SA investor environment can be improved – shadow finance minister

Tim Harris MP, the Democratic Alliance (DA) shadow finance minister, has described current business regulation as “outrageous” when compared to the rest of Africa.

In an exclusive interview with HumanIPO Harris, who is also government liaison member on the Silicon Cape committee, said he was focused on three main areas to help entrepreneurs, startups and foreign investors.

South Africa is one of the few remaining countries which still exercise exchange controls on movement of money in and out of the country.

Added to this is the fact intellectual property is classed as capital, adding extra complications for foreign investors.

Harris said: “This [intellectual property] is the real bread and butter of the venture capitalist. You are moving financial resources to try and support IP. When you do that in South Africa you are constrained.

“We have a huge generalised constraint on VCs, which I have argued is the main constraint holding back Silicon Cape and the tech sector in South Africa more broadly.”

Harris added altering business regulation was among the DA’s priorities concerning initiatives looking to aid the tech scene and expressed horror at the idea many foreign investors look more favourably towards Kenya and Nigeria as places to invest rather than South Africa.

He added: “I’ve heard investors speak favourably of the regulation in the Kenyan system. That is outrageous that we compare so unfavourably to other countries in Africa. In most international rankings, it is clear South Africa has a business regulation problem.”

The third area Harris believes would aid startups and entrepreneurs is open data.

He said making government-collected data on information such as property, traffic congestion and business openly available could lead to the development of effective public service apps, which benefit citizens.

Regarding the Jess Green-led campaign to bring the successful Start Up Chile model to South Africa, Harris said he liked the idea, but the DA would need to be in control at national level to make it a reality.

Harris said: “I think it is a very interesting idea and I think it is one we could emulate. If we [the DA] were in control at national level we would be looking to experiment with ideas like that.

“The direct funding of startups by the state is something Chile has shown can work, but it is not a perfect policy. The trick with industrial policy is knowing when you need to provide that support and when you need to withdraw that support.”

HumanIPO will publish the full Q&A later this week.

Posted in: Policy

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