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Oct 08, 2012

Zille warns investors turning elsewhere as SA becomes too risky

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South Africa has become too complacent about its position as the “gateway” to Africa and was not “making it easy” for foreign investment to flow into the country, said Western Cape Premier and Democratic Alliance (DA) leader Helen Zille.

Speaking at a South African Chamber of Commerce and Industry convention, last week, she pointed out that South Africa had placed many obstacles in the way of investors and with increasing risks in the country, potential investors would start turning to the rest of Africa, particularly “booming” Mozambique and Angola, for opportunities.

She noted that other African nations were outperforming the country, citing, for instance, Kenya’s information and communications technology infrastructure surpassing South Africa’s, and Rwanda, which emerged from a “flattening” civil war 12 years ago, excelling in the implementation of a conducive regulatory environment and ease of doing business.

The continent was labelled as the “flavour” of the next few years, but Zille commented that many Africa-focused investors had concerns about investing in South Africa.

Policy uncertainty, such as lengthy debates about nationalisation and the confiscation of land without compensation, at the ruling party’s policy conference, remained an obstacle.

The potential investors also pointed to the labour unrest in the platinum sector and the subsequent events that resulted in the death of 46 near the Marikana mine, in Rustenburg, and questioned the extent to which the unrest and violence had spread to other industries.

The series of events had revealed South Africa’s growing inequality and the wall between the “insiders”, who had jobs and wealth, and the “outsiders”, who were poverty-stricken and, in many cases, without hope, added Zille.

She also noted that the investors believed the mines in South Africa were marginal, low profit and high risk and, that many saw mining opportunities elsewhere in Africa as more attractive and less risky.

Other obstacles to investment included red tape and an unfavourable regulatory environment, as well as the constraints of broad-based black economic-empowerment, which, the DA leader said, should rather be adapted to include training, skills development and job creation and not predominantly the transfer of equity to individuals.

Further, Zille noted that disputes between various factions in the tripartite alliance in the run-up to the African National Congress’ elective conference in Mangaung in December, added political uncertainty.

Investors were concerned about corruption, the perceived collapse of independent State institutions and abuse of power, which could undermine the country’s democracy.

“We are not making it easier for investment and the more obstacles we put in place, the less likely the investors will invest and the less likely we are to grow our economy and create the jobs we need,” she stressed.

South Africa, which was also competing against every country in the world to become a foreign investment destination, should consider what action should be taken to create the conditions which would result in people with skills and capital, as well as entrepreneurs, innovators and foreign investors, entering the country.

Edited by: Mariaan Webb
Creamer Media Senior Researcher and Deputy Editor Online
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