Much fanfare attended this week’s South Africa Investment Conference (SAIC), but any hope of painting the country as a prime investment destination is contradicted by data on investor sentiment, and undermined by the towards expropriation without compensation (EWC), the IRR warns today.
It said in a statement the new Expropriation Bill, if enacted, would deepen the steady erosion of property rights under the ANC, and be ‘a red flag to the investment on which growth and job-creation depend’.
EWC would add to an already hostile regulatory environment which, despite investment pledges at the SAIC conference in Sandton this week, had ‘led to a steady withdrawal of investment in recent years’.
The statement noted that from January to October 2020, some R121,8 billion worth of private equities were sold by foreigners on the JSE; in only two of the last ten years (2010 and 2014) were there net positive purchases of equities on the JSE by foreigners, with the remainder seeing foreign investors abandoning the JSE; over the same period, R82.3 billion in bonds were sold off by foreigners (vastly higher than any year since 1994); and gross Fixed Capital Formation as a proportion of GDP had been decreasing since 2013. In 2019, it was just 17.9% – lower the average for southern Africa and lower even than many developed nations.
South Africa’s ‘lost decade’ under Jacob Zuma had continued under President Cyril Ramaphosa. At the heart of investor anxiety was the government’s commitment to EWC, ‘heedless of the risks and the warnings’.
The IRR said the key to attracting investment ‘is low taxes, a liberal labour market, and, most important of all, rock solid property rights, which are fundamental to every successful economy’.
Said IRR Head of Strategic Initiatives Hermann Pretorius: ‘The government’s lack of political will to reform means that it will continue to shoot itself in the foot on investment, resorting to marketing South Africa as a charity case rather than as a competitive economy on the world stage.
‘The government begs businesspeople to invest in South Africa while simultaneously pressing for a law that will risk exposing their investments to the whims of municipal cadres around the country. South Africa can either have EWC or investment, but not both.’