Two points stand out from President Cyril Ramaphosa’s recently announced foreign investment drive. The first is that he could not rely on his own ministers to lead it and had to draft in former ministers. It will trouble many investors that they are being wooed by a shadow cabinet of sorts with no policy authority.
Consider the question of expropriation without compensation, which will undoubtedly be raised.
If the "shadow cabinet" gives the assurance that such expropriation will not take place, why would any investor be convinced when, back home, the real Cabinet, and many leaders in the governing party, continue to insist that such expropriation is inevitable?
This leads to the second point on deepening contradictions in government policy. Stricter empowerment edicts, limited changes to mining policy, higher minimum wages and threats to property rights continue to undermine domestic competitiveness. The results are low levels of investment, stunted domestic entrepreneurship and limited economic growth and job creation.
The "shadow cabinet" now needs to offset these consequences by attracting more foreign investment. However, more would surely be achieved if the real Cabinet just removed the many obstacles the government has put in the way of investment generally.
The point ultimately is a deceptively simple one: that if the Cabinet will not lead the necessary structural reforms, SA will struggle to raise investment levels and, with them, the economic growth rate and the rate of job creation.
Frans Cronje
CEO Institute of Race Relations
