The fifth and final South African Investment Conference, which will be held on 13 April in Johannesburg, comes amid a period of turbulence and policy about-turns and the government will once again have to curry favour to appease investors.
“It’s one thing to get investment commitments, but there are conditions attached to it and investors will for the next few years want to see which way the cat jumps,” says Riaan Grobler, financial advisor at Everest Wealth.
The conference comes amid several very public blunders by the government in recent times. South Africa’s continued ties to Russia at the expense of its relationship with America could cost it dearly.
“All eyes are definitely on developments in connection with pres. Cyril Ramaphosa who sent an envoy to America to discuss the country’s attitude towards Russia. America is one of South Africa’s biggest trading partners and blunders in terms of the country’s foreign policy can cost it dearly.”
South Africa’s stance regarding the war in Ukraine and its joint military exercises with China and Russia has resulted in it losing favour with other governments. With the International Criminal Court issuing a warrant for Vladimir Putin’s arrest and the Russian president being invited to the BRICS summit taking place in South Africa in August, the country will have to tread carefully so as not to burn bridges. South Africa is a signatory to the Rome Statute and is therefore subject to the decisions of the International Criminal Court.
The power crisis remains one of the country’s single greatest challenges with load shedding costing the country millions of rands daily and decisions made around Eskom causing great uncertainty.
“The decision to exempt Eskom from disclosing and reporting irregular and fruitless expenditure, the revoking thereof shortly after and then confirmation again that the possibility is still on the table does not bode well for investor confidence. The holders of Eskom’s bonds often have conditions attached to them and the decision to exclude information from financial statements can result in the bondholders demanding their money back, which in turn poses a great risk to the public purse.”
The sudden termination of the state of disaster on electricity and confusing and contradictory statements about the energy sector’s transition to more renewable power supply could also further damage investor confidence.
“During previous investment conferences much was said about South Africa making progress to improve the climate in which investors can do business, but many promises such as Ramaphosa being a new broom and that corruption will be eradicated, has not yielded the required results. What will Ramaphosa promise this time?”
The IMF’s expectation of no economic growth for South Africa in 2023, as well as its concerns about slow reforms and public debt, do not make matters any rosier for investments.