FDI collapses 74%, but Zuma signs bad Investment Bill

21 January 2016

President Zuma has signed into law the Protection of Investment Bill, without any public announcement and only three weeks after the Bill was passed by Parliament. The President signed the Bill on 15 December 2015, the day before he fired former Minister Nene. This uncharacteristic haste is cause for suspicion - there are a number of Bills outstanding which the President has not signed for more than a year, and there were still numerous concerns about this Bill expressed by the DA and the foreign investor community. It seems the President intended to sign the Bill quickly and quietly to try and avoid any further public outcry about the obvious negative effects it will have on foreign investment and the economy. 

For example, the Private Security Bill has been unsigned for two years. This Bill was signed in 20 days. 

 The Protection of Investment Act does not provide adequate protection for foreign investors, and will be an added reason for investors to look elsewhere. What South Africa needs now is as much foreign investment as possible - to create jobs, to support the Rand, and to help recover our economy. But the entire investor community unanimously condemned the Bill (now the Act) as bad for investment and bad for South Africa. Businesses from the US and Europe along with mining multinationals had previously warned Parliament in November 2015, that the signing of this Bill will lead to an exodus of capital and investors from South Africa. It seems they were wrong. The exodus was already under way, and is now only sure to accelerate. 

Add to that the figures released today by the Global Investment Trends Monitor, a division of UNCTAD, that show that foreign direct investment (FDI) into South Africa plunged 74% in 2015, and it becomes clearer that the outlook for turning around investor sentiment towards South Africa is very poor so long as President Zuma and his economic ministers remain in office. 

This plunge is a clear vote of no confidence by the global economy in the ANC government. Investors are voting with their feet, and their dollars. 

The President and his team are currently in Davos making the case for South Africa under the theme “South Africa is open for business”. In their actions, nothing could be further from the truth. The signing of the Protection of Investment Act is another example of this government closing South Africa for business.

Issued by Geordin Hill-Lewis, DA Shadow Minister of Trade and Industry, 21 January 2016