Online Reporter
South Africa is turning potential investors off by adopting policies that are hostile to business, the head of one of country’s largest asset managers said.
“For South Africa to really fund its growth, what it really needs is new investors,” PSG Financial Services Chief Executive Officer Francois Gouws said in an interview on Wednesday. “What is problematic is that the policies and legislation that has been pushed out over the last six months have not been market-friendly.”
President Cyril Ramaphosa has promised massive investment to revamp the economy and upgrade fraying infrastructure that have kept growth below a meager 1 percent on average for a decade.
But he and his government have instituted various policies — such as a universal national health-insurance plan that the business community has said is unfordable and unworkable — and land laws that have chilled sentiment, according to Gouws.
“The NHI has been coming for 20 years and we still have not been able to see a basic financial outline of how that plan will be executed or funded,” Gouws said. “It doesn’t inspire investors.”
The country also stoked concern with its revised land-expropriation bill, which provoked US President Donald Trump to halt aid to South Africa after he claimed the government was seizing the land of White farmers. The nation has not taken any properties since the end of apartheid in 1994.
“The danger with the land-expropriation bill is that there has been lots of misinterpretation of what the law is, but the fact that you changed it creates uncertainty and the fact that it is uncertain created doubt in investor minds,” Gouws said.
The result is that South Africa will struggle to attract new money despite opportunities that look attractive for foreign investors.
“No matter which asset price you look at, everything from homes to the equity market to the bond market, all of these things are cheap,” he said. – Bloomberg
