The Decline of Foreign Investment in South Africa
http://www.economist.com/news/middle-east-and-africa/21600176-some-recent-business-bills-pander-populists-deterring-foreign-investors-why?fsrc=scn/tw/te/bl/ed/whyinvest
Two separate mining bills were constructed by the South African Parliament that are expected to decrease foreign investment into the country. In class we recognized that foreign investment is critical for the expansion and growth of a countries economy as a whole. As foreign investors continue to invest less into South Africa the growth and expansion of the South African economy is unknown. The decline in foreign investors is due to a clause in the bill that will allow the government of South Africa to purchase an additional 20% stake in the petroleum venture at an agreed price. This causes investors and businesses to re-think and re-evaluate investing into this venture. If the venture is profitable, it will pay off for the South African economy and the government will be granted more control.
Many problems are being raised in South Africa because of bill changes taking effect. Security guards have more then doubled because of an increase in ownership into security firms. G4S and ADT are two British security firms that have had direct relations with South Africa. These bill changes are pushing these two firms away to create a sense of nationalism. South Africa's president decided not to attend the European Union-Africa summit in Brussels to try to send a message that South Africa is tired of foreign influences. The main objectives of these bills is to weaken property rights, reduce private sector control by displaying right of self government, and hurt investor confidence.
It appears to me that South Africa is moving in the wrong direction. Parliament is intentionally hurting the economy of its own country by passing these mining bills that are intended to decrease foreign investment. They're also making bill changes which are intended to push away foreign security firms. I understand that the goal of these bills is to increase nationalism, however I believe that there are better ways to increase nationalism that won't hinder the growth of the country.
ReplyDeleteI agree to the comment above on the part that the Parliament is choosing the wrong method. Bill changing in order to push foreign investment won't promote economic growth since other countries will be blocked from establishing business and it will be a loss of possibility of job creations, which, if it happens, will benefit the citizens.
ReplyDeleteI agree with Dylan as well. Foreign investment is beneficial in many ways. Firstly, it will create more jobs which will reduce unemployment rates but at the same time it will improve the living standards as well. Companies and infrastructure that foreign companies build will improve roads and many public services surrounding the area.
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