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Cape Town - If the government is serious about attracting foreign investors, it has to focus on developing effective institutions.
These institutions include efficient regulatory authorities and high quality education and healthcare providers, as well as those which have to oversee economic development in the country.
That's according to Mansoor Mohamed, economic, social development and tourism executive director for the City of Cape Town, speaking on Thursday at a conference on the effect of the global financial crisis.
"Government provides the basis for everything we do and the fundamentals have to be in place from government for investing to take place," he said.
Mohamed said the South African banking system had held up well during the financial crisis, and there had never been any question of it failing. Mohamed said government needed to convey the same message about other institutions.
This comment will hit home for South Africans, who found essential services crippled by public services strikes while trade unions were locked in wage debates with the state for three weeks. This brought major segments of service delivery to a halt.
Mohamed pointed out that Cape Town had recently attracted global online retail giant Amazon.com to the country, and had created 3 000 jobs by generating a positive operating climate where institutions worked effectively in an "enabling environment".
Panelist
Leon Campher, CEO of the Association of Savings and Investments of South Africa, however criticised the lack of innovation around regulation governing the financial services sector. He said many South African financial services houses were exporting capital and intellectual property to offshore tax domicilies. This was not benefiting the country.
However, Bert Chanetsa, the deputy officer of the Financial Services Board (FSB), countered that his organisation was working hard to develop regulatory frameworks to strengthen the way in which the industry operates.
He pointed out that a great deal of work had been done to develop regulations for hedge funds in South Africa and credit ratings agencies.
He also said that there is often a perception that "overseas is always better", but the timeous introduction of the National Credit Act and the well capitalised position of local banks to their international peers disproved this.
- Fin24.com