Reality Bites Back

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South Africa in Distress. Expropriation without Compensation drifts ever closer, threatening the vestiges of South African society.
South Africa in Distress

A is A – Ayn Rand’s formulation of the law of identity, which pertains to reality: reality is what it is, and our wishing that things were different will not make them so. We have heard many promises and plans from politicians in the last two years, to the effect that reforms are coming, that SA will become investor-friendly, that things will be turned around. The reality is far from those lofty promises and plans.

On 11 February BusinessDay detailed that Investec Property Fund (IPF) was set to “increase its offshore exposure to warehousing and distribution centres used for online shopping and manufacturing as SA investment conditions remain dire.” What is the goal of any investment? To obtain a solid return on that investment. Given the difficulties in SA, it seems IPF has decided that the pan-European logistics platform (PEL) is the more rational route for investment.

On 12 February, Moneyweb revealed that between 300 – 500 jobs could be on the line at AB InBev, “in the face of tough economic conditions in the country.”

Expropriation without compensation is the biggest threat to the economy. It has not even been implemented yet and it is already destabilising the property market and the banks, and presents a serious threat to investment. Add to this NHI (for which there is zero room in the budget), talk of using pension funds to bail out Eskom, and the incredibly restrictive labour legislation (like the minimum wage) and the economic scenario looks bleak.

As usual, the blame will be placed on the shoulders of these companies: how dare they leave, they have a duty to provide jobs! Those words of outrage crash against the harsh, jagged rocks of reality. Investment cannot be assumed as a given. Countries must be attractive to investors to show that they are serious about growth.

President Ramaphosa delivered his 2020 State of the Nation Address on 13 February. Apart from confirming that EWC and the NHI will go ahead, he also said that government would ensure ‘cheaper’ data is provided to the people (presumably this will be brought about by government interference in the market). To give some credit, the president said that regulations affecting independent power producers would be eased, and that municipalities will be allowed to buy energy directly from said IPPs. It remains to be seen whether this will actually be enacted, or whether it was simply an empty gesture.

SA, to see any form of noteworthy economic growth, requires a fundamental mind-shift; away from government-centric, government-focused, to an individual focus. The great tragedy of modern South Africa may well be that individual rights were never respected – that individuals were not valued, in and of themselves, but seen as ‘useful’ or not only insofar as they formed part of a particular collective. The job creation and great economic growth we are promised time after time will never occur in the current climate of suffocating government-imposed regulations, high taxes, and general disdain for innovation and individual self-enrichment.

SA has done little to change course, little to show is citizens, and prove to the world, that this is a place where they will be safe, should invest, and work and live. The current administration promises fanciful plan after fanciful plan, with very little chance of concrete delivery. Usually, the more outlandish a government’s announcements and plans become, the less reason you should have to believe them; promising many things is the easiest way to garner support, without the need to worry about actual changes on the ground. As the examples listed earlier show, when reality signals to people that they can live better elsewhere, many will leave, and this should come as no surprise.