Investors urged to take a stand on pressing economic reforms – IRR
17 November 2020
Investors attending this week’s South Africa Investment Conference are urged to press for real, sustainable growth in their engagements with the government, and add their voice to calls for the meaningful policy reform on which growth, jobs and a better life for millions of South Africans will depend.
This is message the Institute of Race Relations (IRR) has conveyed in letters to the participants in the two-day event in Sandton, starting today.
Reminding investors of the role played by the global business community in exerting pressure on the National Party government to abandon the destructive policy of apartheid, the IRR has urged them to recognise the opportunity presented today to make the case for policy reforms that would guarantee investments capable of delivering vast socio-economic benefits to millions of desperate South Africans.
IRR Head of Strategic Initiatives Hermann Pretorius writes in his letter to conference participants: “The people of South Africa … are counting on investors to stop the double speak of promising investment at glamourous summits, only to extract capital at record and disastrous levels once the attention of the media and the politicians moves on.”
Pretorius points out: “Equities net purchases/sales by foreigners between January and October reached -R121.8 billion. Bonds net purchases/sales by foreigners reached -R82.3 billion over the same period.
“These are horrific figures that translate into real socio-economic suffering for millions of South Africans. Yet, we are likely to hear at best platitudes and at worst praise from those attending the Investment Conference this week. Such rhetoric, while wealth is leaving South Africa at a punitive rate, would be a betrayal of the South African people – the unjust placation of a government with its knee on the neck of its people.”
The letter highlights the government’s failure “to make the country a more attractive place to do business”.
In particular, the letter highlights
Long-standing hindrances, such as administrative weaknesses, and “policy uncertainty”;
Recent and pending industrial and labour policy interventions that suggest an intention to complicate the conditions under which business operate;
A recent study of European Union-based firms which found “deep frustrations at the state of infrastructure and the costs and administrative burden of complying with BEE legislation”; and
That, “rather than ‘safeguarding’ investments, the government remains committed to its policy of 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.
President Ramaphosa conceded last week that prevarication on essential reforms has 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.
Pretorius writes: Attendees of the Investment Conference … should of course consider investing in South Africa, but should do so with a clear understanding of the significant and unnecessary risks to such investments posed by unwise and destructive government policy. Constitutional efforts to fatally undermine property rights cannot be counterweighted by summits and rhetoric.”
He adds: “Investors who are unwilling to call out a government that is knowingly choking the life out of the economic hopes of its people expose themselves to being considered willing accomplices to socio-economic crimes against a people suffering under the humanitarian crises of mass poverty and mass unemployment.”
Issued by Hermann Pretorius, IRR Head of Strategic Initiatives, 17 November 2020