Investors ‘excited about SA despite land reform uncertainty’
SA’s policy and political certainty, particularly around land reform, still remains a cause for concern, Deputy Finance Minister Mondli Gungubele said at a business breakfast on Thursday.
While there is fear of potential destabilisation, not addressing it would be a greater source of uncertainty, he said.
In February, the National Assembly adopted a resolution brought by the EFF to begin a process to amend the Constitution allowing for land expropriation without compensation.
State-owned entities (SOEs), particularly Eskom, were also a source of concern. "SOEs are supposed to be value add to the government and not value subtraction. The private sector is necessary to ensure that."
Despite the contentious land issue and concerns around SOEs, investors remained excited about SA.
President Cyril Ramaphosa’s appointment and his firm stance on corruption bode well for SA’s relationship with the International Finance Corporation, said IFC CEO Philippe Le Houerou.
"With your new president and changes in government, SA has a great opportunity for economic growth, even as it faces persistent challenges," Le Houerou said.
Director of Business Leadership SA (BLSA) and Standard Bank CEO Sim Tshabalala said he was confident that the Treasury would get SA back on track.
"[Finance Minister Nhlanhla] Nene’s return is a very clear indication that we truly have turned the corner."
Tshabalala explained that while Eskom had weighed on investor minds, there was a change of tide under board chairman Jabu Mabuza.
The improved sentiment also comes a day before Moody’s is expected to announce its credit rating review and the political changes bode well. "We had a session with almost all the rating agencies. We had very positive discussions which were very frank and honest.
"Anxiously and with all humility, I am expecting something better," said Gungubele, echoing Nene’s statements in recent weeks.
The mood around SA ahead of Moody’s rates announcement on Friday was upbeat. Moody’s is the only one of three major ratings agencies which has SA’s foreign-currency and rand-denominated debt at investment grade.
A downgrade would see SA’s expulsion from the Citi World Government Bond Index and projected outflows of R100bn.