Investors who read our publications might have picked our lack of enthusiasm for SA Incs even when things have been looking up prior to the protests which turned into a looting spree. Our chart of the week below is one of the reasons why. As long as the trend line for our gross fixed capital formation (GFCF) – investments into fixed assets –remains downward sloping it is difficult to get excited about SA’s long term GDP growth prospects. A commonality among countries that have grown their economies robustly over the past century, has been rising GFCF.
We like the president’s infrastructure investment drive; it is a move in the right direction. But with recent events where the government failed to protect businesses from looters in KZN and some parts of Gauteng, some potential investors must be thinking twice about investing in SA.
Source: World Bank