The message from a dinner hosted by Business Leadership South Africa (BLSA) for the 20-20 Investment Association on October 20 was that, while South Africa remains an investment destination, investors are becoming impatient with the slow pace of reforms, says BLSA CEO Busi Mavuso.

"There are myriad of new investment opportunities available in South Africa, such as those in the renewable energy generation and transmission sectors, as well as in electric vehicle manufacturing sector and the generation of green hydrogen. Investors should be queuing to be part of these developments.

"In addition, the attraction of some other emerging markets like Turkey and Russia have waned, providing a perfect opportunity for South Africa to step in, but with our challenges including persistent loadshedding, unemployment, labour issues and the lack of implementation of crucial reforms, will we be able to do so?" she asks.

"Investors are not going to put money into this country because they think we’re nice people. What they want is to invest into a stable environment where they receive solid returns on their investments.

“During the 20-20 Investment Association dinner, I observed that members are anything but naïve about our extremely high levels of corruption and they feel that not enough is being done by government to stamp it out," she emphasises.

It is clear from conversations with members of the association that South Africa is not the worst investment destination in the world, but needs to do much more to build an investment-friendly environment by implementing wide-ranging structural reforms to make its economy more competitive and by implementing resolutions to do away with red tape. The country also needs to prosecute all those responsible for State capture, Mavuso adds.

"It is important to remember that whatever is broken can be fixed and global investors need to be assured that we’re working on creating a desirable investment environment."

Meanwhile, some of the investors have witnessed the difficulties Mauritius faced when it was greylisted by anti-money-laundering organisation the Financial Action Task Force (FATF) and are unlikely to want to invest in another country that faces the same fate, she says.

According to the FATF, South Africa is partially compliant or noncompliant with 20 of its 40 recommendations. The FATF’s recent evaluation found that there South Africa has enormous flaws that relate to State capture and its inability to prosecute criminals and a decision will be made in February next year on whether South Africa should be greylisted, notes Mavuso.

BLSA’s recent report on greylisting finds that there is an 85% chance that South Africa will be placed on the grey list.

Focus needs to be placed on the 15% chance of avoiding greylisting altogether because, if South Africa is greylisted, it will be very difficult for foreign investors like the members of the 20-20 Investment Association to do business with the country.

"The consequences could be grim. Our report estimates that the economic impact of greylisting could be limited or severe depending on how South Africa reacts to greylisting.

“They estimate the impact at under 1% of gross domestic product if we act with alacrity, to 3% of gross domestic product if South Africa is perceived to be slow and unwilling to meet the standards set by FATF," Mavuso notes.