Chief Economist at Cidatel, Maarten Ackerman, says the decision by the Financial Action Task Force (FAFT) to greylist South Africa will impede foreign investment and even further reduce already slow economic growth in the country.
Ackerman says the move is going to make it more challenging and expensive for businesses to move capital in and out of South Africa. His comments come after the FAFT announced its decision to place South Africa and Nigeria on its grey list.
“Unfortunately as expected it’s been confirmed that South Africa has been greylisted despite everything the government has done to reassure them that we’re getting our ducks in a row. This is obviously a major headwind for the environment we’re in already. If you think back to the budget this week, we’re facing significant growth challenges, failing infrastructure, a lot of structural issues that are not been resolved for a couple of years, and on top of that, our energy crisis. Being greylisted will add to those challenges especially for business in terms of operating in the country, the ease of doing business.”
Impacts on banking
The Banking Association says South Africa being put on the Financial Action Task Force greylist will adversely affect the climate of conducting business in the country.
Managing Director of the Banking Association of South Africa, Bongiwe Kunene says the banks’ ability to finance themselves will have an impact on the economy.
‘Far-reaching implications’
Economist Dawie Roodt says South Africa’s failure to do enough to counter illegal activities like money laundering led to its greylisting. Roodt says the implications could be far-reaching.
“I was actually hoping that we will not be greylisted- and I know for instance that the Minister of Finance made some money available to make sure that we set the measures in place to move us back to the white list again. This is certainly not good news for South Africa – and I can see that the rand is under pressure this afternoon. But additional to that, I just learned that the Americans are proposing to reconsider their relationships with South Africa, and I think that is a contributing reason why the rand is under pressure at the moment. The Americans mention for example- our military training with the Russians and with the Chinese- and many other reasons as well- and there’s certainly a possibility that South Africa will be kicked off the so-called AGOA Act.”
Roodt says the USA is an important trading partner and SA’s economy would be dealt a serious blow should the country be kicked out of AGOA:
