Tag Archive | investment climate south africa

Parliament and the investment climate

Seven issues spooking investment…….

editorial……Nothing, absolutely nothing, will stop growth more effectively than to be constantly changing the investment national assemblyclimate by altering the playing field levels; criminalising business for non-compliance of local laws which have nothing to do with business; and bringing about the kind of atmosphere of uncertainty in which investors are constantly attempting to establish current government policy and the reasons for any changes.

Not to understand the reasons is sometimes worse than disagreeing with them. At least if one dislikes an idea one can usually work around the issue. As long as you know its constant its good for investment.

What we know

At parliamentary portfolio committee level, the issue of transformation has been accepted by all as necessary. All are agreed that apartheid was a terrible thing. Most realize that taxes will, without doubt go up, such as carbon tax and probably VAT, as will the cost of living. Most are agreed that service delivery in respect of the ideals of the NDP, especially at local level, is pretty poor.

Also, most agree that just before any kind of election, parliamentarians say some pretty odd things and make totally impractical promises in order to get votes. Look at the USA. However, in rating agency terms of where we stand in South Africa most of these issues have been “discounted”, to use their term.

What we need to know

stone sizaniHowever, in Parliament, cabinet statements, budget vote speeches and government departmental briefings are important to study in terms of trying to establish some measure of understanding as to where government is headed. The aim is always to establish certainty, not give views.

With certainty in the offing, capital investment can be planned for and growth expected. A clearer picture of government policy is always necessary for the greenhouse of ideas in planned expansion and development; whether the plans are worth the risk to exploit and, furthermore, to create an environment where the international message goes out…… this is the place to invest.

What we don’t knowgreen question mark

So what is troubling investors?    Aside from the nonsense going on at the SABC, here’s a few ideas and we are sure there are more….

Seven good reasons for a start:

1. What is the real plan of execution behind the Expropriation Bill? Definitions ranging from “the basis of land reform”; queries on the definition on “the public interest”; and a determination, it appears, not to study the constitutional aspects; all these queries and worries contribute to uncertainty.

2. Imagine what happened to planning departments in the mining industry during the last eight months with Minister Zwane’s surprise contributions to BEE shareholder arrangements and also by stating he was turning charters into law, presumably as part of MPRDA legislation. Uncertainty reigned.

3. It’s not good to hear that the BEE pointing system is to change yet again under the Preferential Procurement Act in major sectors that contribute to growth. One understands that President Zuma warned of this in SONA but how many more changes are to come but how many more times will DTI refine their idealogical BEE process?

4. When are intellectual property uncertainties to end? Where is the new legislation? Planning for the internationals in the pharmaceutical industry can hardly be easy.

5. New climate change fuel specifications are upon us and the Minister of Energy is totally uncertain on this issue, as she is with gas exploration, shale gas, a state refinery and the energy mix generally. Many potential investors have given up the waiting around and have gone, whether the oil price drop was to blame or not.

6. Minimum wage legislation will eventually arrive as far as the human resources environment is concerned but labour law as a whole is in flux with new drafts still with NEDLAC. South Africa is now rated one of the worst countries for an uncertain labour climate.

7. The national health insurance scheme coming from the likes of Minister Aaron Motsoaledi is foggy, unsettling to the financial world and confusing to medical health providers. Issuing White Papers is fine but turning these into legislation requires a finely tuned plan and policy directive. One never knows what the good doctor is to say next.

Cabinet cohesion

A lot of the problems come either from Ministers with little interest in the investment climate and who are probably not up the demands of their portfolio, or who appear to have “hobby horses” of their own. In addition, the friction between National Treasury and the Cabinet, so evident in Parliament, is adding fuel to the fire in terms of financial uncertainty.

A good orchestra always needs a good conductor with the ability of bringing people together accompanied by legislative certainty providing the musical score. South Africa badly needs a leader who can do this.

In parliamentary terms, most will be more relaxed when the current local elections are over; Parliament can restart and pressure then applied again to get clarity on exactly what investors can and should expect.

Previous articles on category subject
Parliament, ConCourt and Business – ParlyReportSA
Minister Brown wants utility shareholder management – ParlyReportSA
Editorial: Working committees – ParlyReportSA

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