Is the grass really greener? SA’s political uncertainties put into perspective…

Considering our peers – as seen by international investors – South Africa probably stands out as one of the more stable countries, according to Old Mutual Wealth Investment Analyst Izak Odendaal.

Consider the following examples:

  • In Italy, the opposition party is headed up by a comedian.

  • Far-right parties are gaining ground in France and Austria.

  • In the US, property tycoon and reality TV star Donald Trump secured the presidential nomination of the Republican Party.

  • Voters in the United Kingdom unexpectedly chose to leave the European Union after four decades, putting the pound in a tailspin and causing massive economic uncertainty.

  • Russia under Putin has become less free and more authoritarian, and more of a meddler in international affairs. Its economy is in recession for the second year following the collapse of the oil price and the imposition of international sanctions.

  • Fellow Brics (Brazil, Russia, India, China, South Africa) member Brazil is suffering the worst recession in decades, partly as a result of political problems. Runaway government spending under Former President Dilma Rousseff contributed to a collapse in the currency and spikes in interest rates, but this could not be contained because of political deadlock worsened by an epic corruption scandal involving many politicians, well-known businessmen and the country’s largest company, Petrobras.

  • A few weeks ago Turkey suffered an attempted coup.

  • Thailand is currently under military rule, after the 12th coup in 80 years.

  • In Malaysia, US$681 million (almost R10 billion or 40 Nkandla upgrades) from the sovereign wealth fund found its way into Prime Minister Najib Razak’s personal bank account. He was cleared of wrong-doing by his own government, but US authorities are now investigating money laundering.

South Africa’s institutions are a key strength, according to Odendaal.

The International Monetary Fund’s deputy Managing Director, David Lipton said in a recent speech in Johannesburg that South Africa “should be proud of its world class public institutions”, including the judiciary, the Public Protector and the Auditor General, that were “the envy of many emerging market and developing countries”.

The strength of our political, economic and legal institutions was also recently highlighted by ratings agencies Fitch, Moody’s and S&P Global when they left South Africa’s investment grade credit rating unchanged.

Regular free and fair elections are a cornerstone of a functioning democracy and South Africa now has a solid track record in this regard.

The Money Show’s Bruce Whitfield interviewed Odendaal.

Scroll down for quotes from the audio below.

There is an element of disenchantment with political elites all over the world.

Izak Odendaal, Old Mutual Wealth

The assumption that China will become more open and democratic as it grows richer hasn’t panned out.

Izak Odendaal, Old Mutual Wealth

This is an opportunity for us to show the world that we’re a mature democracy.

Izak Odendaal, Old Mutual Wealth

Local elections typically do not influence fiscal policy. But this is a different kind of election, because it’s the first time the ANC is under pressure.

Izak Odendaal, Old Mutual Wealth

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Article brought to us by Old Mutual.


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