By Andrew Bahlmann
At the Mining Indaba earlier this month, many potential investors applauded the way Zambia has made itself attractive as an investment destination. This demonstrates that it is not difficult to turn matters around as not long-ago Zambia’s light did not shine any brighter than South Africa’s.
President Cyril Ramaphosa might want to look at what makes countries such as Zambia and Botswana more attractive investment destinations than South Africa.
Comments made about Zambia at the Indaba included: The people there really want investment, the government is accessible, there’s no BEE, the legislation is clear, information is readily available (in mining in this instance) as to which companies have mining rights and permits. Under the previous Zambian president, corruption had been widely perceived to have flourished and the mining sector was a frequent target of political wrath – much like South Africa today.
While Zambia’s star is on the rise, similar to “Ramaphoria” of a few years ago, Ramaphosa’s star is definitely on the wane through inaction.
Five years ago, in his SONA and annual budget, Ramaphosa was talking of spearheading a drive to generate billions in private sector investment over the next five years in order to create 1–1.5 million new job opportunities in South Africa.
FDI and its fellow M&A (merger and acquisition) investments, are important enablers of economic growth. For emerging market economies, such inflows are crucial for transferring money and expertise from multinational companies to local enterprises and to help finance infrastructure deficits.
Economic growth and FDI in this country have on a downward trajectory for two decades, barely ever rising above 2% when the National Development Plan’s (NDP) goal is for economic growth to exceed 5% per annum towards 2030.
The NDP originally envisioned the unemployment rate falling from 25% in 2012 to 14% by 2020 and 6% in 2030 – instead every economic indicator has gone in the opposite direction, with key unemployment increasing since 2012 to soar above 30% today.
Current policies are clearly not working, and low business confidence indicators are only for the latter part of this year to be worse than the present.
President Ramaphosa needs to emulate global best practices. That includes a walk away from socialist policies towards business-friendly policies. It may seem harsh to remove job protection, lower or remove social grants, appoint people fiercely only on factors of ability and qualification – but global best practice demonstrates that such policies ultimately result in full employment and rising standards of living.
This starts with a budget which for the first time makes a commitment which goes beyond mere lip-service and embraces business rather than viewing it as the enemy; puts hardnosed businesspeople in charge of each SOE with a view to ultimately privatising them, and makes all public sector employees accountable for expenditure on a ‘value for money’ basis.
Andrew Bahlmann is the chief executive: corporate and advisory at Deal Leaders International
** The views expressed do not necessarily reflect the views of Independent Media or IOL.
BUSINESS REPORT