Government’s regulations concerning black economic empowerment (BEE) policies have made investment in South Africa unattractive for both foreign and local investors, Democratic Alliance leader Tony Leon said on Friday.
Writing in his weekly newsletter, Leon said that China, which had few restrictions on foreign direct investment (FDI), attracted $53-billion in FDI last year — nearly a third of all foreign investment in developing countries, and ten times the amount invested in South Africa.
Leon said he had recently returned from a visit to the United States, where he was surprised by the frequency and urgency with which American business leaders and politicians raised concerns about BEE in South Africa.
”International investors are keen to do business in South Africa. They are excited by our country’s growth potential, and impressed by our government’s fiscal and monetary policies.
”However, some are concerned about the government’s BEE policies and what these suggest about the future of the South African economy,” he said.
He said that affirmative action policies were not new to foreign companies. Nor were they put off by the notion of contributing to social upliftment. Many had adopted codes of corporate social responsibility at home and abroad.
”The core of the problem with BEE is equity divestiture. They feel that a foreign government should not tell them, as foreign investors, how to invest their assets.”
In addition, it had not escaped attention that the lion’s share of BEE deals were dished out to a select few individuals with close ties to the upper echelons of the ruling party, he said.
Government was stopping short of directly threatening firms that failed to comply with empowerment charters, but President Thabo Mbeki and his party were not afraid to vilify individual investors and to warn of ”the fire next time”.
”In addition, no one knows whether or how empowerment companies or newly-empowered individuals are expected to reward the ruling party for protecting their interests, but the close links between the two raise serious questions.
”None of this is to say that the stated goals of empowerment are wrong in any way. This country certainly has an economic and indeed a moral duty to help those who were exploited and marginalised by the apartheid regime.
”But the best way to empower people is to create sustainable jobs. The best way to do that, in turn, is through rapid and sustained economic growth. And the best way to achieve that is to unleash the full potential of the private sector,” Leon said. – Sapa