LETTER: SA is hostile to investment and skills development

Speaking at the fourth SA Investment Conference, President Cyril Ramaphosa said: “As investors, you need to know that your investments are secure, that the operating environment is stable, and that you are supported by policy certainty and regulatory safeguards.” (“Ramaphosa invites global business leaders to join SA’s road to recovery”, March 24.) The reality on the ground is different; numerous current and proposed policies serve to render the SA environment hostile to serious capital formation, investment and skills development.

The Land Court and Expropriation bills remain on the table. These will, if adopted, undermine all South Africans’ property rights and assuredly disincentivise international investors from risking their capital here.

The Employment Equity Amendment Bill sits with the president and must be vetoed if the administration is serious about changing tack from policies that have produced record-high unemployment.

It appears that the Competition Commission has taken a harder, disincentivising line towards international businesses merging with SA companies; will this be changed?

Localisation master plans will increase the costs of goods and services, as well as making the movement of goods and inputs through ports and borders more difficult. This will add to rising inflation, with the consequence that embattled consumers cannot engage in much economic activity.

If the government truly desires serious investment it must not erect additional barriers to trade. International investors and businesses will look for those countries where they aren’t forced to deal with additional government-imposed non-tariff trade barriers, such as security concerns and long delays at ports.

It is not nearly enough to have a spun-off ports authority. Opening the most lucrative rail corridors to private investment would indicate that government recognises its own shortcomings and isn’t simply focused on window-dressing “reforms”.

Foreign direct investment flows into the country fell 39% to $3.1bn in 2020, from $5bn in 2019. The 2019 figure was also a decline from $5.4bn in 2018. Wishing differently doesn’t make it so. Only radical, pro-economic freedom reforms can achieve a meaningful turnaround.

Chris Hattingh
Institute of Race Relations

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