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Johannesburg - South Africa has neither the economic data nor a good enough relationship with rating agencies to restore the country’s investment grade rating, former finance minister Trevor Manuel said this week at an event held at the Nelson Mandela Foundation about “Mandela’s economic legacy”.
During a brief interview with City Press on the sidelines, Manuel said: “The rating agencies sit with a big suite of data, but they also look to relationships. I don’t think that we have either the data that persuade them or the relationships that convince them.
“Even when Pravin Gordhan was minister of finance, backed by CEOs, the rating agencies gave South Africa the benefit of the doubt ... Even at the time of his appointment after the removal of [former finance minister] Nhlanhla Nene – the rating agencies were asking about the direction of decision making in the country. So, all of these are fundamentally about trust relations.”
Former president Nelson Mandela established close relations with the rating agencies, Moody’s Investors Service in particular, Manuel said.
“He [Mandela] would ensure that we could be contacted. People have to trust, policy must be predictable and I think that is a discontinuity that we have at the moment.”
Manuel was finance minister from 1996 to 2009.
In February 2000, S&P Global Ratings for the first time granted the country an investment grade rating and in July 2000, Fitch Ratings did the same. Moody’s Investors Service first assessed the country as investment grade in 1995.
In early April this year, both S&P and Fitch downgraded South Africa to “junk” investment status after President Jacob Zuma fired Gordhan as finance minster and replaced him with Malusi Gigaba.
When asked by City Press for his view on Gigaba in his new role, Manuel said: “I don’t comment on people and their skills – it’s inappropriate.”
Fitch this week affirmed South Africa’s “junk” rating. Moody’s has the country’s credit rating on review for a downgrade and will announce its decision by early July at the latest.
“We are at a very bad place as a country... [For Mandela,] it was always about using economics as a means to something else ... never as an end in itself,” he said during the panel discussion.
“Right now, politics is an end to personal enrichment by whatever means possible and economics is entirely by the way.
“So, the language of caring ... building a democracy that actually takes account of people’s needs – that kind of language is missing,” Manuel told the audience.
Turning to land restitution, Manuel said – during the panel discussion – that there was no mention in the South African Constitution of the “willing seller, willing buyer” principle.
“It is actually state failure that has created the problem,” he said.
Turning to Parliament, Manuel said during the interview that, over a long time, Parliament’s oversight responsibilities had failed.
“Parliament is ill-equipped to oversee what happens. Take the judgment of the Constitutional Court of March 31 last year. A unanimous decision of the court found that Parliament had failed in its core mandate to exercise oversight over the executive. Now, that happened in relation to the president and Nkandla, but department by department [is] going in there and not dealing with issues.
“In the context of the three arms of government – we can’t merely depend on the courts. Courts are the last line of defence. Courts can’t initiate policy. They can’t implement policy. They can indicate on request when a particular decision is out of line of the spirit and letter of the Constitution.
“You need the other two arms of government to be active, dynamic and involved in the process of policy to deal with issues in people’s lives. That’s where the break is happening.
“I say Parliament – but I also include the nine provincial legislatures and elected local governments – faces enormous stresses and strains in exactly the same area. As is evident now from Johannesburg, it’s not merely changing parties.
“There is a series of systemic issues that need to be dealt with in the way governments engage with people and deliver services.”
Regarding white monopoly capital, Manuel said that the alternative was “Indian monopoly capture out of Saxonwold”.
“The alternative surely has to be how we build an inclusive economy. White monopoly capital doesn’t exist – other than what has been generated by [PR agency] Bell Pottinger,” he added.
In another development, Fin24 this week reported that Nene said that the country was going through “turbulent times”.
“Our economy is moving at a snail’s pace and for some it may feel like it is not moving at all.
“Then there is the political drama that grabs the attention much more than any of the soapies currently out there.”
He was speaking at the launch the University of Cape Town’s Graduate School of Business’ new satellite campus in Sandton.
“Turbulent times call for a special type of leader; above all else, they calls for steady nerves.
“Turbulent times call for leaders to gaze beyond the fog."
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