South Africa’s ‘political risk now worse than under Zuma’
INDEPENDENT business lobby organisation, Sakeliga, says South Africa’s political risk is worse today than it was three years ago under President Jacob Zuma.
In a statement issued on Sunday, the organisation said international diversification to hedge against local political risk is becoming a norm.
This deduction was made from a poll it conducted among its members and subscribers last month and the poll had 261 respondents.
The statement by Sakeliga comes at a time when South Africa’s political risk, together with its rising debt and “bloated and ineffective” civil service, has been a concern for rating agencies and economists.
The chief executive of Sakeliga Piet le Roux said as a result of the political risk, hedging against political risk in South Africa is eminently sensible.
He said “State-proofing” enables businesses to continue local operations and protects the economy against an intensifying political storm and without it, the South African economy would be in much worse shape soon.
He added that while true that some businesses and executives are exiting South Africa altogether, they were yet find evidence of a wholesale exodus.
Rather, they saw numerous signs of healthy strategic hedging against the rising political risk.
Le Roux stressed despite much hope, planning and rhetoric, the Cyril Ramaphosa presidency is not delivering the desired results for businesses.
“The scoreboard says president Ramaphosa’s term has seen increasing social instability, riots and disruptions, worsening business conditions, weakening property rights, doubling-down on race-discriminating policies such as Black Economic Empowerment, continued fiscal profligacy, and any number of other harmful interventions.
“It comes therefore as no surprise that business people are deciding to mitigate their exposure to political risk, rather than wait on unkept promises of better business conditions,” he said.
In conclusion, Le Roux said keeping an economy’s engines of growth far away from the hands of politicians is not only good business, but most importantly a public service.
“As such, we welcome the increasing internationalisation of businesses in South Africa as something that improves local economic conditions, given the circumstances of political risk.
“No doubt, the trend will reverse once president Ramaphosa delivers on his promise of a new dawn. Until then businesses in South Africa are going to do the responsible thing by hedging themselves, their employees and their clients and customers against political risk.” — IOL