from SAVIOUS KWINIKA in Johannesburg, South Africa
JOHANNESBURG, (CAJ News) – SOUTH Africa must speedily implement business-friendly legislation, as part of economic reforms, if it is to pull itself out of the economic quagmire.
The proposal by a business executive follows rating agencies Moody’s Investor Services and Fitch Ratings recently pushing South Africa’s credit rating further into junk.
Paul Marais, Managing Director of NFB Asset Management, who is critical of current policies by government, said the administration of President Cyril Ramaphosa must in its reforms include policy and legal certainty around issues such as expropriation of land without compensation.
Marais dismissed the position by the government that the recent summit to lure investors to South Africa was successful.
“Despite official spin that the president’s annual investment conference last week was a resounding success, the reality is that investors are not lining up to invest in new mega projects,” Marais said.
“In fact, a number of projects that were included as part of the numbers at last year’s conference have subsequently been put on ice,” he added.
He noted investment spending had slowed down significantly in recent years to the extent that spending in 2019 was at its lowest levels since 2012.
The recent credit ratings downgrades by Moody’s and Fitch also gave South Africa its lowest credit rating since 1994, the year of independence.
Marais said it becoming “increasingly clear” is that government’s spending priorities are “questionable at best.”
“This is exacerbated by the failure of just about every state owned enterprise which results in the need for ongoing bailouts.”
He said while the government had no choice but to bail out strategically important entities like Eskom, its determination to bail out a less strategically important organisations like South African Airways (SAA) was “not as easy to understand.”
“At the same time it begs the question of the extent of other wasteful expenses in government departments.”
Marais said there was little incentive for foreign investors to consider South Africa unless government addressed its crippling debt, load shedding or loosen empowerment rules as well as creating a more investor and business friendly environment.
He refused to blame the coronavirus (COVID-19 ) as the sole cause of the economic problems.
“What 2020 has done, however, is fast track the country’s seemingly inevitable race to the fiscal cliff,” Marais said.
– CAJ News