Former finance minister Trevor Manuel says foreign investors disinvested more than a trillion rand from South African equities and bonds over the past decade.
Manuel, now the chairman of Old Mutual said in the company’s annual report that investors are choosing to leave the SA market due to regulatory uncertainty and execution status.
“This money is being redirected to competing markets that appear to be on a more sound governance and regulatory footing,” he said.
Essentially, Manuel argued that South Africa’s assets produce more negative returns when compared to global markets.
Africa and South Africa in particular, has to compete to attract and retain investment from global players, he argued.
Moreover, Manuel said that the impact of state capture on South Africa is still prevalent and wide-reaching.
“The effects of state capture continue to be felt in all spheres of South African society. While there has been an effort to restore the institutions and rebuild the economy, more work is necessary to eradicate corruption and regain institutional strength,” he said.
The former minister said that there is an immediate need for regulators to provide long-term certainty for investors.
“Against this backdrop, it is crucial that regulators adopt a pragmatic approach, striking a balance between fiscal requirements and providing clear regulations and long-term regulatory certainty.”
The May elections
The elections on May 29 will only add more uncertainty for investors looking to the South African market.
Manuel said that 2024 is destined to be a record-breaking election year, with 19 African countries scheduled to go to the polls.
“This will likely extend the period of political uncertainty, but may also signal the beginning of a new regulatory environment in many countries,” he emphasised.
Standard Bank
Sim Tshabalala, the CEO of Standard Bank, has echoed the same sentiments over the last year and argued that South Africa is losing ground to its African peers.
In January, Tshabalala told CNBC that African economies are becoming more attractive to investors.
He urged SA leaders to reduce the red tape and make it easier to do business.
In August, Tshabalala also told Newzroom Afrika that SA is losing its competitive advantage over the rest of Africa.
He said that the country had a risk premium that is moving international investment away from South Africa.
“The world competes for capital. We compete for the money we need to finance our nation’s budget deficit and compete globally for the money to finance infrastructure investment, fund Eskom and Transnet, and finance corporate projects,” Tshabalala said.
“We are competing on the continent and with emerging markets for this capital. So if they have decreased the risk of investing in their country and generated greater returns, the money will then rather go to those places than South Africa,” he said.
IOL BUSINESS