LETTER: Investors can’t overlook bad policies
The government has done very little to make the country a more attractive place to do business
The investment conference this week carries high hopes for President Cyril Ramaphosa’s administration. It will showcase the wonderful opportunities on offer, and is intended to encourage investors to sink their money into SA.
The line is that SA is a safe, dependable and lucrative destination. Phumla Williams, director-general of the Government Communication and Information System, put it thus: “In the midst of global gloom, this is an opportune time for SA to demonstrate to investors that it can safeguard and grow their investments.”
But this message may well be a tough one to sell where it matters.
Long-standing hindrances, such as administrative weaknesses, remain, as does “policy uncertainty”. Recent and pending industrial and labour policy interventions suggest an intention to complicate the conditions under which business operates.
A recent study of EU-based firms found deep frustrations at the state of infrastructure, and the costs and administrative burden of complying with BEE legislation.
Yet none of this appears to be factored into the government’s thinking. Despite the ravages of the Covid-19 pandemic and the lockdown — which came on top of a recession — SA has done very little to attempt to make the country a more attractive place to do business.
Indeed, it seems intent on pushing in the other direction: rather than “safeguarding” investments, the government remains committed to expropriation without compensation.
Investment conferences can in principle be an effective means of communicating opportunities to investors. They are not likely to be great venues for explaining why those opportunities are hedged in qualifications and disincentives.
Ramaphosa conceded last week that prevarication on essential reforms had cost the economy dearly. So, it must be noted, have bad policies. Investors and entrepreneurs are well aware of this, and will be cautious until there is decisive change.
Project Manager, Institute of Race Relations
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