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INVESTMENT DROUGHT

7th October 2016

By: Darlene Creamer

  

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South Africa is unable to attract investment. In addition to the mining cycle being down, the country is also at the wrong end of the weighted average cost of capital (WACC) yardstick, mainly because of poor government policy. Southern African Institute of Mining and Metallurgy mineral economics division chairperson and University of Cape Town academic Professor Michael Solomons last month pointed out that WACC competitiveness in the context of the Southern African Development Community rated South Africa below the Democratic Republic of Congo as a mining investment destination. In the same week, Chamber of Mines of South Africa CEO Roger Baxter reported that South Africa had plummeted to an abysmally low level on the World Bank’s 160-country cost-of-doing-business rankings. On the bank’s Doing Business scale, which measures the fitness of a country’s economy to grow and compete, South Africa has tumbled 15 notches to position 73. As South Africa is learning, unstable policies and corruption go hand in hand.

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