Hendrik du Toit, founder and CEO of SA’s biggest asset manager, Ninety One, has called out the government for its “dangerous” dalliance with Russia, saying the way Pretoria has handled the relationship is not in the national interest.
Ninety One, formerly Investec Asset Management, has about R3-trillion in assets under management.
Du Toit said the government has been tone deaf in its diplomatic relationship with the Kremlin.
“We’re a large investor in SA. We also care for the country, its people and its future. So, our view is clear. The way in which the government has handled its diplomatic relations with the US is most concerning,” Du Toit told Business Day.
“Staying neutral is one thing, but appearing to support Russia while claiming neutrality is dangerous. Appearing to flout US sanctions is simply not in the interests of the people of SA.”
Citing recent events linking SA and Russia Du Toit said: “Why on earth did the head of the army visit Russia in these sensitive times, when we are being accused of arming Russia?
“Why did we conduct joint naval exercises on the first anniversary of the Russian
invasion of Ukraine?”
He said this raises questions on the “effective co-ordination” across all arms of the government. “The minister of finance should be commended for his recent intervention, but this entire episode has not been positive,” Du Toit said.
He was referring to Enoch Godongwana’s comments during his speech on his department’s budget in the National Assembly on Tuesday, in which he recognised the importance of maintaining good relations with the West.
“We are fully aware of the harmful effects of any US or EU sanctions,” Godongwana said, adding that the government is working with the US authorities to avert any such measures against key institutions in SA.
The finance minister said mishandling of the issue could affect SA in various ways — through the currency, as has already happened; potential disruptions of trade and supply chains; and in investment and liquidity.
“At this stage we are assessing the quantitative sizeable impacts of these channels.
“We must be alive to the fact that uncertainty elevates the risk premium of SA, increasing the cost of borrowing and the cost of doing business,” Godongwana said.
The CEOs of Remgro and FirstRand and the chair of Pick n Pay have also called out SA’s support of Russia in the face of the latter’s invasion of Ukraine.
Business Leadership SA has called on the Ramaphosa administration to make clear its position on arms trades with Russia, as other nonaligned countries such as China have done.
“The harm to US bilateral relations was considerable even before last week’s debacle. Joint military operations with Russia, the visit last year of Russian foreign affairs minister Sergei Lavrov, the prospect of a visit by Vladimir Putin in August, and our voting on UN resolutions related to Ukraine, have all served to make our stance appear decidedly in favour of Russia,” the organised business lobby group said.
SA has a fine tightrope to walk when it comes to its relationship with Russia.
Their friendly relationship dates back to the ANC’s fight against apartheid. The two countries are also part of Brics, alongside China, India and Brazil.
President Cyril Ramaphosa is chairing Brics in 2023 when SA is set to host the bloc’s summit in August.
It is still unclear if Putin will visit the country.
The International Criminal Court issued an arrest warrant for the Russian president in March, accusing him of illegally deporting children from Ukraine, which would be a war crime.
SA has abstained from a UN General Assembly resolution calling for Russia to pay reparations for the damages inflicted on Ukraine since its invasion of the country on 24 February 2022.
The resolution was adopted by a vote of 94 in favour, with 14 against and 73 abstentions.
SA’s UN ambassador, Mathu Joyini, objected to the “exceptionalism” and “double standards” of the initiative, saying it proposed reparations for Ukraine, but not for victims of other attacks.
The rand last week weakened more than 5% because of higher load-shedding stages and US ambassador to SA Reuben Brigety alleging that the SA government supplied arms to Russia.
Rand weakness saw local-currency bond yields to rise, with the 10-year yield approaching 11%, not far off its highs at about the middle of last year. Rising bond yields indicate unwillingness among investors to own the debt, as buyers demand a lower price to buy.
UBS Switzerland is now advising its clients against taking outright long positions in the rand against the US dollar or euro.
“Investors should use intermittent periods of [rand] recovery to reduce exposure,” it said on Friday. With Linda Ensor
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