Confidence, and a tale of two leaders' cars

British Prime Minister David Cameron dipped into his own pocket to buy a second-hand Tory-blue Nissan Micra for R35,000 so that his wife, Sam, could independently bob around the Oxfordshire countryside.

We had a similar story this week.

About R9-million of the police budget has been used since 2013 to buy a fleet of 11 luxury cars for the exclusive use of President Jacob Zuma's wives - enough money, the DA pointed out, to fund the tuition of 116 university students or pay the salaries of 61 police officers for 12 months.

Incidentally, the R9-million is on top of the R88-million spent by the presidential spousal unit for travel, technology and incidentals since Zuma took office.

If you were in a generous mood you might think that the South African government bought these vehicles as a goodwill gesture to the motor manufacturers investing billions via the Department of Trade and Industry's Automotive Production and Development Programme.

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But no, there is not a single Toyota, Ford or Volkswagen among them. The cars are all imported: four Range Rovers, two Land Rover Discoverys, two Audi Q7s and, in March this year, three Audi A6s.

What Cameron understands is the power of positive public relations. Of course his car purchase was a stunt. Nissan builds the Micra in the UK and he used his own money to buy a second-hand runabout, in person, from a local dealer, thus supporting small business.

But in South Africa, that lesson hasn't been learnt. Here, we face a worsening cash crunch should ratings agency S&P Global Ratings decide on Friday to downgrade us to sub-investment status. It's a move Standard Bank warned this week would push us into recession and cost at least 200,000 more jobs - and that is just for starters.

Higher borrowing costs will mean there will be even less money to spend on services that are already failing so badly that communities have resorted to violent protests.

Profligate spending also leads ordinarily law-abiding citizens to try to avoid paying tax - and that could spell disaster for the National Treasury's financial turnaround plan that relies on public goodwill.

At least, every cent you earn as of this week is yours. Tax freedom day measures the time it takes the average citizen to meet their financial obligations to the state before they can call their earnings theirs. In South Africa, this came on May 24 - 43 days later than it did in 1994. Americans celebrated tax freedom day a full month before South Africans this year.

It's eroding wealth and confidence. More and more people who can afford to are taking money out the country rather than investing it here. And companies have been upping the rate at which they've been investing elsewhere - instead of applying the capital on their local balance sheets.

This has paid off handsomely for investment company Brait, which has moved aggressively offshore over the past year. A trading update this week told investors that its NAV could rise by as much as 40% - in euros - as a result.

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But while many wealthy South Africans are taking their money out, some foreigners see opportunity.

Carmakers, for example, require the considerable benefits afforded them by the automotive development programme to expand domestic production of export vehicles, thus demonstrating that the right incentives do encourage businesses to invest. So, how do we take the lessons of this programme's success and apply them to local businesses, encouraging them to free up the billions in unproductive capital they sit on?

A host of CEOs of South African corporates are dedicating company and personal time to the efforts to stave off a potential downgrade on Friday. Assuming they are successful, how do they make sure we dodge the bullet in December?

The answer is growth.

But that will only happen if the CEOs have the confidence in our economy to make some big investments in the future.

Whitfield is an award-winning financial journalist, broadcaster and writer