PRETORIA, Despite positively changing direction two years ago with the election of President Cyril Ramaphosa, the deterioration in the South African economy and state institutions still requires serious attention, vice president and executive director of the Franklin Templeton Markets Equity Danesh Ranchhod said on Thursday.
The past two years have seen some change in direction; these include a new president with better intent, an election and subsequent change in cabinet ministers as well as an attempt to change the boards of weak stateowned institutions. While these remain positive developments the deterioration in the economy and state institutions still require serious attention, said Ranchhod.
He said South Africa has endured several years of weak economic growth, rampant corruption, stateowned entity mismanagement and a policy stall.
Much of this was founded and accelerated under the previous leadership with evidence pointing to a host of middlemen and government officials that used their authority to mismanage state entities, said the respected economic analyst.
The Franklin Templeton Markets Equity said earlier this year it highlighted several reforms needed to indicate progress, but has not seen much movement due to the ongoing infighting within the executive in the ruling party and the resistance from public sector unions to allow some hard decisions to be made at state owned entities.
Ranchhod said it appears that the South African government execution will remain poor thereby resulting in a rather weak economic environment.
Considering these broader political risks, current opportunities remain slim amidst weak business and consumer confidence. This does not mean we would dismiss South Africa as an investment destination, there are still many quality companies operating with sound management. However, for now, we continue to monitor the political progress and look for indications of a meaningful turnaround, he said.
Understanding the company fundamentals together with the broader economic, regulatory and political landscape allows us to better profile risks when researching an investment opportunity.
Last year, after the African National Congress (ANC) won over 57 percent in the sixth democratic national elections, Ranchhod said corruption had become quite pervasive at all state levels in South Africa under former president Jacob Zuma, so any action Ramaphosa can take to address this meaningfully within the party and stateowned entities will be considered a key progress marker.
At the time, Ranchhod pointed out Ramaphosa’s appointment of a new head of the National Prosecuting Authority as a favourable start.
We think the next test will be how the ANC can tackle policy direction. There remains confusion around key policies on the mining charter, land nationalization and the muchdelayed issuance of spectrum to the mobile telecommunication companies, Ranchhod remarked at the time.
Source: African News Agency