President Cyril Ramaphosa will today open the third South Africa Investment Conference (SAIC) in Sandton to showcase the country as an investment destination – but the question must be asked: what exactly does the country have to offer?
The two-day talk shop between business leaders and government will dwell on what’s needed to fix the country – but what’s really needed will be overlooked.
South Africa is in a dire state on all fronts. In a document on the South African Investment Conference (SAIC) website, the government provides ten reasons why it thinks South Africa is a good investment bet. It claims, for instance, that South Africa is a ‘vibrant emerging market’ with a ‘growing middle class, affluent consumer base, excellent returns on investment’.
Yet, as South Africans well know, the middle class is not growing but shrinking, as is evident in the Quarterly Labour Force Survey (QLFS) released by Stats SA last week. South Africa’s unemployment rate is now at 30.8%, or 43.1% on the expanded definition, the highest it has been since 2008.
According to the South African Reserve Bank (SARB), real gross fixed capital formation, South Africa’s net investment, reached a record low of -59.9% in Q2 of 2020, which means we are getting poorer as a nation.
The Johannesburg Stock Exchange delivered average returns of 12% in 2019. Compare this with the 31.9% achieved on the New York Stock Exchange last year and it becomes clear that the returns in South Africa are modest at best.
Misleading
These are just a few examples of just how misleading the SAIC document is.
What the government fails to understand is that South Africa is not an island, it finds itself in an international market where countries are competing with one another to attract investors.
This failure is evident in finance minister Tito Mboweni’s statement in an interview with Fin24 last week that ‘any international organisation that thinks they can provide us with funds but dictate policy are wasting their time’. Could there be a more tone-deaf statement? Here we are, putting out our begging bowl, but refusing to accept that nothing is free and there will be strings attached to any money we receive.
Hosting summits, which likely cost the taxpayer a pretty penny, is not what attracts investment.
The government is buckling under the weight of its own contradictions, with the finance minister encountering opposition every time he wishes to be prudent with our money.
And while the president is in Sandton turning on the charm, his own party is in parliament, attempting to destroy property rights in its drive to implement expropriation without compensation, and increasing unease with its continuing talk of taking away the independence of the Reserve Bank.
Fundamentals
Perhaps we ought to stop tampering with the fundamentals of a functioning economy before we ask people for money.
While the SAIC may be a great dog-and-pony show, the hard truth is that South Africa has neither dogs nor ponies to show.
[Picture: Chronis Yan on Upsplash]
If you like what you have just read, support the Daily Friend