providing significant learning opportunities to advance your career.

Performance will be judged by the delivery of high-quality research projects and reports, as well as engagement with clients and other audiences. We expect the person in this role will over time become a thought leader nationally on the issues they are studying and an active contributor to the South African policy conversation.  and other audiences. We have offices in Sandton, where this position will be based, London and Boston. The position will report to the global head of capital markets research.

We have offices in Sandton, where this position will be based, London and Boston. The position will report to the global head of capital markets research. 

We offer a small company environment in which you will have considerable latitude to shape your role. Remuneration will be a mixture of basic (in the mid-level researcher range) and performance-based pay.

Our standards are high. You will be working with MBAs, CFA charterholders and PhDs on our team to ensure that Intellidex delivers high levels of client satisfaction and responds dynamically to new business opportunities. 

If you are interested in the position, please send a covering letter in which you address the requirements listed above, using the form below. There is no deadline for applications, but the role will be filled as soon as a suitable candidate is identified. 


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Celebrating its 12th anniversary, 6,599 clients participated in the 2021 Top Securities Brokers survey. Formerly called Top Stockbrokers, this survey has established itself as the premier independent assessment of SA’s securities brokers. Winners were announced at an awards ceremony on 28 September, with Infront as platinum sponsor, Financial Mail’s Investors Monthly as the media partner and JSE as the event sponsor. Rand Swiss took the overall prize, while Sasfin Securities won Best Advice Broker and PSG won Best Online Broker.

For all the winners, access the 2021 summary report below.

Politicians in the UK don’t seem to realise the outrage that came with the decision to keep SA on its travel red list. This isn’t useful in trying to deepen relations with a country given with a key role in Africa, the Brics and G20, writes Intellidex’s Peter Attard Montalto in Financial Times.

The visit of climate envoys to SA has been a useful shock to the system, enabling the country to step out of its comfort zone on energy matters.

This column was first published in Business Day.  

There were two interesting rhetorical nuggets last week, one from President Cyril Ramaphosa and one from our relatively new finance minister, Enoch Godongwana.

Both, if you allowed them to wash over you, could probably be easily ignored. Both didn’t say anything we didn’t know already. Yet both had strong and emotive reactions.

Why? It was the way they were said.

The first was Ramaphosa’s Luthuli House press conference comments on Digital Vibes. On the surface, accountability was called for and, not unsurprisingly, shock was expressed at what a comrade had got up to.

Yet the way this was done led to an outcry (even among my clients who are normally not quick to express outrage). The impression and choice of words implied that the ANC was more important than corruption allegations and that there were wider issues (KwaZulu-Natal winning a second term, etc) that were more important than giving simple declarative statements about wrongdoing.

Is this unfair? Not really. As SA’s political balance moves away from ANC hegemony and towards a messier contestation, hearts and minds are won in sound bites on the evening news, as happens in every other country. Language should, however, be more carefully constructed and thought through.

The most interesting factor probably was the revealed preference for the internal as opposed to public opinion when speaking off the cuff.

And yet Ramaphosa, also speaking off the cuff at the same event, gave probably one of the clearest, most transparent expositions of the just energy transition ever heard from him or any cabinet minister.

With climate envoys in the country this past week, clearly what to say and how to say it were foremost in the mind of the government and the presidency. And so out popped the “right” response (and even if you disagreed with it, it was at least coherent and clear).

The appearance of the climate envoys has clearly been a useful shock to the system. Zooming out from the details of the discussions, the government has had to get its act together and cement its views on a range of issues — from the ideological to the technical. This was not totally possible, of course, as the department of mineral resources & energy was the fly in the ointment, talking instead about non-viable energy technologies in Limpopo.

Yet the impact of having experts in the country to talk about specific issues has clearly been useful in galvanising a topic that has floated on the ether for the past decade in SA but has seen good momentum since the start of 2021.

Of course, getting things over the line is another matter: actually committing to required conditionality for borrowing large amounts of money is still going to be politically fraught. As we saw with the drama of the IMF rapid financing instrument (conditionality free) facility last year, and then with the debacle of the collapsed World Bank loan, SA has a problem accepting conditionality.

Then there is the specific conditionality of more rapid Eskom decommissioning of coal-fired power stations and everything politically and socially that this will involve.

Then came the second speech — from Godongwana at the Sunday Times National Investment Dialogue. What was said was not overly complex or long, or indeed new, but was said with refreshing bluntness.

“Government has spent 13 years trying to fix Eskom. We need a paradigm shift. What has got to be the focus is fixing the electricity supply. Let’s not talk Eskom, let’s talk security of supply.”

Now if you look at the last integrated resources plan (yes the one that’s now out of date from 2019), or speeches even by our friend Mantashe, one could argue that it’s not that different from what Godongwana said. Yet it was the tone — that it is so blindingly obvious that Eskom has to change to a completely different role and we need a system that solves problems, not ones that keep dead status quos on life support — that struck home with people.

This sense was what originally catalysed so much support for the infamous “Tito paper” from the National Treasury in August 2019 and gave rise to Operation Vulindlela. It was viewed as a rare rallying cry for outcomes-focused, evidence-based policymaking.

Godongwana appears to be saying he represents continuity in this respect. As a quite transparent ANC economic transformation committee head, he has said some odd things, such as on coal, for example. However, he now gives the impression that he is valuing and listening to his staff and is a pragmatist, especially as he is talking more regularly in public than his predecessor did.

Further evidence-based, outcomes-orientated thinking from the minister — a kind of “Enoch Paper” — would be very welcome as we drift increasingly on the economic reconstruction and recovery plan of last year (too many aims and too many amorphous goals). His recent comments on industrial policy are also interesting but need more flesh. Industrial policy need not be a dirty term but can become so if it is only associated with the department of trade, industry & competition’s command-and-control style.

Clear evidence-based policy and eyes on the goal — clearly expressed — will give difficult debates over conditionality and working with international partners on the just energy transition a very different flavour to being dragged down in ideological quicksand. Looking outside the circle of party and vested interests is therefore important. Attracting funding, investment and expertise will be so much easier. This is after all what SA needs: stepping out of its comfort zone to undertake big change quickly, sustainably and justly.

Attard Montalto is head of capital markets research at Intellidex, an SA research-led consulting company.