Stevens Mokgalapa talks about foreign investment opportunities and challenges in South Africa’s administrative capital, and the balancing act of development and environmental needs in the developing world.

Q: Which particular sectors have the most interesting opportunities for foreign investors?

A: We hosted a trade and investment summit [in September 2019], where we achieved our goal of R10bn ($684m) of investment pipeline projects for the next two years, which will yield about 6700 jobs. The most important sectors are the automotive cluster, property, energy and tourism. Those are the key sectors we are focusing on as we have got quite a lot of potential around that [alongside] agro-processing and agriculture. This is because Tshwane has a serious agro-processing and agricultural network and capacity. Linked to that is the automotive industry, where we have got some of the biggest brands – Nissan, Ford, BMW and Mercedes – being produced in Tshwane. We recently attracted a R10bn investment from Ford in Silverton in one of our automotive industry areas, which is going to yield around 1200 jobs.

Q: What sort of incentives do you offer to foreign investors?

A: When development comes to our city, we put it on the strict strategic investment committee, which basically means that if a development is more than R1bn, we put it into a fast lane. This is so that it doesn’t go through the red tape and bureaucracy of approvals within the city, rather it goes to a specific committee, where all the departments get together and make sure they process the development. Second, we are making a contribution to infrastructure. In order for us not to delay development, we are saying to developers if you have money we can allow you to build infrastructure and we will reinvest after you have developed. We’ve got special economic zones, which are areas where we can give rebates. The private sector does not want to be frustrated by red tape, so that’s why the theme of our investment summit was ‘From red tape to red carpet’. Tschwane is ready and open for business.

Q: What challenges are you facing in attracting foreign investment?

A: I think most of the challenges involve the fact that our economy is not growing as much as it should nationally. Yet there are issues around xenophobic and violent tendencies that have erupted where there was a tax on foreign-owned shops, which has created some anti-investment behaviour. More generally the red tape has always been there and delays development. These are the issues that investors are worried about.

Q: What’s your resilience strategy, and how do you balance this with FDI attraction?

A: It’s a balancing act, especially in the developing world, in terms of our need for development to grow our economy and create jobs vis-a-vis ensuring that we respond to climate change issues. We are a signatory of the net zero carbon buildings declaration and have a green building by-law in the city. We also signed the Net Zero Carbon Emissions Declaration and have several efforts to stay true to this, such as a policy of mixed energy, with a focus on embedded generation, looking at alternative sources of energy, waste to energy, hydro energy, and cleaner forms of energy. We have also got a fleet of 40 compressed natural gas buses operating in the city and are looking to transition the fleet in our administration to be electric cars.

Q: Any closing thoughts on why Tschwane is attractive to foreign investment?

A: I think Tshwane is a most unique city, with a population of 3.3 million, and it’s the capital where you’ll find the Union Buildings [the seat of the South African government]. You’ll find Freedom Park and the Voortrekker Monument side by side. There is the military hospital where our founding father Nelson Mandela was treated and the Palace of Justice. You can see ‘the Big Five’ at Dinokeng Nature Reserve, and we are the only city where you can see them within 30 minutes’ drive. We have the Wonderboom Airport with its own airspace within the South African Development Community SADC, providing a good base to take a light aircraft to Mozambique, Namibia, Tanzania and other countries.

This article is sourced from fDi Magazine
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