A critical turning point for policy and economics
SOUTH Africa’s Pravin Gordhan is ranked 15th out of 19 Group of 20 finance ministers by the Financial Times. The survey has been published for the past seven years, but this is the first time the G-20 has been included.
As South Africa approaches a critical turning point when policy and economics cross swords in Mangaung in December, the survey is a timely reminder of how dire the situation has become and how much work lies ahead.
It is no surprise that South Africa ranks below Turkey — we were once on a par — and Mexico. In fact, we are by the far the worst member of the Brics economic grouping: Russia is number two (behind first-placed Saudi Arabia), China is third and India 10th.
The survey, conducted among seven leading overseas economists, is important as it reflects how much foreigners’ perception of South Africa has sunk. We are now in a bottom-of-the-pile club with France, Japan, Italy and the UK, despite having no Europe-style crisis of our own or multidecade deflation.
Indeed, this poor outcome has nothing to do with Gordhan himself, who, as a finance minister, holds his own with the best. It is rather a reflection of how difficult it has become to manage the myriad challenges South Africa faces: a moribund mining industry beset by strikes, abysmal education, rampant corruption and a political fight getting increasingly nasty, making it hard to make coherent policy decisions or to get the economy and jobs going. The finance minister is paddling against a strong current in a very flimsy craft.
South Africa’s Brics partners — Brazil, Russia, China and India — are probably worried about what they let themselves in for.
A new study reveals South Africa is the least compelling investment destination among these. Furthermore, only 6% of chief financial officers see South Africa as a focus for general expansion, according to the BDO Ambition Survey: Global Opportunities 2012, conducted among 1,050 chief financial officers of mid-size businesses in 14 countries across North America, Europe, the Middle East, Asia Pacific, Latin America and Africa.
For the third year running, China had topped the BDO Global Market Opportunity Index as the world’s number-one destination where chief financial officers feel the most comfortable investing. After China come the US, Brazil, India, Germany, Russia and the UK. South Africa is ranked as the 15th most popular market for entry or increased investment.
There’s that dreaded number 15 again — it is poor and at the bottom of the class. It’s a pity the African National Congress cannot wake up to this fact and be less defensive about its track record.