(3 minutes read)
· Poor power and water supply and the costs of complying with Black economic empowerment legislation, in South Africa, are major deterrents for European investors.
· Many companies had to shell out money to source alternative supplies of energy.
Poor power and water supply and the costs of complying with Black economic empowerment legislation, in South Africa are major deterrents for European investors according to representatives of an industry body.
Erratic water and electricity supply have led to severe losses said Shane van der Nest, the head of Huhtamaki Oyj’s South African business and a board member of the European Union Chamber of Commerce and Industry in South Africa. Many companies had to shell out money to source alternative supplies of energy. He added that a packaging firm from Finland has sued the city of Ekurhuleni, near Johannesburg, after an electricity sub-station it depended on blew up twice and affected production and has postponed a 70 million euro ($83 million) investment in new machinery.
Power woes of South Africa started in 2008 after the state electricity monopoly failed to invest adequately in new generation capacity. At the same time, the provision of other services such as water also deteriorated.
Additionally, the bureaucratic procedures of Black Empowerment (BBE) laws compelling companies to be partially owned by Black South Africans and to procure goods and services from Black-owned companies to help redress the inequities of apartheid were cumbersome and expensive. Almost 1,100 European companies operate in South Africa. Many are family-owned and find it difficult to comply with the Black ownership requirements, as also the Procurement and training legislation.
Meanwhile, President Cyril Ramaphosa has embarked on an aggressive drive to attract investment to help the economy recover from what’s forecast by the government to be the biggest contraction in nine decades this year. He is due to hold an investment conference in Johannesburg.
