A proliferation of new laws, soon to be tabled in parliament, has foreign investors jittery about their current operations and developments in South Africa. Furthermore, there’s concern that those looking at African investment are likely to set their sights elsewhere on the continent unless there is urgent clarity on policy decisions. Director and chief economist at Efficient Group, Dawie Roodt, told FTW that since a change of leadership in 2008, the South African government had been grappling with an identity crisis and had been basing proposed regulations on several national policy documents developed over the past 55 years – the Freedom Charter, the Constitution, the National Development Plan and the Industrial Policy Action Plan (Ipap). “As a result, there are lots of policies and regulations which contradict each other and therefore create a lot of confusion when it comes to implementation.” This uncertainty, more than anything, is what has current and potential investors running scared, Roodt believes. “As a result, development is at a standstill and the government is not meeting voter expectations. In their panic, they are increasingly intervening in business policies and introducing more laws and regulations,” commented Roodt, adding that this merely exacerbated an already dire economic situation hard hit by labour unrest and a faltering power system.
Carol O’ Brien, executive director at the American Chamber of Commerce in South Africa (AmCham SA) – which represents 250 of the 600 US companies with operations in SA – told FTW that with one piece of legislation after another hitting companies, global businesses were “rightfully wondering if foreign direct investment is actually welcome in South Africa”. O’ Brien said four proposed new laws – the Private Security Industry Regulation Amendment Bill; the Promotion and Protection of Investment Bill; Intellectual Property Policy and the Expropriation ill were of particular concern to US companies operating in South Africa. She said: “The Expropriation Bill, for example, calls for expropriation of land for a public purpose and allows the courts to determine the amount of compensation payable. This Bill in itself is not problematic, but read in conjunction with the Private Security Industry Regulation Amendment Bill (which calls for foreign- owned security companies in SA to give 51% of those companies to South Africans) and the Promotion and Protection of Investment Bill, then a worrying trend starts to develop.” O’Brien added that the Intellectual Property Policy diluted intellectua property protection. “While the broad aim is to make medicine more affordable in SA, multinational pharmaceutical firms are up in arms that their patents will no longer be protected in South Africa if the policy gets accepted. Already some drugs are not rought to the SA market because of the uncertainty,” she said. According to O’Brien, the IPP was withdrawn after a huge outcry. “We were told that a new policy had been created, but we have not seen it as yet.” O’Brien pointed out that foreign direct investment (FDI) was one of the proven ways to address unemployment, poverty and inequality.
