WORLDVIEW: Why foreign investors are sticking around in SA

By Alec Hogg.Unlike many who live inside the country's borders, I pay close attention when global investors talk about South Africa. As a capital-starved developing country, SA needs foreign investment to balance it books and must attract billions more to fund long-term projects that promote growth..Without foreign capital, SA's open and growth dependent economy will soon implode. A harsh reality which the Apartheid government learnt in the late 1980s – and Zimbabwe is going through right now..___STEADY_PAYWALL___.Fresh from a trip to the country, London's leading SA-watcher Peter Attard Montalto sent out a note to Nomura's clients yesterday where he maintains last week's SONA met the low expectations of investors. Montalto, like his audience, is pragmatic. To his credit, he has accurately called the SA story for some months..The Nomura emerging markets specialist does caution, however, that longer-term risks are growing. His base case is a cabinet reshuffle in mid-March, with the likely exit of Gordhan and others outside Zuma's inner circle. Until then he sees strength in the Rand, reaching close to R12 to the US Dollar; but serious weakness after Zuma's move, dropping it to R15.50 by year end..If that's the most likely scenario, why aren't foreign investors cashing out now? Why don't they run for the exit before it gets too crowded?.The answer lies in the response I got from a couple of Londoners who have spent four years building a presence in SA. They admitted that progress has been slow, mainly because neither they, nor their BEE partners are prepared to entertain requests for bribes. They are taking the long view, sitting on their hands for now and simply keeping relationships ticking over until the environment changes..With Ramaphosa, Gordhan and Manuel in attendance, I was reminded in Davos this year of the opportunity SA offers with the right political leadership. There is massive human and natural potential waiting to be unleashed. And right now global investors are crying out for promising emerging market stories..SA's renewable energy programme shows what is possible. Some common sense adjustments to the MPRDA (which remains on ice) would spark a massive new boom in the untouched, massively rich shale and offshore gas sectors. And a more inclusive approach to Big Business would generate growth dividends far beyond anything Zuma's "radical economic transformation" will achieve..Eventually, this will come to pass. South Africa has a poverty problem that no amount of rhetoric will solve. Once all other alternatives have been exhausted, the country will opt for economic growth. Hopefully sooner rather than later.

WORLDVIEW: Why foreign investors are sticking around in SA

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