The world is changing fast and to keep up you need local knowledge with global context.
By Terrence Corrigan*
An enormous well of goodwill, and a great deal of interest in South Africa and the opportunities it offers – but great concerns about the path it is taking.
These are the impressions we at the IRR have been left with after a week in Berlin. In a busy schedule of interviews and engagements, we have spoken to a range of decision-makers politics, academia, business and the media. High on the list of concerns, probably topping it, is the question of the South African government’s apparent determination to introduce a policy of Expropriation without Compensation (EWC).
“Dies ist ja ein äuβerst wichtiges Thema”, as one of our German interlocutors put it – “This is an extremely important issue”. Indeed.
Germany has investments upwards of R140bn in South Africa, much of it in highly productive, value-adding industries. Germany also accounts for a little over 7% of SA exports, a large proportion of which are manufactured goods. (Not only do we produce German cars in South Africa, we export cars to Germany.) This is precisely the sort of economic relationship that South Africa needs, not least if it is to have a chance of achieving the industrial development that is so close to the hearts of government policy makers.
South Africa is also very much in the public eye. Aside from the considerable economic stake, South Africa is a popular destination for German tourists. Many Germans have long-standing personal relationships with South Africans, and thousands of German citizens call South Africa home. As emerged in more than one of our discussions, someone who ‘follows the news’ in the German media would have a reasonable handle on South Africa and would know about EWC.
There is a prominent view in Germany of South Africa as a partner country. A stable, prosperous South Africa is good for Germany. Aside from the obvious stake that Germany has in the country (and for that matter, the stake that South Africa has in its relationship with Germany), the two countries share some important challenges, as well as perspectives on the world.
So it is with a large degree of concern that some German observers have watched developments in South Africa. Some of the policy missteps that the country has taken – former president Thabo Mbeki’s stance on AIDS, for example – have shaken confidence in South Africa. The ascendency of President Jacob Zuma and the associated scandals probably had an even more severe impact (matching, it must be said, the adverse impact it had in South Africa itself).
But if these could be dismissed as aberrations of the path that South Africa is on, tied to particular personalities, greater concern arises in discussions about the policy orientation displayed by government. The frequent rhetorical antagonism towards ‘the West’ is one such issue. More concrete was South Africa’s decision to repeal the bilateral investment treaties (BITs) it had with a number of European countries, Germany included. We heard repeatedly that this has provoked great anxiety about the security of investments, and is a significant disincentive to undertaking new investments.
The cancellation of the BITs appears to be seen as a companion issue to EWC. Both downgrade investor protections and dampen confidence in South Africa.
Some of those with whom we discussed the issue noted the disjuncture between President Ramaphosa’s investment initiative and the negative effect of these policy choices on the actual investment environment. (It’s as well to point out that what is required is less soothing words and explanations than guarantees that South Africa is open and receptive to foreign capital.)
For the moment, EWC is a self-inflicted hindrance to South Africa’s investment ambitions.
None of this is to suggest that there is not widespread sympathy and support for measures to promote growth and to foster economic inclusion. Indeed, we have been privileged to discuss the work that a number of organisations are doing, at various, levels to assist South Africa in this.
For the IRR, it has been a pleasure to engage with people who are in general extremely well-informed about South Africa. We are pleased to say that the information exchange has gone both ways, and we look forward to further engagement.
From this week, the IRR will be continuing its engagements abroad, first in Belgium and then United Kingdom.
Our campaign in the international sphere is focused on building support for the protection and extension of property rights for all South Africans.
- Terence Corrigan is the project manager at the IRR, a think tank that promotes political and economic freedom. If you agree with what you have just read then SMS your name to 32823.
- Terence Corrigan will share the facts behind SA’s ruling political party’s promotion of expropriation of land without compensation at an event in London hosted by Alec Hogg. Register here.