Political uncertainty as high now as in 1993

Political uncertainty has risen to levels previously experienced in 1993 at the time of Chris Hani’s assassination.

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“Something is very wrong if business leaders are telling us the political climate is now as uncertain as it was in 1993,” said Prof Stan du Plessis, Dean of the Faculty of Economic and Management Sciences at Stellenbosch University, at the Agbiz Conference in Somerset West today (28 August).

He presented findings from a Bureau for Economic Research (BER) survey which focused on four known constraints to business expansion: lack of access to skilled labour, dampened demand, an uncertain political climate and rising interest rates.

One of the most worrying results of the study was the degree to which businesses have, since 2007, increasingly pointed to political uncertainty as one of the main investment deterrents.

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“From 2000 to 2006 politics became less and less of a concern for businesses. Then starting from 2007 onwards political uncertainty kept on rising,” said Du Plessis.

“It is clear something has gone wrong in the discussion between business and government.”

What SA was experiencing was not a ‘ballot box’ uncertainty, where doubt prevailed about which political party would win elections, he said. It was an uncertainty about how government would choose to use the available policy instruments, such as labour and trade policy.

“The concern is not about the policies themselves,” said Du Plessis. “It’s about whether or not they are implemented soundly.”

Social sustainability was another cause for concern. That is, “that the rules of the game, the society we know, will not be maintained – that the rules will change.”

The potential expropriation of large tracts of land was a primary example of a “disruption of the rules,’ said Du Plessis.

“If the rules of the game are going change it makes sense that no investment is happening.”