Cabinet inaction over looting has dented investor confidence

As images of people armed with brooms and mops replace those of mobs armed with bricks, petrol and looted treasure, South Africans (and all of us who call SA home) will be breathing a sigh of relief that the worst appears to be behind us.

The rainbow nation, with its seemingly indefatigable ability to pull itself back from the brink, appears to have once again lived to fight another day. Order has been restored, SA style. But South Africans should not self-congratulate too quickly.

As an expatriate who has chosen to live, work and invest in SA, the naked, and ugly, truth is that the events of the past week have done immeasurable — possibly irrecoverable — damage to SA Inc.

Ironically, it was not the hundreds of videos of looters storming shopping malls, factories and businesses that did the most damage. Nor was it the glaring media headlines that made their way about the world of protesters blockading SA’s busiest roads and burning trucks. Or social media posts of frightened residents hiding from gunshots in their homes.

That those images were terrible and tragic, no one can dispute, but what did the most damage was what we did not see or hear — a rapid response by the state at the onset of the violence to take control of the situation, showing that the rule of law still mattered in SA and that there was a plan to deal with the unrest. This was a failure President Cyril Ramaphosa openly admitted to during his address to the nation after a visit to KwaZulu-Natal.

What did incalculable damage was the first four days of silence and inaction from SA’s leadership, especially the president and his cabinet. That silence communicated to investors — existing and potential — that SA is not a safe place in which to invest, that their investment cannot be protected, and that the country, despite all of Ramaphosa’s talk to the contrary, is rudderless and without a plan.

July 13-15 was a far cry from December 19 2017, when the then newly elected ANC president embarked on an investor love-bombing campaign to reassure everyone that regardless of the mess he had inherited from his predecessor, Jacob Zuma, SA Inc was still very much a going concern.

In the aftermath of his elevation the “man of action” travelled to SA’s biggest trading partners and investors to reassure them that SA Inc was very much alive and well. He embarked on an exercise to understand what investors wanted and what was holding back investment. He appointed investment envoys and instructed them to raise $100bn in investment in five years. He convened an Investment Summit.

And in one of the most inspiring moves since the presidency of Nelson Mandela, he ended his inaugural state of the nation address to parliament in February 2018 with the lyrics of Hugh Masekela’s Thuma Mina, evoking the theme of individual responsibility.

“I wanna be there,” he quoted from Masekela, “when the people start to turn it about / When they triumph over poverty / I wanna be there when the people win the battle against Aids / I wanna be there for the alcoholic / I wanna be there for the drug addict / I wanna be there for the victims of violence and abuse / I wanna lend a hand / Send me (thuma-mina).”

Satisfactory answers

That evocative call was nowhere to be seen last week when protesters embarked on a looting frenzy not seen in SA since the dawn of democracy. As SA burnt the authorities dithered, striking fear in the hearts not only of shocked South Africans but foreign investors too.

Why, they will be wondering, would they invest in a country where the safety of their property and stock cannot be guaranteed? Why would they invest in a country where the rule of law cannot be enforced? Why would they invest in a country where the government is obviously not in control? Unfortunately for South Africans, investors have not received  satisfactory answers to those questions, even as the violence abates.

Despite its faltering economy, inability to guarantee energy supply, lack of policy certainty and the widespread corruption that have become hallmarks of the country over the last 15 years, SA still matters.

As Africa’s most-industrialised and diversified economy and the only African member of the G20, investors closely track what happens on the southernmost tip of the continent. Ramaphosa’s recent invitation to the G7 meeting hosted in the UK by prime minister Boris Johnson bears testament to the esteem in which SA Inc was held, at least up to that point.

What foreigners saw last week will be front of mind as they make investment decisions for the next five, 10, 15 years. Investors like certainty and the knowledge that the law is respected. Capital is mobile, and where investors do not find the certainty they desire they vote with their wallets away from risky environments (perceived or actual).

That is why it is imperative that Ramaphosa take a leaf from the state of the nation address he made just 41 months ago and embark on a roadshow to reassure domestic and international investors. He needs to honour the implicit promise he made to South Africans that he will “lend a hand”.

It is time he realises that this is his time to “turn it about”.

• Vela chairs Lonsa Group, the controlling shareholder of building products manufacturer Everite.