(Bloomberg) — South Africa's political situation is the most uncertain since the end of the apartheid era, with investors deeply concerned about the possibility of coalitions between the ruling party and left-wing groups after next year's general elections, Investec Bank said. the CEO said. the official said.
Richard Wainwright said in an interview with Bloomberg TV on Wednesday that concerns are growing about the consequences if the African National Congress falls below the 50% needed to maintain leadership of the continent's most industrialized economy. He said there was. This could lead to the party joining forces with the Economic Freedom Fighters, which advocates the nationalization of banks, mines and land.
“There is probably the highest level of political uncertainty since 1994,” he said. “Certainly, in some cases they seem to be siding with his EFF. That would be very negative for both foreign and domestic investors.”
The ANC has ruled South Africa since white minority rule ended nearly 30 years ago. Opinion polls show the party risks losing its majority next year due to voter backlash over record power outages and a failure to address widespread poverty, unemployment and inequality.
The ANC is working with the EFF and other smaller parties to take control of many city councils after the November 2021 local government elections.
Mr Wainwright said political uncertainty was a deterrent to overseas investors. He spoke a day before President Cyril Ramaphosa hosts the annual investment conference, which has set a target of attracting R1.2 trillion ($65.1 billion) in investment in 2018.
“We had hoped that the current president would accelerate reforms when he took office, but unfortunately we have not seen any such movement,'' said Investec's CEO. “I think the level of political uncertainty will again make it very difficult to attract significant investment both internationally and domestically at this time.”
Presidential spokesperson Vincent Mugwenya said on Wednesday that South Africa had so far “realized” R1.1 trillion in investments since President Ramaphosa set the target.
Mr Wainwright said investors were asking the president for details of the government's plans to deliver structural reforms, including restructuring power company Eskom Holdings' SOC, expanding grid capacity and improving the ease of doing business in South Africa. That's what it means.
“Unfortunately, there will be a general election next year and it will be difficult to make any major policy changes. So our basic expectation is that we won't see any major policy changes, but they are necessary. “We need structural reforms to change policy on international investment,” he said. “I don’t think anything will happen until after next year’s elections.”
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