There are areas that threaten to unseat the country from capitalising on the global attention it receives…
The Global Competitiveness Index has ranked South Africa the second most competitive economy in Sub-Saharan Africa. Globally, the country has been placed 47th out of 138 economies.
The World Economic Forum’s annual report assesses economic openness based on a nation’s ability to stimulate its economy despite developmental challenges.
Pieter Steyn, Chairman of LEX Africa and Director at Werksmans Attorneys — says South Africa’s strengths primarily lie in the stability of its financial markets and banking sector, its dynamic private sector, independent courts and democratic system of government.
But, there are also serious challenges to overcome that if left unattended threatens to unseat South Africa from its position.
Steyn says uncertainty, dangerously low growth rates and low business confidence are problems which need to be urgently addressed.
“A key issue is the lack of regulatory certainty – the important mining sector is a good example with uncertainty over the treatment of previous Broad-Based Black Economic Empowerment (BBBEE) transactions for the purposes of mining firms’ compliance with BBBEE requirements and proposed amendments to legislation which have been pending for several years. Rules need to be clear and investors need certainty that the rules will not change overnight and without consultation, as was the case with the new BBBEE mining charter. Investors will otherwise look elsewhere“
Steyn says a more investor friendly environment could easily bolster South Africa’s competitiveness if attention was paid to it. “Perceptions are important. The unilateral termination of bilateral investment treaties with several important European trading partners caused concerns especially as there was no prior consultation.
“Violent student and other protests, corruption and governance issues and infighting within the ruling party contribute to both local and foreign investors being cautious about investing in South Africa. The quality of Health and education also remains seriously problematic as indicated by our very low rankings by the WEF,” he warns.
Mauritius beat South Africa on the index, scoring highly for its robust tourism sector, world-class services industry and quality infrastructure.
LEX Africa South African member is Werksmans Attorneys