An update on South Africa’s political risk profile in 2015/6

Abstract

In 2015, South Africa has dropped out of the Kearney Foreign Direct Investment Confidence Index for the first time since its inception in 1998. Although many resource companies have diverted their investments away from emerging markets in 2014, South Africa also had perception issues driven by lower growth and rating downgrades by the leading international rating agencies. The question arises whether political, economic and social conditions in South Africa are currently posing greater political risk for potential investment than during the 1990s to mid-2000s. This calls for a fresh assessment of relevant indicators or variables in the South African context. In other words, what is needed is an analysis of relevant political risk indicators that are based on a sound intellectual tradition and practical logic. Against this background, this study is an attempt to revisit and analyse current political risk in South Africa on the basis of a selected set of indicators or variables that are commonly and internationally used in risk analysis frameworks.