South Africa must act swiftly or risk losing significant domestic and international investments. Duncan Wanblad, CEO of Anglo American, was quoted by TimesLive as saying that the failing infrastructure in South Africa, especially load shedding and Transnet’s troubles, was frustrating to investors and business leaders.
According to Wanblad, who spoke to Business Day at South Africa’s fifth Investment Conference, investors may seek elsewhere if the country doesn’t take the initiative to fix these problems.
Investors in Anglo American, for example, can choose to put their money elsewhere. and they expect a particular rate of return on their money. Wanblad remarked, “Investment is difficult to the extent that our way of operating is not competitive with the other various options they have.” South Africa is not a complete disaster, but attracting foreign investment is “becoming more and more challenging” due to the country’s declining competitiveness.
Because of the late delivery of iron ore from Kumba and other mines to ports, Anglo-Americans lost billions of rands. Furthermore, the global community is losing confidence in South Africa’s ability to tackle money laundering due to the country’s recent greylisting by the Financial Action Task Force.
Wanblad warned that if South Africa’s investment grades deteriorated, it may hurt Anglo-Americans indirectly.
“I think it’s an appropriate time to say: I think we’re on a precipice. There’s a real anxiety… in everybody’s mind. What should we do next? “Because,” he explained, “there are only two ways: down, or we can flip it and move it up.
Ramaphosa Has Full Faith
At the investment conference, President Cyril Ramaphosa was much more upbeat.
Despite the country’s enormous issues over the past year, he assured investors that South Africa is still on the road to recovery.
“We are currently dealing with the repercussions of years of under-investment, mismanagement, and fraud in our electricity, rail, and logistics sectors,” the president added.
We are on a lengthy road trip to put things right and regain the ground we’ve lost as a nation. It will take some time for us to get back on our feet. We’re making progress toward a full recovery; despite our difficulties, we’re not going to let them stop us. To reach his five-year goal of R1.2 trillion in investment, the president was looking to bring in additional billions of rands. Since 2018, South Africa has attracted investment pledges of R1.5 trillion, well above expectations.
Despite the bleak global economic outlook, the president has announced a fresh investment target of R2 trillion for the following five-year cycle.
When asked about the government’s efforts to make South Africa more appealing to investors, Busi Mavuso, CEO of Business Leadership South Africa (BLSA), has previously remarked that not much has been done. According to Mavuso, “The government made several mistakes in the way it communicated with the market.”
For instance, she claimed that it was a huge mistake for the National Treasury to exempt Eskom from having to report irregular, unproductive, and wasteful spending.
Shortly after, Finance Minister Eoch withdrew the exemption, saying it was done to protect the credit rating and auditor opinion of the troubled power provider. This decision was received with public outcry, however, as people were concerned that it would allow additional corruption at the institution.
It was a major misstep that the exemption was communicated to the market in a way that gave the impression that it could be used to hide information from rating agencies. According to Mavuso, this hurts the government’s credibility as a trustworthy partner to investors.
According to her, South Africa’s electricity minister Kgosientso Ramokgopa made a new mistake when he suggested giving renewed attention to the country’s outdated coal power fleet.
The minister was extensively quoted as saying that the stations’ lifetimes should be extended through increased government investment, while extra could be put into coal mines to produce more coal. “While it is entirely correct that the power stations ought to be operated to enhance their performance, the minister in question was extensively quoted as saying that,” Mavuso added.
“This wasn’t going to be about operating the stations better, but rather breaking with the strategy established by the National Electricity Crisis Committee (NECOM) according to the current decommissioning schedule for Eskom plants.” She expressed concern that the minister’s remarks would be misunderstood by investors planning to pour billions of dollars into the country’s move away from coal.
About The Author:
Sipho Mabona is an esteemed investment industry specialist and contributing writer for African Nova. His rich experience and deep insights into the African investment landscape, combined with his articulate storytelling, provide readers with valuable knowledge and inspiring success stories.