Investec CEO: ANC squabbling strangles SA growth


Johannesburg - Infighting among South Africa’s political leaders instead of promoting business-friendly policies risks keeping the continent’s most industrialised economy mired in recession, according to Stephen Koseff, chief executive officer of Investec.

The governing African National Congress is being divided by corruption scandals surrounding President Jacob Zuma, his ties to a family from India and a contest for who will replace him as head of the party at the end of the year.

Government policies are also raising concern, with the mines minister last month releasing new rules that are being challenged in court by the industry and this week freezing the granting and renewing of mining rights.

“There’s so much political noise out there, no one is concentrating properly on the economy and what needs to be done to get it growing,” Koseff said in an interview at Bloomberg’s offices in Johannesburg on Friday. The proposed mining charter “is something just at absolute loggerheads with a growing economy. You can’t say to the industry, ‘do XYZ’ and then expect them to still invest.”

Investec - which owns a bank and money managers with almost $200bn in combined assets and operations in South Africa, the UK and Australia - is focusing on making sure it has the right clients and is remaining cautious on lending to cope with the slowdown, the CEO said. It will focus on growing existing businesses, while rolling out insurance to customers in South Africa and a new online product called Click & Invest to individuals in Britain who have more than £10 000 ($13 000; R167 800) to invest, he said.

Room to cut

The South African Reserve Bank lowered interest rates for the first time in five years on Thursday in an effort to stimulate the economy, which it forecasts will expand only 0.5% in 2017. There is room for at least one or two more rate cuts because the rand has strengthened almost 10% against the dollar over the past year and inflation is within the central bank’s 3% - 6% target range, Koseff said.

A 14-point plan released this month by Finance Minister Malusi Gigaba to revive economic growth by selling some assets and punishing state-owned companies for not sticking to conditions of financial support “was more of the same,” Koseff said. “We need to do better than that.”

Taking advantage of export zones where employers could attract contracts by not being subject to minimum wage rules, or by promoting industries in tourism, computer coding and service jobs, would instill investor confidence, increase consumer spending and boost the economy, he said. Otherwise, it could mean the country would eventually have to rely on a bailout by the International Monetary Fund.

“You might as well do the right thing before you get to that point,” said Koseff, who turns 66 on July 23. “It’s actually not that hard to shift direction. You just have to understand that you have to be a lot more business-friendly.”

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