The high-profile murder of South African mining magnate Brett Kebble this week could hurt attempts by Africa’s biggest economy to bury a reputation for violent crime and lure more foreign investors, analysts say.
But the gangland-style killing in a smart suburb of Johannesburg is unlikely to have a long-term impact on investor perceptions in a country where even foreign executives are quickly inured to the risk of gun crime.
Kebble’s killing stunned South Africa’s business community and sparked speculation that the murder of the colorful executive, who was embroiled in various legal disputes, may have been linked to his business dealings. Police say it is too early to tell.
Bad for business
Analysts say that regardless of the motive, grainy pictures of Kebble’s bullet-ridden Mercedes Benz and headlines of murder and intrigue deal a blow to South Africa’s bid to sell itself as a safe and profitable place to do business.
“Either way it is very bad for South Africa’s image,” said Reg Rumney, director at local think-tank Business Map. “Violence is not new, but a high-profile killing is like a terrorist attack —even if the death toll is minimal it is a scare factor.”
Rumney said that while major international firms might now simply give executives extra danger pay and hire bodyguards, renewed worries about the high crime rate could deter mid-level investors.
South Africa is desperately seeking foreign direct investment to help power economic growth to the six percent level needed to curb widespread unemployment and poverty, from an estimated four percent this year.
Deputy President Phumzile Mlambo-Ngcuka quickly sought to allay investor fears after the murder on Tuesday night, which came as thousands of top oil executives met in Johannesburg for the World Petroleum Congress.
She urged a prompt investigation to “rebuild the confidence in our country” and said Kebble “would not want this tragedy to be used in any way to spoil the progress of our country,” according to local media.
Rattles recent breakthroughs
Analysts said the murder was unlikely to rattle investor confidence in the long term given the country’s relative political stability.
“This is a chilling reminder that you can be gunned down on your way to dinner in South Africa ... but it will be discounted over time,” Rumney said.
Nevertheless, the murder tarnishes a number of recent developments which have helped improve South Africa’s investment image.
The country this year scored upgrades from international rating agencies Standard & Poor’s and Moody’s; crime statistics showed a decline in murders in the last financial year; and the main stock index has turned in one of the best performances in the world, setting a string of record highs.
Yet some foreign investors are still wary — a Swedish pension fund this week voted down a takeover offer for insurer Skandia by South Africa’s Old Mutual due to “unusually high” political and currency risk in the country.
“I think people are coming to realize that things are improving both anecdotally and in terms of statistical evidence, but the risk still remains high,” said Mike Davies, Africa analyst at London consultancy Control Risk group, who rates downtown Johannesburg as risky as Liberia or Ivory Coast.
