“At the moment, South Africa is going through a very self-destructive path of complacency,” Iraj Abedian, chairman of Pan African Advisory Services told CNBC Africa on Tuesday.
This follows after the International Monetary Fund rated South Africa as the worst performing out of the BRICS (Brazil, Russia, India, China and South Africa) countries in terms of economic growth.
“South Africa’s growth has come from a high of five percent to a level going below two percent and policy makers just have their heads in the sand. It’s very unfortunate,” he said.
The International Monetary Fund have stated that the country cannot blame its poor performance on international volatility as domestic issues such as labour disputes and policy uncertainties have been proven to be some of the key challenges holding back investment and growth.
“Ten years ago, Africa was the hopeless continent and now South Africa is rapidly reaching that point where everybody can criticise it,” said Abedian.
Within government for instance, he pointed out, the introduction of ‘nonsensical’ legislation that is changing the economic space of the mining industry is hampering the country’s national interests.
Earlier this year, the government amended the Mineral and Petroleum Resources Development Act, resulting in tighter and stricter regulations within the mining industry which has raised concerns that the new law could exacerbate negative investment sentiment.
“Introducing some nonsensical, vague and indeterminate legislation, these are elementary mistakes which ministers and policy makers should stay out of. If you do make pronouncements in this environment, you must make absolutely sure that national interests are not compromised,” explained Abedian.
Leadership in government is not the only poor performing sector, he added, business leadership has also been lacking as they have not been voicing their concerns over government policies in fear of losing business. Instead, they have been reduced to complain silently.
“Businesses have been muzzled by government from time to time. When they did stick their heads out once or twice, it was chopped off,” he said.
“The role of business is not to keep quiet, that’s the way business in a global environment operates, when the going gets tough in one country, they take their capital and go to the rest of Africa.”
According to Abedian, this is a major concern because if businesses aren’t happy in one country, they can easily move their investments into a better performing country.
“For the first time in our modern history, our neighbour is no longer poorer and unpromising. You can take your capital anywhere north of Limpopo and you’ll get a fantastic return. The environment is much more favourable now,” he added.
“If you want direct investment, you need to make sure that the environment is right.”
However, South African policy makers, he stated, are not seeing this as a concern. They remain complacent.