Cape Chamber is amplifying the call for private sector involvement in critical infrastructure development
There's a world of difference between spending somebody else's money and spending your own.
When you handle other people's money, as Finance Minister Enoch Godongwana did last week, it's easy to sprinkle a few billion here and there, to prop up public salaries, or bolster tax collection.
But when you spend your own money your fingers clutch onto the purse strings, or clamp shut around your wallet, particularly when things get tight.
The distinction between these two hugely different types of spending explains a worrying data set that surfaced recently, duly reported last week in popular online business website Daily Investor. The amount of foreign investment in local equities has plummeted, from around $70 billion In 2016 to $10 billion in less than ten years, according to investment analysis conducted by Stanlib.
The decrease is all the more dramatic when compared with the massive foreign investment inflows seen during the Mandela and Mbeki years, when the local stock market was booming, and local equities offered promising returns.
Sadly, that is no longer the case.
As Stanlib points out in their analysis, foreign investment in local equities is viewed as a barometer South Africa's growth prospects. The better the prospects, the greater the potential returns, and the larger the investment amount. Conversely, investment disappears as prospects diminish.
While this equation may seem self-evident, it adds to the weight of evidence pointing to the urgent need for effective public private partnerships in infrastructure development. Without efficient ports, railways, and power utilities, South Africa's growth prospects are dismal.
This is why the Cape Chamber is amplifying the call for private sector involvement in critical infrastructure development. We have highlighted the bottlenecks in Cape Town, but the problems are countrywide.
Together with prudent debt management and efficient law enforcement, infrastructure investment is a fundamental pillar of economic growth. Remove one of these pillars and foreign investors start to look elsewhere.
On the other hand, investment is almost guaranteed where these pillars are in place.
We firmly believe we can remove these impediments to growth if government spends our money more wisely, and more carefully. If they get this right, there should be more money for us to spend ourselves.
John Lawson
CEO of the Cape Chamber of Commerce and Industry