Government seems determined to scare off investment in South Africa.
There was a bit of good news last week amid all the economic gloom and doom and concerns about the lack of policy certainty under President Jacob Zuma’s mew administration.
The new minister of mineral resources, Ngoaka Ramatlhodi, announced that he has asked the president to delay in signing the Minerals and Petroleum resources Development Act Amendment Bill.
Ramatlhodi apparently has a number of worries about the bill, including that it might not pass constitutional muster because it was not processed correctly when it was rushed through the legislature of ahead of the May 7th elections.
Even more critical, however seems to be the belated realization that, if enacted, it would scare off investors in the potentially massively lucrative oil and gas sector, this is because the ANC has used its majority to increase the state’s proposed ‘free-carry’ interest in future oil and gas projects from 20% to 100%. The upshot of this iniquitous (wicked, evil, sinful, immoral, bad, unfair) provision is that investors could pump billions into the project only to see it taken over wholesale by the state. The result: little or no investment would happen – despite Zuma’s repeated assurances that fracking in the Karoo, could be a ‘game changer’ for our suffering economy.
Since he took over the reins at Mineral Resources, Ramatlhodi has been a breath of fresh air, injecting new urgency into attempts to resolve the devastating platinum strike of which his predecessor was little more than a spectator.
It is to be hoped that some of the minister’s pragmatism (practicality, expedience, common sense, and uncomplicatedness) rubs off on his cabinet colleagues.
The Security Bill, which is also waiting for Zuma’s signature, is a case in point. An attempt to force foreign owned security firms to cede 51% of their ownership to South Africans, could expose the country to economic sanctions and result in large-scale job losses and rocketing security costs.
A radical proposal to strip farmers of 50% of their land in favour of farm workers will also set the alarm bells ringing.If it really wants to boost investment and create jobs, the government must think hard about it again…