The Western Cape Property Development Forum (WCPDF) addresses challenges faced by the property development and construction industry. The WCPDF aims to be the collective voice of the industry in the Western Cape. Here Chairman Deon Van Zyl comments on investment, infrastructure spend, and more – he headlines the piece: “President Ramaphosa’s technicoloured dream coat.”
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In a recent conversation with a well-connected private equity investor, I asked what the future of investment in South Africa was and how things would play out post elections. His answer was: “We know as much as you do. All we can say is watch the rand.”
In the month since the election, the rand has had its ups and downs. Investment wants certainty – whether the news is good or bad. Surprises do not bode well for fixed-capital investment. The market needs to know what the new direction is.
On the evening of the last day of June, President Ramaphosa announced his technicoloured Cabinet (to quote Andrew Lloyd Weber):
“It was red and yellow and green and brown and blue
Joseph’s brothers weren’t too pleased with what they saw
We had never liked him all that much before, and now this coat has got our goat
We feel life is unfair.”
One can say, though, that the Cabinet (albeit as bloated as before) is a fair reflection of the outcome of the election. A tapestry of party representatives with a variety of views and levels of experience is the team that the President has assembled. No doubt some noses are out of joint. We know it cannot be business as usual. South Africa is now, once again, a different country with new rules to be established; the proverbial technicoloured coat of interests and perspectives.
There is no question that the performance of each of the new cabinet members will be under scrutiny, not only from the public at large but also by their individual parties as well as their fellow ministers. The competitive vibe will keep many awake late at night. And if this self-awareness is the only outcome of the 2024 Elections, then the country will already have won. But so much more is possible if every minister steps up to the stage to improve Product South Africa.
Infrastructure underinvestment
We are fortunate in the Western Cape; we have enjoyed stability for some time. But stable times still require critical thinking and commentary, with complacency being the worst enemy. Slowly, having pointed out local infrastructure underinvestment for years, we now see historic complacency making way for urgency in investment.
Cape Town’s Mayor Geordin Hill-Lewis has listened to critics and is applying his mind to the inevitable growth that is playing out in the Mother City, not least of which is the 10-million population figure the metropole is expected to reach within a generation.
He has announced a budget of R76.4 billion with a capital investment of R12.1bn. The next three years will see an investment of R40bn in infrastructure. Cape Town has also dared to challenge the economic hub of South Africa, with its capital budget now 80% bigger than that of Johannesburg.
Plus, we are seeing green shoots of infrastructure spend in municipalities, with those such as Stellenbosch now starting to budget for growth into the future.
Setting the tone
A great deal of time will now be spent looking at the role of national government and its new Cabinet. Yet for the average property developer, their role with local government as service provider is a substantially closer relationship than that with national government. And although national government impacts policy and investor confidence, the industry depends essentially on well-functioning local government spheres.
Whenever the Constitution unpacks economic growth, we tend to forget that local economic growth is a municipal function. And, arguably, the most that local government can do to increase investment confidence and generate opportunity, is to ensure that local infrastructure functions well and that the creation of growth-orientated capacity is predictable.
What is missing, however, are strong local governments that are prepared to remind national and provincial spheres of government that the importance of their constitutional roles stands parallel to those within national and provincial spheres. As we are seeing in Cape Town, every local municipality must take the lead and invest in its own future. No need to wait for other spheres of government to set the tone.
For our technicoloured dream coat to be spectacular, we need every sphere of government to step up to the plate. Just as with any newly appointed national minister, every MEC in Provincial Government and every Mayco Member in local government must apply the same self-scrutiny and urgency that will now play out in the national cabinet.
And who knows, maybe South Africa as a sum of its parts will finally become the investment destination that we want to continue living in and building.
