Since liberation in 1994, South Africa has become increasingly reliant on private capital inflows. There is nothing wrong with that – in principle. What does matter is the composition of those inflows – specifically the breakdown between hot money inflows of potentially short-term money targeting the booming Johannesburg Securities Exchange and the money market, and the long-term foreign direct investment (FDI) that generates output, jobs and exports.

It is here that South Africa has a problem. Unlike its global competitors, it is heavily reliant on portfolio inflows that might exit the country at any time and incur immediate outflows of interest and dividends, relative to FDI inflows that are there for the long haul and mostly do not give rise to foreign currency outflows until they turn profitable.