Press Release: Switzerland – 23 January 2016. “The South African Presidency welcomed investors after a ’successful’ World Economic Forum (WEF) in Davos, Switzerland that concluded on Saturday. The president led a high level delegation” and, according to the Presidency, ” the overwhelming sentiment emanating from Davos was that investors continue to see South Africa as a preferred investment destination”.

”SA is open for business to global investors”, he declared, and he assured “the global community of the country’s commitment to maintaining policy certainty, fiscal discipline and the promotion of inclusive growth and development”. He followed up with pronouncements about the usual “challenges” that seemingly always face the nation, many of which he said were due to “global shocks”.

Did the president himself instruct his communications department to put out such absurdities? Or did he leave it to “the Presidency” to compose this deceitful message?   According to media reports, Team South Africa was not welcomed with open arms. Indeed, it was a case of “Uphill in the Alps for SA at Davos after 9/12” (Sunday Times 24.1.16) and “Team SA left out in the cold at Davos” (Business Times 24.1.16). Some Team-organized Forum discussions were cancelled due to lack of interest.

The facts belie President Zuma’s Davos pronouncements. There was a 74% drop in foreign investment into SA last year as recorded by the UN Conference on Trade and Development. Despite the government showcasing some motor-industry deals, the reality is that SA only drew $1,5 billion in foreign direct investment last year, less than Nigeria and Mozambique. There is in addition increasing world capital flight from so-called emerging markets into safer havens. ”The pace at which capital is flowing out of SA’s equity and bond markets is accelerating” says Business Day (22.1.16). “Portfolio outflows have been running at R16 billion a month for the past three months” says Barclays analyst Mike Keenan.

In the very heart of Europe, Mr. Zuma told business people in the Kirschner Library in Davos that he intends using the 26^thAfrican Union (AU) summit (which was held the following week) to lobby for a ”self-reliant continent unshackled from its colonialist links”. Perhaps Mr. Zuma was feeling the cold draft of indifference and Africa fatigue from the WEF and thought it face-saving to change focus. Whatever his reasons, his remarks that “the AU has gravitated towards looking at the interests of the continent collectively….. due to pressure from colonialists” were unfortunate. The colonialists of Europe pay the AU’s bills every year and Africa as a continent has no “collectivity”. He questioned whether the WEF held any real “quantifiable value” for the continent”. (For “quantifiable” read “aid and/or soft loans”.) Team South Africa’s trip to the WEF is reputed to have cost R6,6million.

INVESTMENT AND DELUSION

President Zuma’s sacking of South Africa’s finance minister Nhlanhla Nene on December 9 last year, and his quick about-face to re-appoint a former finance minister Pravin Gordhan should have been a salutary lesson as to where SA’s real power lies: it does not lie with him or indeed with his party. It lies within the business community and a small taxpayer coterie, and it lies with SA’s commercial farming sector. A catastrophic drought had enveloped the country, the worst since 1904. Food security became SA’s talking point and the ANC government’s woeful lack of preparedness revealed just how close the country came to panic. If it were not for groups of non-official citizens who set about preparing the logistics for the importation of millions of tons of maize, would government officials have been capable of stepping into this vital breach?

The world is watching South Africa. The damaging finance minister faux pas sawthe rand drop like a stone. A high-powered SA business and banker group presented the president with an ultimatum: if Nene’s sacking stood, the rand would continue its nose dive, foreign investors would run for the hills, and the cost of borrowing by the state and state corporations would become untenable. What an embarrassment that the citizenry had to enlighten the president about basic economics!

Was the president chastened by his failure to comprehend the folly of his decision? Seemingly not. His cavalier remarks at Davos are an indication of a bizarre type of self-delusion that has manifested itself in some world leaders, many of them in Africa. (The ageing dictator president of Zimbabwe is an example!) The pattern is becoming familiar. SA’s president lashed out at his detractors for “gross exaggeration” over his sacking of Nene – a move which wiped billions of rands off the economy. He attributed the weak rand to the “global economic meltdown”. (The rand depreciated 25% against the US dollar last year.)

Clearly investment in South Africa is not a current priority in world business and financial circles. Why should anyone invest in South Africa? Does Mr. Zuma really believe that no one knows what’s going on in our country? The World Bank has a large office on a main road in Pretoria. Its personnel read the papers, they watch television, they see the destructive protests, they witness the trashing of our universities, they are aware of our municipal corruption and incompetence, they avoid our polluted water and keep away from our myriad fetid squatter camps. They are cognizant of the travails of our drought-cursed commercial farming sector which struggled to keep animals alive, which failed to plant because there was no rain, and which had to rely on a caring populace to help with water and cattle feed because the government obdurately would not declare the drought a national disaster.

What does the World Bank and the myriad other international organizations, not to mention the hundreds of foreign embassies in SA’s capital, think about the collective mentality of a government that has allowed a once-functioning country to disintegrate into third world status? Open for business, Mr. Zuma? Who’s going to heed your call to put money into a country where government phones remain unanswered, where civil servants and the cabinet take their share of the country’s budget before it’s apportioned anywhere else, where corruption, nepotism and ineptitude are only exceeded by an arrogant and wholly undeserved sense of entitlement? In addition, the WEF says South Africa has the worst labour/employer relations in the world.

The SA government is long on promises and short on action. When a citizens’ organizations spend R380 to fix a leaking municipal pipe that over-paid local authority councillors couldn’t repair for two years, then the writing is on the wall.

A PERFECT STORM

A perfect storm is brewing. As the SA economy shrinks, thousands of people are losing their jobs. Food prices are set to increase by at least 25%. Many farms are for sale. Agricultural unemployment will mushroom. Electricity provider Eskom wants a 17% tariff hike for its power. Credit ratings agency Fitch Ratings declares that the outlook for residential property and mortgage markets this year has severely deteriorated from last year, and that there will be no growth this year and an actual decline of 3% in 2017. Mines are closing. SA’s construction outlook is bleak. Previously declared government infrastructure projects are now on ice because of lack of funding. (Infrastructure expenditure in terms of the National Development Plan was set at R1trillion, a fairy tale figure when taken in the context of SA’s over-stretched budget.)

The president of Master Builders SA declared in his annual report that the steel, mining and construction industries were “in desperate need of an investment stimulus”. Government’s ineptitude and lack of reliability and trustworthiness have put paid to investors moving into these sectors any time soon. (Perhaps Mr. Zuma can call on his friends in the African Union to come up with some investment ideas for these beleaguered sectors.)

The list of catastrophes is endless. Transparency International has placed South Africa on a par with Senegal and Lesotho on its latest corruption list, and behind Ghana. Africa is once again the most corrupt continent. The official audit report for the city of Tshwane (Pretoria) for the year ending June 2015 reflected an “irregular” expenditure of R4 billion, according to press reports. All over the country the picture is the same. Government officials continue to declare that “we need to ensure” or ”we must address the challenges”. “We have improved the lives of many” declared Tshwane’s mayor Kgosientso Ramokgopa as the R4 billion scandal erupted.

The government and its officials are either deceitful or delusional, or perhaps both. Their policies are idealistic, not realistic, and they are not changing. Their words are palliative but do not have an honest resonance. The president’s government is corrupt through and through and he either ignores history or deliberately falsifies it. He still tells the world that “the people’s land” was stolen by whites when he knows this is historically and empirically false. He is preparing legislation to expropriate productive land in order to hold on to power.

And investors must come into this quagmire? We think not.