The South African government will have to do its best to appease investors in the midst of “a lot of turbulence and policy uncertainty” to invest in the country.
This is how Everest Wealth, a private investment and wealth management company, announced on Wednesday on the eve of pres. Cyril Ramaphosa’s fifth investment conference said which will be held in Johannesburg on Thursday.
“It’s one thing to get investment commitments, but there are conditions attached to it and investors will only want to see the cat properly for the next few years,” said Riaan Grobler, financial advisor at Everest Wealth.
“The conference comes in the midst of several public slaps by the government in recent times. South Africa’s continued ties with Russia at the expense of its relationship with the USA can cost him dearly.”
Grobler believes that all eyes are definitely on developments in connection with the envoy that Ramaphosa wants to send to the USA to protect South Africa’s trade ties with this country.
Experts have been warning for a long time that the South African government’s ties with Russia could undermine the country’s relationship with one of its largest trading partners and, according to Everest Wealth, is precisely one of the major “blunders” that South Africa has suffered in recent years with regard to its committed foreign policy.
“South Africa’s stance regarding the war in Ukraine and its joint military exercises with China and Russia has resulted in it losing favor 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 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,” says Grobler.
The power crisis naturally remains one of the country’s biggest challenges with load shedding costing the economy millions of rands daily. Decisions made around Eskom also cause further uncertainty.
“The decision to Eskom release regarding reporting requirements on irregular and wasteful spending, their repeal soon after and then confirmation that the possibility is still on the table does not bode well for investor confidence.
“The holders of Eskom’s debentures often have conditions attached to them, and the decision to exclude information from financial statements can result in the holders of these debentures demanding their money back. This in turn poses a major risk to the state treasury.”
Grobler further says that the sudden end of the state of disaster and conflicting statements about the energy sector’s transition to more renewable power supply can damage investor confidence even further.
“During previous investment conferences, nice talks were made about South Africa making progress to improve the climate in which investors can do business, but Ramaphosa’s numerous promises have not yielded much yet. What will he promise this time?
“The IMF’s expectation of no economic growth for South Africa in 2023, as well as its concerns about sluggish reforms and public debt, do not make matters any more rosy for investment either.”
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