39. Unlocking infrastructure investment in South Africa

It's an interesting point, Sandy, because I guess some of what we've been reading lately in terms of recommendations from various commissions is that there should be a minimum infrastructure investment limit.

But is one not perhaps then muddying the waters for Regulation 28, which was really designed to protect retiree savings and offer diversification, and not necessarily to further the policy goals of government?

Yes, you can say that, but of course the government would say, "Well, Ray run the show." [laughs]

[laughs]

[laughs]

And these are ...

The, um, the trouble is that, uh, th- as you say, Regulation 28 was designed around security for investors, but it also, the foreign component of it is in- linked into foreign exchange regulations and protecting the, uh, exchange rate.

Now, when South Africa became, uh, the new order happened in 1994, there was a long period of major rand weakness and capital flight.

Now, we've gone through that process for a long time now, and the, all the capital that's going to flee probably has flown.

And the, uh, present situation is actually there's a reasonable balance between, of foreign assets and r- domestic assets as for, for the market to be f- stable.

And think, I think one of the things that surprised investors this year is how stable the rand's been in a world of considerable currency volatility and political upheavals.

And the reason is because we have a very strong savings pool here, which creates an underlying stability to the system.

This creates the ability of foreigners to come into South Africa and know that there's a lot of local money, which is they're investing beside.

And you d- what you don't want to be as an investor is the only person there.

You want to be along- investors like to be in a herd, and that's what this domestic savings pool provides to the foreigners, that there are a lot of locals who also can invest in our assets.

Ray, now I wanna change paths slightly and throw a question at you.

It's an interesting point, Sandy, because I guess some of what we've been reading lately in terms of recommendations from various commissions is that there should be a minimum infrastructure investment limit.

But is one not perhaps then muddying the waters for Regulation 28, which was really designed to protect retiree savings and offer diversification, and not necessarily to further the policy goals of government?

Yes, you can say that, but of course the government would say, "Well, Ray run the show." [laughs]

[laughs]

[laughs]

And these are ...

The, um, the trouble is that, uh, th- as you say, Regulation 28 was designed around security for investors, but it also, the foreign component of it is in- linked into foreign exchange regulations and protecting the, uh, exchange rate.

Now, when South Africa became, uh, the new order happened in 1994, there was a long period of major rand weakness and capital flight.

Now, we've gone through that process for a long time now, and the, all the capital that's going to flee probably has flown.

And the, uh, present situation is actually there's a reasonable balance between, of foreign assets and r- domestic assets as for, for the market to be f- stable.

And think, I think one of the things that surprised investors this year is how stable the rand's been in a world of considerable currency volatility and political upheavals.

And the reason is because we have a very strong savings pool here, which creates an underlying stability to the system.

This creates the ability of foreigners to come into South Africa and know that there's a lot of local money, which is they're investing beside.

And you d- what you don't want to be as an investor is the only person there.

You want to be along- investors like to be in a herd, and that's what this domestic savings pool provides to the foreigners, that there are a lot of locals who also can invest in our assets.

Ray, now I wanna change paths slightly and throw a question at you.