A nationalisation policy would see a drop in private sector demand for funding to invest in South Africa, the International Finance Corporation (IFC) said on Tuesday.

The IFC, which is the private-sector lending arm of the World Bank, had invested $2.2-billion in Africa, of which $247-million was spent in Southern Africa during its last financial year, ended June 30.

This investment has seen power to 6.6-million additional people being generated, 59-million telephone users connected, supported 500 000 students, provided loans to 241 000 small businesses and 260 000 farmers and created an additional 217 000 jobs in the last year on the continent.

Speaking at a media briefing in Johannesburg, IFC senior manager for Southern Africa Saleem Karimjee said that South Africa’s New Growth Path (NGP) was in line with the IFC principles, but noted that the nationalisation debate were creating uncertainty for foreign investors.

“A nationalisation policy will reduce investor confidence and ultimately lead to South Africa’s economy slowing down further, as foreign capital is needed for growth,” he commented.

Karimjee said that such a policy would lead to a natural retraction of especially foreign private-sector investors, which would lead to a reduction in demand for IFC funding.

An uncondusive investment climate and uncertain policies in neighbouring Zimbabwe has led to the IFC being an able to provide any funding to businesses in that country in the last financial year.

On the other hand, Karimjee said that the published version of South Africa’s NGP was indeed private-sector investment friendly and could see funding from the IFC increase into the country.

He said that capacity limits might be reached if the set targets of the NGP were to be achieved, which would drive further funding from the IFC into South Africa.

The IFC is focused on developmental and sustainable investments, with a strong drive towards job creation and also the development of small and medium-sized enterprises.

Through the NGP, the government aims to create up to five-million jobs within the next ten years. The government has also earmarked the growth of small and medium enterprises to drive growth and employment in the country.