After the Zuma years, there was renewed hope and interest with Cyril Ramaphosa’s succession, but over time very real concerns are eroding optimism.
Whereas previously many believed President Ramaphosa was a strategic mind – hampered by the need to operate within difficult parameters set by ANC policy – there now is concern that not enough is being done to ensure populism can be avoided altogether.
Can SA continue to count on Ramaphoria?
Expropriation without compensation is an illustrative example. On his G7 trip, the President delivered an excellent address to Canadian investors on the morning of the summit. Yet it appeared to me in subsequent conversations that the appreciation from investors did not translate to the tangible conviction that putting money in the country is the right move; certainly not so long as EWC and other proposals like nationalising the Reserve Bank remain on the table.
People are sympathetic to the need to address past injustices, but one is hard pressed to find serous investors who believe undermining markets and property rights – instead of extending them to all – can be a part of the solution.
What makes North America significant?
South Africa holds appeal to those still very familiar with the transition in 1994. Progress has been disappointing for many onlookers, though the remaining goodwill towards South Africa is real.
And even if attention toward South Africa and the continent is eclipsed by other geographic issues right now, notably North Korea, NATO and Nafta, the US remains one of South Africa’s top trading partners.
Interestingly, when it does come to Sub Saharan Africa, there is a fair bit of focus among democracy activists and mining investors on Zimbabwe’s prospects.
For the US, what does SA mean to the Trump Administration?
We’ve briefed the White House Security Council and the State Department. While the US Presidency has not indicated a specific Africa focus to date (and many believe it won’t), on Capitol Hill there is interest on both sides of political aisle.
Indeed, inside the US Congress – both in the Senate and House of Representatives – there are several senior leaders with a strong Africa interest and an open door.
Why is the case? South Africa’s success as a liberal constitutional democracy in Africa, as well as the potential trade opportunities, are important factors in a South Africa focus. This is underscored by a belief many hold that South Africa could play a leading role on the continent. It is evident China sees the strategic importance of South Africa in the context of the continent’s rising consumer market in the coming decades.
What of the mining sector in light of the Revised Charter?
Toronto is the mining investment capital of the world and it seems South Africa is far down the list when it comes to junior mining exploration.
Interest in Zimbabwe, with the visit of Minister of Mining Vincent Chitando, highlights that the interest in African commodities is very real, when the right sentiments are conveyed around investor protection – as happened in downtown Toronto last month by the Zimbabwean delegation.
The revised South African Mining Charter has done little if anything to allay the kinds of fears that have seen investors here give South Africa a miss.
are other pockets of interest?
Everyone seems to know of a South African, within their personal network or industry. There are business ties to the pockets of excellence in South Africa.
In Silicon Valley, in addition to the familiar face of Elon Musk, there is a well-known contingent of venture capital investors – even though business deals fly often under the radar and are outside the scope of media coverage. This is more often than not the case across North America, including when deals are being struck with South African-based counterparts.
What is the view of expatriate South Africans themselves?
Everyone has friends or family in the country. Most I meet tend to be genuinely interested in South Africa’s welfare and success. Many have not left South Africa so much as they’ve come to North America – for career opportunities, to join a spouse or to be with family who are already here.
There are of course those with a less positive view and well-founded concerns, as is the case within South Africa.
What are the risks and what are the opportunities in the international context?
Our strengths include moderate public opinion, mostly sound institutions, a welfare net that continues to function in the face of what would otherwise be destitution for millions (because of the lack of genuine 'economic freedom', as the Fraser Institute in Vancouver properly defines it, using decades of empirical findings).
Our established middle class, pockets of private sector excellence and our world-class emerging market infrastructure are big pluses too in our favour.
Major threats include global and regional headwinds and crises, attempts to circumvent constitutional safeguards, threats to property rights and internal ruling party power plays. Social and political agitation triggering mass protests, and significant currency and investment flow reversal, are real threats.
Opportunities nevertheless abound in areas from sane mining and property rights policy to labour, energy and education reform. A 5% GDP growth rate within the medium term could ensue. Right now, ideological resistance to reform and waning sentiment are major risks. Ideas have consequences and too many ideas dominating policy discourse in South Africa will lead to continued poverty and underperformance if they are not corrected.
Garreth Bloor is Vice President for Transatlantic Affairs at the Institute of Race Relations (IRR). He is the founder of a venture capital firm and serves as a consultant on policy matters and risk analysis. He was formerly a member of Cape Town’s Mayoral Executive Committee. He currently lives in Toronto.
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