Let's give Europe a breather and, for today at least, consider our financial exposure in the South African dynamic.That has me thinking about civic pride; the South African government, it's policies and investor perception as a whole.
At the macro level, civic pride plays a key role in predictable economic expansion. Short-sighted strategic planning with 'nation-building' as justification in preference to civic pride misinterprets the sustainability of the project. To clarify: - 'nation-building' as a concept, is a State imposition ie: big brother knows best whilst civic pride is more reliably 'we-the-people-get-what-we-need'. The push / pull forces are very different. Civic pride is commensurate with a mature society. Imposition at its core is not sustainable. Giving people what they need rather than what you think they need addresses civic pride and is, by definition, more sustainable. A nationally-recognised vested interest in an asset and or a project promotes longevity. It's arguable that South Africa's young democracy has not matured sufficiently to nurture civic pride and therein lies the problem. Assets in the hands of the private sector, particularly the mining sector, are perceived, generally, by many South Africans, to be an injustice. There is therefore very little civic pride in the current mining infrastructure. As a consequence this sector faces a possible / probable legislative, judicial and or administrative threat to its longevity, certainly in its current form. Political preservation disguised as policy discussion on nationalisation and or the recently proposed 2nd-transition is evidence enough of this phenomenon.
What's worse for the mining sector as a whole, in the South African context, is the tangible dislike local communities display, often violently, against these mines. Employment, as opposed to inclusion, is not seen as justification for the nurturing of civic pride. Until that changes, mining productivity, asset security and staffing will remain an issue. It is, in fact, the key risk variable most analysts build into mining-sector risk-models.
International investors, as a whole, either directly or indirectly, justify risk by examining longevity. In the South African context sustainability is perceived, by both foreign and local investors alike, to be questionable and it's for that reason only that companies, either locally domicile or wholly invested here, particularly in the mining sector, will continue to underperform their peers.