To my mind
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 firstname.lastname@example.org