To my mind

Finweek English Edition - - Contents -

DUR­ING OC­TO­BER in­vestors over­seas sold South African shares val­ued at R27bn, bring­ing the to­tal out­flow of share cap­i­tal for the year to R48bn, against a net in­flow of R64bn last year. Those fig­ures are in­dica­tive of the neg­a­tive mood world­wide, not only to­wards SA but also to­wards emerg­ing mar­kets in gen­eral.

Last week, SA re­ceived a more di­rect slap in the face when rat­ing agency Rat­ing & In­vest­ment In­for­ma­tion (R&I) ad­justed this coun­try’s prospects from sta­ble to neg­a­tive.

Though that rat­ing has noth­ing to do with the state of SA’s fi­nan­cial sys­tem, it also did noth­ing to im­prove the sen­ti­ment to­wards this coun­try.

The slaugh­ter that took place on world mar­kets left our econ­omy ex­tremely vul­ner­a­ble. Fears about SA’s mas­sive R164bn cur­rent ac­count deficit (in the sec­ond quar­ter) forced in­vestors over­seas to flee to less risky mar­kets.

Based on all the ev­i­dence, Fi­nance Min­is­ter Trevor Manuel warned – ac­cord­ing to a re­port in the – that a shift to the left by the gov­ern­ment that comes into power af­ter next year’s elec­tion could cost this coun­try dearly.

And to crown it all, SA is sit­ting with a cur­rency that’s weak­ened so ir­ra­tionally that Mer­rill Lynch de­clared the rand akin to the cur­ren­cies of Ice­land and the Ukraine, which are ex­pe­ri­enc­ing a cri­sis – in ad­di­tion to the chal­lenge of SA hav­ing to al­lay global fears of po­lit­i­cal in­sta­bil­ity.

Those fears arise from, among other things, the de­ci­sions on eco­nomic pol­icy by the ANC and its two al­liance part­ners, trade union fed­er­a­tion Cosatu and the SA Com­mu­nist Party, at their eco­nomic sum­mit, which re­flected clear un­der­tones of a more so­cial­ist ap­proach.

Fur­ther­more, the fact that the laud­able pro­posal on en­cour­ag­ing food pro­duc­tion was ut­tered in the same breath as the one propos­ing that the prin­ci­ple of will­ing buyer, will­ing seller should be scrapped in the in­ter­ests of the speed­ier re­dis­tri­bu­tion of land will ob­vi­ously not in­still any con­fi­dence over­seas.

The clear signs of ANC mem­bers’ in­tol­er­ance to­ward those who sup­port the break­away fac­tion are also fan­ning fears about the fu­ture of our democ­racy. In­flam­ma­tory chant­ing urg­ing ANC mem­bers to elim­i­nate the leaders of the break­away fac­tion could eas­ily evoke im­ages among over­seas view­ers of how Robert Mu­gabe’s sup­port­ers marginalised MDC mem­bers in Zim­babwe for years.

That con­tempt for democ­racy be­came an un­stop­pable wave steadily sweep­ing away ev­ery­thing in its path.

If SA wants to en­sure for­eign funds flow back into this coun­try when the mar­kets set­tle, de­ci­sion and pol­i­cy­mak­ers will doubtlessly have to tone down their pop­ulist rhetoric in line with mar­ket re­al­i­ties and jeal­ously guard the fu­ture of our democ­racy.

COLLEEN NAUDÉ colleenn@fin­

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