News24 | Godongwana: SA’s Constitution, red tape stall investment

Finance Minister Enoch Godongwana says the key to unlocking private sector investment in sectors such as mining is a policy issue, not a fiscal one.

Storm Simpson/News24

• Finance Minister Enoch Godongwana says South Africa’s Constitution is not always conducive to investment.
• He said oil and gas exploration has thrived in Namibia, while local exploration has been bogged down by court cases.
• The minister added that National Treasury was working with mining entities to fix policy issues.
• For more financial news, visit News24 Business.

Finance Minister Enoch Godongwana has said that South Africa’s “legal architecture” is a barrier to growth and investment.

Speaking at a breakfast hosted by Rand Merchant Bank on Thursday, following the latest Medium-Term Budget Policy Statement, Godongwana said the country’s Constitution and regulatory environment pose significant hurdles.

The minister was asked about the slow rollout of structural reforms in South Africa. Rwanda was cited for comparison, following its recent success in signing a 10-year Formula 1 deal that will mark the sport’s return to Africa for the first time since the 1990s.

Godongwana said in response: “I am sure Rwanda does not have the same Constitution as us.”

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Prolonged legal battles are another setback to growth and reform, the minister said, including challenges among the national, provincial and local spheres of government over their powers and responsibilities, as well as legal challenges to private sector investment.

He cited energy exploration and development as a key area where South Africa was lagging behind.

“The guys that found gas in Namibia, they started here, and they failed several times because the environmental [groups] can take you to court until you give up.

“Our Constitution and regulatory framework sometimes do not create a conducive environment for investment. We have been asked to create environmental courts so that things can be done on time,” he told the panel.

Operation Vulindlela, government’s flagship programme to introduce reforms across the energy, transport, water and other sectors, aims to increase private investment in services while also working to unbundle monopolies held by state-owned entities such as Eskom and Transnet.

However, reforms have faced delays, with the Department of Electricity and Energy recently announcing that private sector investment in building transmission infrastructure would be delayed by six months. The launch of the SA Wholesale Electricity Market was also initially delayed by one year, and is now expected in April 2027.

READ | BLSA warns of stalling electricity reform, as Eskom owes R2bn to private producers

Godongwana said Treasury was working to fix policy and regulatory issues, including in the mining sector, to unlock investment and economic growth.

He said private sector investment was a policy issue, not a fiscal one, adding that conversations with the Minerals Council South Africa and the Department of Mineral and Petroleum Resources were ongoing.

“We need to fine-tune this regulatory issue in mining to increase exploration in South Africa. We [National Treasury] have got a vested interest in this, and we are a mineral resource-heavy country.

“We would like to know what policy challenges are in [other] sectors, and what their challenges are. We are happy to engage about these challenges,” he said.