Investors may be reluctant to invest in SA
Political instability, frequent changes such as South Africa’s recent greylisting and the power crisis has created reluctance among potential investors to invest in the country, says Andrew Bizzell, the Chairman of the BEE Chamber.
The consultancy, which provides advice to help deliver improvements in B-BBEE business strategies, monitoring and implementation, and to help businesses to grow their B-BBEE score performance, said that currently there appeared a willingness to invest, but they (potential investors) needed the surety and security of a stable economy, thus some businesses may hold back.
Bizzell said there were those who were optimistic, but there were also the boards of companies that were waiting to see how it rides out.
He said there was “investment noise, but a wait and see approach.”
“Typically, the recovery post-Covid happened fast for some, slow for others, so we have seen some businesses are willing to invest if they are in a cash recovery position. Others have been holding back, cutting costs and waiting. Some of these had to keep investing in development no matter if they were under economic pressure or not,” Bizzell said.
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Andrew Donaldson, senior research associate at the Southern Africa Labour and Development Research Unit of the University of Cape Town concurred that political instability around key policy issues contributes to negativity in the business investment environment.
“It is difficult to quantify the impact, but South Africa’s economic growth is clearly lagging the rest of the world and several analysts expect there will be a recession (negative growth) this year,” Donaldson said. He said Minister of Finance Enoch Godongwana recently tabled a budget that assisted in stabilising the public finances while resolving Eskom’s debt problem.
“But an improved business climate requires more than this - the president (Cyril Ramaphosa) needs to give assurance that relations with our international investment and trade partners remain sound and that economic recovery will be prioritised.”
-IOL