Turning political tide makes SA a better prospect, says Thuli Madonsela
Former public protector says recent setbacks a prelude to a more optimistic period of growth
Former public protector Thuli Madonsela says impunity is over for politicians implicated in wrongdoing and this should boost SA’s investment confidence.
Speaking at a Sanlam investment summit in Johannesburg on Thursday, Madonsela said many had started to question the reality of the “new dawn” that came with the election of President Cyril Ramaphosa after the first-quarter GDP numbers showed a 3.2% contraction in the economy. She said this was likely a setback SA had to go through before a reset.
“Moving forward often starts with a step back, especially after a turbulent situation. You may have to move back, not to saying it’s a lovely environment but it’s a reality,” said Madonsela.
On Thursday afternoon the quarterly index compiled by Rand Merchant Bank (RMB) and Stellenbosh University’s Bureau for Economic Research (BER) showed that business confidence remained in the doldrums in the second quarter of this year, clocking 28 index points. This was unchanged from the mood in the first quarter, with seven out of 10 respondents remaining dissatisfied with current business conditions.
Madonsela said while the new dawn had not yet translated to economic growth or a boost in confidence, rays of sunshine were already visible. She said a couple of big companies she engaged with had committed to reinvesting in SA.
She did not name the companies, but she pointed to the revamp of the security cluster and dissolving impunity as developments that will start boosting confidence.
“The sense that some people are untouchable is disappearing,” said Madonsela, adding that state capture prosecutions were likely to happen as there were pockets within the ANC that want to adhere to the spirit of good governance.
As investors ask themselves if it is worth investing in SA given problems such as power blackouts and concerns about property rights, Madonsela said a level of consistency was emerging on some contentious policy issues such as land reform.
“You might not be happy with some policies such as land reform but at least there’s consistency and you know how to position yourself for what’s coming.”
Uncertainty on land reform has partly been blamed by the Agricultural Business Chamber for a decline in agricultural production and was seen as a contributor to the 12,000 jobs lost in the sector during the first quarter of 2019.
While there is still no clarity on what land expropriation without compensation will actually entail since all the ANC has so far said is that it will be done within the rule of law, Madonsela said investors can take comfort in the fact that property ownership is a guaranteed right in SA.
“One of the things investors are looking for is whether your legal system is functioning and that has always been one of our strong points here in SA. Of course there may be concerns about delays but just generally the rule of law in that regard [property rights] is guaranteed,” said Madonsela.
Madonsela said it was not about pointing fingers for why the “new dawn” was not translating to a good environment for the business sector. If the sector wanted a particular outcome, it was up to it to make the next move.