French companies halt SA commitments

French businesses have decided to stop further investments in South Africa until government implements desperately needed reforms to provide a stable and competitive operating environment."French companies chose to hold off on committing to additional investments at the 2023 South Africa Investment Conference as business leaders are eager to see material improvements around energy stability, logistics efficiencies, port competitiveness, anti-corruption measures, and an improved investor visa application process," said Sébastien de Place, president of the French Foreign Trade Advisor in SA and a partner at Mazars.In the meantime, while South Africa grapples with its plethora of ills from Transnet to Eskom to enormous unemployment, countries like Kenya, Ethiopia, Egypt, Ghana, and Nigeria are developing faster through more favourable policies and attracting French attention as better potential investment destinations, according to De Place.France is South Africa’s second-largest trading partner within the European Union, after Germany, and South Africa is France's leading trade partner in Africa. To lose this status would be another blow to an already deteriorating economy, which shrank 0.2% from the second quarter to the third and recorded a 3.4% decline in investment.Signs of caution abound with Tuesday’s gross domestic product data also showing South Africa’s tertiary and secondary sectors contracted and inventories were drawn down for the first time since 2021."This implies that producers and manufacturers are pessimistic about the future – in other words they have cut back production and have drawn down on existing stock because they expect demand to slow more meaningfully," Kim Silberman, economist and macro strategist at Matrix Fund Managers, said.EmploymentThere are more than 400 French companies in South Africa, directly employing 70 000 people and contributing to the fiscus through taxes, according to De Place. The businesses include TotalEnergies, EDF, Engie, Air France, Air Liquide, Sanofi, BNP Paribas, Mazars, Danone, Lactalis, Leroy Merlin, L'Oréal and Pernod Ricard.Since France’s initial pledge at the 2019 SA investment conference, French companies have invested R70 billion in sectors such as energy, health, tourism, mobility, retail and manufacturing. Now they want to see faster implementation and reinforcement of business-friendly policies and turnaround plans, including those related to business visa approvals because it can take up to two years to secure a visa.Nonetheless, French companies are positive about the country and there is significant capital ready and waiting to flow into South Africa because investors see the huge opportunities that exist, according to De Place."It’s now up to the South African government to listen to private-sector feedback provided through the established working groups and act with greater urgency to implement the promised structural reforms to affirm this belief and unlock the country's vast potential," he said.-Fin24

French companies halt SA commitments

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