South Africa’s foreign policy decisions in 2023 have been problematic for foreign investors looking to invest in the country, preventing investment in economic development.
This is feedback from Old Mutual CEO Iain Williamson, who spoke to CNBC Africa following the South Africa Tomorrow Conference in New York this week.
At the 10th edition of the conference, there was a record turnout of prospective investors from the United States.
South Africa was represented by CEOs from some of the country’s largest companies, as well as Finance Minister Enoch Godongwana, Reserve Bank Governor Lesetja Kganyago, and Public Enterprises Minister Pravin Gordhan.
Williamson said it is refreshing to hear perspectives on South Africa from outside the country that were more positive than expected.
Emerging markets, in general, are in very difficult positions, with Russia and Turkey being largely uninvestable and China’s growth declining.
“So, from an investor’s perspective in emerging markets, South Africa is not unattractive. It was a refreshing perspective for us,” Williamson said.
However, South Africa still has major challenges in relation to the supply of electricity, deteriorating logistics, and economic uncertainty that worry foreign investors.
Williamson brought specific attention to South Africa’s foreign policy as being a hurdle for preventing potential investment.
At the South Africa Tomorrow Conference, the country’s geopolitical stance was “definitely a topic of conversation” between US investors and local companies.
The country has repeatedly clashed with the world’s largest economy over the Russia-Ukraine war and other geopolitical issues, with the former head of the World Bank warning that South Africa was playing a dangerous game.
Williamson said these clashes have decreased the attractiveness of investing in South Africa for US investors.
He said that investors have no problem with the country’s stated non-aligned stance but several actions in 2023 have been perceived as South Africa choosing sides against the West.
“That becomes problematic,” Williamson said.
US lawmakers penned a letter earlier this year, urging South Africa to be punished for its stance on the war in Ukraine.
They expressed “serious concerns with current plans to host this year’s AGOA Forum in South Africa”.
“South Africa’s government has formally taken a neutral stance on Russia’s unlawful invasion of Ukraine but has deepened its military relationship with Russia over the past year,” they said.
The group highlighted that a Russian cargo vessel subject to US sanctions docked in South Africa’s largest naval port.
US intelligence suggests that the South African government used this opportunity to covertly supply Russia with arms and ammunition that could be used in its illegal war in Ukraine.
They also pointed to joint military exercises with Russia and a Russian military cargo plane subject to US landing at a South African air force base.