Investors in particular want Cyril Ramaphosa to end an impasse over the mining charter.
Investors in particular want Cyril Ramaphosa to end an impasse over the mining charter.

S. Africa Mining Seen a Winner as Ramaphosa Woos Investors

S. Africa Mining Seen a Winner as Ramaphosa Woos Investors

South Africa’s embattled mining industry could be first in line to benefit from a boost in foreign direct investment if the new leader of the ruling party Cyril Ramaphosa implements measures seen as vital to draw in more cash, analysts said.
The governing African National Congress needs to water down black ownership targets in mining, roll out mobile broadband access and cut red tape in the labor market to revive investor interest, they say, Reuters reported.
South Africa has failed in recent years to attract significant direct investment due to slow economic growth, policy uncertainty and higher labor costs.
South Africa recorded FDI inflows of $2.3 billion in 2016 against outflows of $3.4 billion, UN trade and development agency UNCTAD data show. A decade ago, it had average annual inflows of $4.5 billion against outflows of $3.3 billion. The agency said on Monday South Africa’s FDI “still remained low by historical standards” in 2017 at $3.2 billion.
Ramaphosa, South Africa’s vice president who succeeded President Jacob Zuma as head of the ANC in December, has promised to deliver economic policy change. “Mining is definitely one area where we could do more to attract foreign investments. We have a lot of potential,” Old Mutual Multi-Managers investment strategist Izak Odendaal said.
Investors in particular want Ramaphosa to end an impasse over the mining charter, introduced as part of a wider drive designed to rectify the lingering disparities of apartheid.
A revised charter drawn up under Zuma raised the target for black ownership in mining to 30% from 26%, a level being challenged in court by the industry.
Changes to the Mineral and Petroleum Resources Development Act, yet to be passed by parliament, have added to uncertainty. Amendments include a move to give the state a 20% stake in any new gas and oil ventures, a level the industry said was too high to encourage investment.
South Africa attracts more short-term portfolio flows than FDI, while local firms have tended to expand operations abroad.
Ramaphosa said at the Davos global forum that “if the mining charter is holding us back we must deal with that” and said South Africa did not want to miss out on a commodity boom.
Financial markets have cheered talk of economic reform. The rand has surged to 2-1/2 year highs against the dollar and bond yields have fallen.

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