Trade and Industry Minister Rob Davies is deluding himself and the people of this country by claiming that the Marikana tragedy will have no effect on foreign trade and investment. A recent report by a leading global independent macro-economic research consultancy, Capital Economics, reveals that it is telling its investors a very different story.
Last month, Minister Davies embarked on a face-saving tour to London in attempt to placate the growing fears of international investors on the back of the Marikana tragedy.
Minister Davies was reported in the media as saying that while the labour unrest had hurt shares of companies such as Lonmin, it hadn't affected foreign investment. He went on to reportedly claim that "we have not seen an impact on foreign direct investment. The impact has largely been felt in the shares of the companies concerned."
Minister Davies has preached a similar message to South Africans. However, Capital Economics reveals the minister's message to be at best hopeful and at worst delusional.
The agency provides research on the US, Canada, Europe, Asia, Latin America, the Middle East, the UK and on the property sector to more than 1 200 institutions around the globe. Its clients include some of the world's largest banks as well as boutique property investors.
Their Africa Economics Focus report advises potential investors that "we believe that South Africa will continue to muddle along at growth rates of around 3 percent, despite having the capacity to achieve around 5 percent with the aid of supply-side reforms".
In direct contradiction with Minister Davies' assertions, the report points to recent events in SA's mining sector as being "symptomatic of wider economic problems that are likely to mean the country falls short of achieving its significant growth potential over the next decade". …