CGF ARTICLES, OPINIONS & EDITORIALS
Responsible Investing in South Africa (2012-10-29)
February 19,
2015 3554 3554 
Given the height of the social unrest currently being experienced in South Africa, and considering the manner in which the media and global rating agencies have portrayed our country as heading toward a downward spiral; it’s imperative noting the impact this situation brings upon South Africa and its business communities.
Irrespective of whether these views are correct or not, the manner in which investors perceive and regard a country for sustainable investing is what really counts. The decisions taken by investors to support or withdraw their investments are largely dependant upon their risk appetite, as well as their confidence levels that their investments will flourish. As local and foreign investors can be fickle, particularly if there is uncertainty linked with political and economic matters -- being the case in South Africa -- they generally disinvest and redirect their much needed investments and support to areas where they have a better understanding of their risks, and the ability to protect and grow their investments.
Notwithstanding the fact that South Africa’s economy is struggling -- which is not too dissimilar to other developing countries at this point in time -- not only has there been a massive job loss in the country, but there has also been a net sell-off of R26bn in South African equities by foreign investors since January 2011. Moreover, the latest UN Global Investment Report shows that South Africa has seen a decline of its foreign direct investment of 43 per cent in the last year alone; this being the largest decline amongst all developing countries.
That said, as the confidence levels in South Africa may be somewhat shaken, it is critical to note that informed investors are becoming more demanding that ESG (environmental, social and governance) factors are also taken into account, prior to their investment making decision. Understandably one cannot separate the matters of a government and the impacts their decisions have upon its citizens, and the implications upon businesses. The cause and effects upon these players are inextricably linked, as they are all in the same supply chain. Clearly, if government and business intends to retain and attract local and/or foreign investment -- whilst at the same time allaying investor’s fears which are linked to our country’s political and economic turbulence -- government and SA businesses will need to offer its existing and potential investors a lot more reasons for maintaining investor’s confidence.
