2001 is likely to be a watershed year for President Thabo Mbeki and his government to rebuild negative foreign perceptions of South Africa?s economy, with the ANC?s defensive political style contributing strongly to poor foreign direct investment (FDI) figures.
This is the view of independent think-tank Business Map, which says bold measures are needed to turn negative foreign perceptions of South Africa around and boost the modest growth the economy has seen in the past decade.
?If investors fail to see progress, South Africa is likely to slide to the edge of their radar screens,” it said in a statement released with its bi-annual country risk report.
The think tank said the defensive political style adopted by Mbeki in issues like the Aids epidemic and the handling of the government?s arms probe was seen as a key factor in compounding negative investor perceptions.
”If they don’t do something fairly significant this year which rebuilds confidence, companies in this area will start to look elswhere – this is a crucial period for government,” Business Map chief executive Jenny Cargill told reporters.
Business Map said South Africa would remain a poor magnet for investment without progress in key areas like privatisation, crime and meeting a chronic skills shortage.
Foreign direct investment (FDI) figures for 2000 were the poorest of the past few years, with the quarterly average for the year falling by 52% from the previous year to $492m, it said. This was despite a 144% leap to $6.6bn for the fourth quarter from $2.7bn during the third, it said.
At the same time, South Africa’s credit risk rating fell to 71.6% from 74.2% in August – although still comfortably within the ”good” category, it noted.
Cargill said another issue that worried both the domestic and overseas investment community was the growing racial polarisation emerging in South Africa, with minorities becoming more fearful of their status.
South Africa’s privatisation programme was also crucial, with the IPO of state telecoms operator Telkom this year a key opportunity for investors, particularly after legal delays to the awarding of the country’s third mobile license. – Reuters