NEW YORK -- Although it's been sending many of the right signals to international investors, the government of South Africa could amplify its message to draw investors from the global marketplace.
That was the sentiment with some leading investment bankers and South African businessmen at a recent conference in New York, the U.S.-South Africa Business and Finance Forum.
Key moves would include speeding up the privatization of government assets and opening up the commercial banking business to overseas firms.
Good public relations is also important. "The best thing (the South African government) can do is to improve the image, the PR, associated with the country," said Jakob Stott, managing director and head of investment banking, Central & Eastern Europe, Middle East and Africa with J.P. Morgan Securities Ltd., London. The government could "explain a lot more . . . what's being done about some of the negatives, like crime, education, unemployment."
He added the government's focus should be on answering two questions: What is it really doing to create economic growth in South Africa, and why is it taking so long?
"The South African voters are very patient because they have the government they want," he said. "But international investors are not patient. They want to see results, and they want to see them right now. And when they don't, they don't want to invest."
But Mr. Stott also stressed the positives of South Africa. Its equity and bond markets are bigger and more sophisticated than those of other emerging markets, he said. The market capitalization of the country's stock markets is $170 billion, second only to China's in emerging markets.
The government also has reduced its debt to close to 3% of gross domestic product in 1998 from between 9% and 10% of GDP in 1994. And inflation likewise has fallen.
Mr. Stott added that, like every other emerging market, South Africa is susceptible to market forces beyond its control, particularly the movement of the U.S. stock market and the prices of commodities such as gold.
But there's a clear downside. Wages and salaries are a heavy burden on the government, making up 40% of its budget. And the role of its reserve bank is not clear. "Reform must continue at an unabated pace," Mr. Stott said.
But officials with the South African government defended their country's moves, saying the country has been taking strong steps in the right direction.
And they pointed to high-profile events like the forum, which began with Vice President Al Gore introducing South African President Thabo Mbeki, as signs of South Africa's concern for good public relations.
Finance Minister Trevor Manuel put the criticism of a bloated government work force in context. Its 1.1 million government workers, out of a population of 42 million, is similar in size to the government work force of California, he said.
Cutting workers could prove difficult. Twenty-eight percent of government workers are teachers, he said. Education is one of the country's highest priorities. The remainder are police, defense forces and health workers. He added that one measure the government is taking with its work force is to "stabilize the share of expense that goes to the public sector wage."
And in some of the country's poorest regions, there is effectively no private sector, making layoffs potentially disastrous.
The South African government said in June that it would sell 20% of its national airline to SwissAir for $231 million. The deal hasn't closed.
It has participated in a host of other privatizations, said Jeff Radebe, minister of public enterprises and is planning more, including a sale of government timber assets.
The message could be working. U.S. companies including IBM Corp., McDonald's Corp. and Microsoft Corp. have pumped about $10 billion in direct investment to the country since 1994.