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If you don’t invest in your country, why should outsiders?

Your investment strike is as responsible for the country’s economic woes, as government policies are.

A sobering reality is that neither the budget speech nor the state of the nation address is going to pull the economy out of the current crisis it finds itself in. At best, the two can give the country a sense of the state’s policy direction and thus enabling some sort of certainty.

  • Fact: 35% of the labour force is unemployed or has given up hope of finding work;
  • An even more frightening fact: Absorption of the youth (graduates or non-graduates) into the labour market is South Africa’s single-biggest economic challenge;
  • Another one: Government debt now stands at R2.2 trillion, or 50.7% of GDP, while expenditure on public services will continue to grow moderately above inflation.

A glance back to the last ten years of economic performance is shocking enough to turn us into proverbial statues. The South African economy has been plagued by declining productivity since the mid-2000s, and seen stagnant median wages for regular working-class people and at least 15 years of underemployment.

Even amid encouraging remarks by president Jacob Zuma such as, “we’ve declared 2011 the year of job creation, and mobilised our social partners, namely business, labour and the community sector, to work with us in implementing the New Growth Path.”* The years that followed proved contrary; fewer jobs were created and the job opportunities government spoke of never came to the fore. Instead, what followed was a change in the country’s economic narrative that the economy was not growing as it was expected and the word recession became increasingly part of the economic parlance.

Statistics South Africa’s long-term unemployment threshold levels from 2011 further dented any illusion of miraculous job creation in the year/s that followed. The country’s economic slump has now lasted six years, and output is still below the previous peak level (early 2000s). The decline is evident in the last six years’ revision of expected GDP growth to an even lower percentage. The growth has been too little – and almost insignificant in real per capita terms – when compared to countries such as Brazil, Turkey, Indonesia, India or China.

A reality: There’s very little prospect in sight of improvement. The economy’s cracked and fragile walls are giving in, soon they will collapse and bury the country under. What you’ve just read paints a doomsday scenario that has most of us reaching for anti-depressant medication. No matter the angle you look at it from, there hasn’t been any good news related to the economy in a while. 

Why am I telling you all this? It’s time words are said against the private sector investment strike. If we are being honest, their actions are equally responsible for the facts mentioned above and the current state of the economy. 

It is a truism, of course, that when politicians, especially those who are from the ruling party, do bad things or make mistakes, business will criticise them and even oppose them. It is also a truism that in dominant public narrative, business is hardly as criticised and scrutinised as government is.    

I get unsettled when in an economy that has many players, one is more reprimanded for bad play than the other. A strong case can be made that in South Africa, we hardly give the private sector a lashing or serious scrutiny for bad behaviour, corruption or bad corporate practices as we do the state.

While business claims to support minister Gordhan’s call for ‘collective choice in growing the economy’, the unwillingness to invest its growing cash balances locally is contrary to their words. In failing to put their money where their mouth is, business must equally bear the responsibility of a failing economy.

Dean Acheson’s autobiography, which includes sections about his years in government, comes to mind. Pompously titled Present at the Creation, the book is about him being present when America rebuilt itself out of war rubble. So too is business in South Africa present at the creation of the economy’s failure. By refusing to invest locally, it has ensured that household and business suffer inflation, while the economy stagnates.

Each quarter (labour force survey) statistician-general Pali Lehohla, talks about the high number of black graduates who still battle more than any other demographic to find jobs. Yet corporate South Africa says it cannot find qualified people to employ. A hashtag has emerged on Twitter, #jobseekerwednesday, and the level of qualification on CVs shared via the platform disproves that narrative. 

By its nature business is selfish. Its sheer buying power allows it to override anyone or anything that stands in its way. Sadly for South Africa, that selfishness has blinded it to matters of national interest and mutual growth.

I therefore remind you, business leader reading this; America fought its way out of the great depression (putting aside individual interest and working on a common goal) by forging a New Deal. The consequences both economically and socially of you not doing the same are to speed up the coming doomsday.

*Sona Speech 2012

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Don’t be ridiculous. The article was actually quite good until the toxic nonsense about private investor strike was brought up with less aplomb than a mangy moggey hawking up a saliva encrusted furball on the brand new suede sofa.

The private sector makes investments based on the projected return and the risk/ uncertainty profile of the investment undertaken.

The fact is that South Africans do not want to invest in SA as the return is not commensurate with the risk. The marginal productivity of capital is very high in South Africa ca 9% versus most Western countries where it is about 1 to 2% (less is good BTW). Since it is difficult to externalise your capital, people prefer bonds or sitting on the cash. Overseas investors love bonds. FDI, well… not so much. South Africans would love to be able to easily externalise their capital but the regime does not allow this. Capital controls rob South Africans of the value of their money. Capital control are only there because the regime is messing up and driving capital overseas.

It is the regime’s fault that the economy is not growing. Entirely ANC. They cannot provide law and order and security- a basic government function but they themselves are common or garden looters and criminals and this goes to the top. Their onerous labour and BEEEEE laws make FDI a legal nightmare and dilute returns by insisting on parasitic partners who bring nothing to the table. If they brought commensurate value to the table then BEEEE would not be required as these ‘partners’ would be snapped up. The regime is anti business and anti capital but they are smart enough (barely) to tolerate their milch cows. They are not smart enough not to drive capital overseas, dry up investment and exile the best SA human capital to faraway lands.

Q: why would South Africans rather externalise their capital than invest at home?
Q: why do investors prefer bonds to fixed direct investment (FDI)
Q: why are capital controls considered necessary?

There is no ‘bad play’ only being thoroughly ignorant of basic economic principles.

It would appear that economic principles are not where it ends: heaped on this nonsense we have historical principles.

I quote:

“Dean Acheson’s autobiography, which includes sections about his years in government, comes to mind. Pompously titled Present at the Creation, the book is about him being present when America rebuilt itself out of war rubble”.

The book is actually about how the USA rebuilt the free world including West Germany and Japan. The USA was the only country with a strong industrial base at the end of WW2. Apart from Pearl Harbour, Midway, a balloon bomb landing in Oregon and other minor harbour attacks by subs, no USA real estate was damaged at all in WW2. There was no “America rebuilding itself”.

Of course, we end the nonsensical diatribe with the Parthian shot. A predictable threat. Unable to mount a cogent argument, we are left with Argumentum ad Baculum. Do as I say or else you gonna get it! Doomsday commeth.


When businesses expand without enough demand to support growth, it leads to waste of capital. Better for SA businesses to invest where it gives a return (offshore in many cases); long term, they will have more money to invest in SA.

Can the author give a personal example of “investing” a large portion of their own money for the greater good, rather than to maximize returns?

(putting aside individual interest and working on a common goal), this will include all parties, not just the one side, – Government is on it’s own agenda, and their to milk with their own individual interest.

I guess the private sector is also to blame for Zimbabwe’s failure. Who in his right mind will invest in an economy were property rights are not respected, were your return is diluted with BEE, were basic services are generally weak. The author does not realize that private investors make decisions based on a return/risk ratio. Its very objective, its unemotional and has got nothing to do with politics.


If the road I travel to work is full of potholes (which it is) I will start taking another road with less potholes (which I do).

If I pay more at one store for an item than at another one I will go for the cheaper option (quality being the same in the scenario).

If the money I give to someone keeps disappearing into their own pockets instead of being used for the correct purposes I will cease giving money.

I’m not sure how much clearer this needs to be to the author of this drivel.
I have no choice (at the moment) ito of service delivery from the government (the ruling party of which I did not vote for in any election) at present. So I am giving them money (taxes) and not seeing any return on that (refer potholes for example).

As I can’t expect decent retirement or healthcare from the government I need to invest my money somewhere to get a return worth something when I’m old.

Having 20 children is not a retirement plan fyi.
Having a BAdmin degree which you obtained over a 6 year period with a chip on the shoulder to accompany it will not make you employable.
Being forced to employ within strict draconian principals will ensure that less people are employed.
Having your money stolen (through corruption and greed and the basic African way) will ensure that less money is invested here.

Blaming the victim seems to be a staple of the ANC government and their proponents such as this author.
A rational consumer/company/investor/employee will go where the return on their capital/labour/effort/tax etc is worth it for them and their family.
They owe you nothing.

What the government owes them is a stable, safe, free environment within which to apply their capital and labour and skills to ensure prosperity and growth.

Stop stealing our money and we’ll invest again. Pretty simple really.
And I didn’t even have to wikipedia a random book as a “quote”.

Isn’t it funny how simple logic and the truth can be!

And also the main source of denial when it suits those denying the truth.

I personally feel this article is so on the button! The Vitriol of notes from this article saddens me. All South Africa needs is a dialogue of “We”. The American Flag is everywhere in the States. When they have a problem they don’t all flee they look at the flag (ie their future) and fix the issue. Capitec, Discovery and Shoprite are only three examples of many many where the returns in “dollars” have been more than acceptable.

Blondie, I am not really an SOB but you cannot dismiss criticism as vitriol merely because you disagree. Sure there is good, there is bad and there is real ugly.

The US government is not at war with the private sector and a significant part of the population like the ANC is. If South Africans are divided it is only because the ANC has pounded a stake between them. They had all the goodwill in the world on their side 20 years ago.

In finance, high returns can be an indication of a problem. If the underlying assets were stars in a low risk environment, the market would bid up their prices and lower the returns.

Blaming people for not wanting to lose their money into a corrupt system is not a solution.
Fix the government and we’ll all invest here again.
Make it easier to do business and business will invest here again.

Hold business accountable – absolutely. But why should only business be held accountable?
If your president can’t be removed by law, protest or election you live in a tyranny. And people don’t invest in tyrannies.

Not sure why that is seen as being negative. It is logical.

The reasons people don’t want to invest here:

1. Corruption
2. Out of control government spending,
3. Threats that property rights will be taken away.
4. Bad policies that buy votes at the expense of economic growth.

One thing i like about this article is mentioning 35% unemployment, that is getting closer to the real figure of 50% or more.
fair enough the author mentions black graduates not finding jobs – everyone for their own, but how about the young pale males who are not employed due to BBEEE quotas ?
i have many young family members and friend graduates who have left the country and were snapped up overseas- they could not find employment in SA
My son had to create his own company and now he has the BBEEE wolves barking at his door
I know of a bright young attorney who only found employment because his parents paid his salary at the firm he worked for until he became indisposable.
now we go to the top of the pyramid where we have a bunch of thieves in government who seem to go out of their way to not deliver, steal mining rights for friends and family ala Gupta, pay previously white owned companies a third or less for the coal supplied to Eskom.
now does this government expect loyalty from white citizens- you must be joking , we warn off foreigners at every opportunity we get because we are pissed.
what goes around comes around- remember the boycotts initiated by the ANC during apartheid that brought the Nats to their knees.?
Mandella was a shining light but this crowd we have now are useless

I agree with you. The credibility of the degrees and qualifications given the low pass marks required to get a diploma etc. makes our qualifications questionable and in some cases worthless. It is pointless having a metric, diploma or degree if you don’t have basic spelling or basic arithmetic techniques.

You call it a strike like you think capital is delinquent and obliged to come back to you. This government has an abusive relationship with capital, particularly white monopoly capital, slapping it around and then trying to guilt-trip it into staying. But we know how that ends.

This article is pretty terrible, does Moneyweb not vet these?

As pointed out in comments below, one has a choice with the private sector. If I don’t feel I am getting value or a company is socially immoral then I will simply stop purchasing their products/services. With Government, you have to wait 4 years and then hope that everyone else is equally disgusted with the constant crisis being funded by the taxpayers. Where else in the world does someone get to keep their high paying job despite never meeting their fundamental KPIs? (ala Eskom, SAA, SASSA, SABC etc).

I also find it funny that the author concludes that black graduates are not being hired by private, the reason the author seems to imply is simply racism. Seeing a few good CV’s on twitter is not exactly sound research and the SG never seems to elaborate on why black graduates would not be the highest % of unemployed graduates despite the quantum of black students vs other races? In addition, a sound CV does not mean the right fit for a job, a CV gets you an interview, the rest is up to you and that is more prominent given the current economic environment. My personal experience is that affirmative action has ramped up significantly over the past 5 years in all the big industries I have been involved with. No complaints with that because of historical injustices etc but I find it cheeky when there are still complaints about black people not being hired by the “racist” private entity, If that is the case then I have not come across it and no one seems to provide any hard evidence to support that other than a few “selective statistics”.

I don’t buy this for a second!!! …Sorry. Companies have every right to move from saturated markets into new/emerging markets like many South African companies have. Had government created jobs and attracted foreign investment like it promised, then local companies would have a bigger working class to sell its products and services to. In the absence of this they have to seek out new markets. Companies and their management cannot stand still, because if they do, they get replaced. If only this happened in government…..!!
Companies may not directly create jobs here when they invest abroad, but growing their earnings and diversifying their revenue makes them more sustainable and SA is the beneficiary of these new revenue streams and of these more robust companies. The authors view is very short sighted ………

What a load of hogwash this article is. Suddenly it is those in business, or those with money to invest who are to blame for the state of the economy. The author of this article would do justice to his credibility if he were to set out the real reasons why investors no longer want to plow their resources into this almost dead economy. Let me mention just a few matters he could comment on when next he puts his pen to paper…. if he has the guts to do so.
Over regulated labour legislation.
Control by the unions of the business sector.
Political uncertainty.
Over taxing those 14% of the registered taxpayers who pay 95% of the taxes collected.
Government departments with too many idle staff collecting salaries.
Poor service delivery.
Crime. Both as reported to police and as committed by white collar and government employees.
Slow pace of the Justice system.
The unfairness of the electoral system. People are appointed and not elected.
And the list is almost endless….

>> Even amid encouraging remarks by president Jacob Zuma such as, “we’ve declared 2011 the year of job creation

Opening with this statement really sets the tone for the remainder of the article. The primary problem with the ANC is the ever present and widening gap between the tripe that comes out of their mouths and the degenerating reality of life in South Africa.

For a more recent example, see Malusi Gigaba’s comments on recent xenophobic attacks:

“…South Africa is amongst the most diverse countries in the world‚ we are a host to multiple nationalities from the world. I reject any insinuation or assertion seeking to cast us as mere xenophobes.”

There is a worrying and consistent pattern of behaviour within the ZANC where the existence of major structural problems (xenophobic killings being one of them), resulting from both the legacy of Apartheid and the ANC’s subsequent wholesale looting and mismanagement of the economy, are repeatedly denied. This makes meaningful dialogue impossible, and prevents the root causes behind these problems from being addressed.

This is the very worst combination of bullying, groupthink and magical thinking.

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