Doubling industrial investment over 5 years could generate R100bn for SA - PIC & Oxford research

The Public Investment Corporation (PIC) has made a strong case for particularly institutional investors to put money into the re-industrialisation of South Africa.

In a paper authored with Oxford University, the state-owned entity argues that doubling investment in industrialisation over the next five years could add R100 billion in real output and create over 250 000 jobs in SA.

The research focuses in particular on agro-processing, mining beneficiation and automotive manufacturing.

The study is titled Re-industrialising South Africa: Can institutional capital spark South Africa’s next industrial boom?

One of the PIC's G20 research projects, it builds on the work of the G20 Finance Track - led by the National Treasury and the South African Reserve Bank, and aligns with the technical workstreams on Infrastructure and Sustainable Finance. 

Co-author Geoffrey Nolting, senior economist at the PIC, says the analysis shows that the country already has an excellent industrial base to work off.

"By re-investing in key sectors, we can lay the groundwork for our economic growth well into the future and reclaim our position as the most industrialised country in Africa."

In conversation with Stephen Grootes, Nolting highlights mining and the fact that South Africa is 'uniquely positioned' from a critical minerals perspective.

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"We're obviously competing globally with decarbonisation in the world, and I think SA has really set itself up as a destination for green capital, which we've seen recently with the EU deal. If we can focus on re-industrialising our economy, we can anchor battery and hydrogen supply chains locally and then get that extended to global supply chains."

Grootes questions whether investment is enough, arguing that policy changes are also key to securing an investment boom.

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While acknowledging this need for further reform, Nolting notes that there has been important progress in key areas like power reliability.

"I do think that policy needs a bit more work and fine-tuning, but we've seen a number of political parties putting out their economic plan and they all seem very keen on increased private participation."

"The key message from our paper is that, as South Africa, we're sitting on this latent capacity in these sectors and we believe that can really unlock differentiated risk-adjusted returns."

Scroll up to the audio player to listen to the full conversation