Germany’s business role in South Africa is a very significant one.  You have a big investment in the country, and some idea of the business you do is reflected in the fact that the German Chamber is the biggest foreign chamber in the country.  You have also undertaken through a separate company to promote skills and provide training to South African workers – something much needed and greatly appreciated.
 
My task today is to offer you a broad view of the South African situation.  The last 12 months have not been happy ones for foreign investors in South Africa or businesses contemplating investing in South Africa.  At the national level, the dominant political party the ANC has been wracked by leadership issues.  And leadership - or an absence of leadership - figured even in the Lonmin mining tragedy which demonstrated a huge malfunction of our society and the failure of authorities at different levels to act as their duty and responsibility required them to.  The unions, mine management, the police for possible excessive force, the minister and the mining ministry, and in the end the Cabinet all had a role and responsibility in this matter but didn’t exercise it. 
 
The last six months is also a period characterised by lots of populist rhetoric; the emergence of Julius Malema; Cosatu, South Africa’s biggest trade union confederation has played a role which has been unhelpful to tackling South Africa’s enormous unemployment problem and in particular youth unemployment.  Education and the management of education has been shocking.  Government failure to deliver services like housing, sewerage, roads, electricity and water to so many black communities has generated great dissatisfaction, often boiling over into violence.  Reports of government extravagance and corruption contrast with unemployment and poverty, etc.  These are all events and tendencies that have affected investor perceptions.  In fact, six years ago South Africa was the undoubted gateway for foreign investors coming into Africa, Johannesburg was the equivalent of the American Big Apple.  That has changed.  Now Accra, Nairobi, Lagos and others are staking their claim. 
 
Hence the question, Quo Vadis South Africa?  Is it a lost cause?  Is it another Zimbabwe?  We don’t believe so, but the issues must be faced and debated.
 
On the positive side, South Africa has become a member of the BRIC group of nations.  At present this seems more symbolic than real but it depends on what South Africa does with its membership.  So, for example, a major agribusiness conference will take place in South Africa in November with the theme – “Agribusiness:  Do the BRIC countries have lessons for Africa?”  Clearly, as this is an all-Africa event, South Africa is bringing the BRIC countries into Africa and demonstrating the relevance of its membership of that grouping.
 
Other positives in South Africa are its vibrant and robust institutions.  Its legal system, its independent electoral commission, its public protector, its regulatory bodies, and the South African Constitution which has demonstrated that citizens have the right to take on the government and win in the highest court of the land.
 
In assessing investment opportunities in South Africa one needs to distinguish between rhetoric and reality.  For example, nationalisation of major institutions – the banks and the mines – has been populistically promoted.  But it is not policy.  And responsible for maintaining distinctions of this kind is Africa’s most active and vibrant media and developed civil society.  And an important positive has been the encouraging growth in support from all communities of the Democratic Alliance, the main opposition party.
 
South Africa’s financial markets, the Johannesburg Stock Exchange and its banks and other financial institutions, are exceptional in Africa.  An important positive is Trevor Manuel’s National Development Plan which we expect will be adopted fully at the ANC’s important conference in December.
 
Overall, South Africa is still the most diversified economy in Africa, contributing in very important ways to the rest of Africa through institutions like the Development Bank of South Africa, the Industrial Development Corporation, Transnet, Eskom, South African agriculture, and companies who meet middle-class needs in Africa.  South Africa’s national airline – SAA – as Africa’s biggest airline facilitates tourism to Africa and promotes business across and into Africa.
 
The next six months will be quite critical for South Africa because in December the ANC will elect its next leader who will be its presidential candidate.  President Zuma desperately, it seems, wants a second term.  A year ago there would not have been talk of him being opposed.  Today, that is a certainty.  And the smart money is on him losing.

Note: The speech above was delivered by our chairman, Dr Denis Worrall, to a Euro-African Trade & Investment Workshop in Potsdam, Germany, last week.  We believe it will be of interest to Insight recipients.