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Mboweni: No conspiracy against SA over junk status

Cape Town - There is no conspiracy against SA over the junk status ratings, former SA Reserve Bank governor Tito Mboweni said in Cape Town on Friday.

''There is nobody who has a conspiracy against you in terms of ratings,'' he told Cape Peninsula University of Technology students at a talk on economic transformation.

''There are basic technical issues which have to be answered,'' said Mboweni in response to an angry question by a student over SA being downgraded to junk status shortly after Pravin Gordhan was fired as finance minister.

He said many factors were at play.

''What is your budget deficit before you borrow? What are your levels of debt? Is your policy environment consistent or not?

''You answer all those questions - then there are perception issues - and those are subjective, but they are not the overriding ones, and they do come into play.''

Apartheid debt

However, Mboweni said that even before South Africa's first democratic elections in 1994, by 1990 young economists within the African National Congress were sent off to find out exactly how credit ratings work, and what to do to get the best one.

He named current SARB Governor Lesetja Kganyago and Barclays Africa CEO Maria Ramos as being among those who figured out how to fix the economy by the dawn of democracy.

The country had inherited junk status from the Nationalist Party apartheid government, which left $25bn worth of debt behind for the new democracy to resolve.

There were two currencies - a financial rand and a commercial rand.

''The financial rand was used to attract foreign investment. The rest of us in the country used the commercial rand for our day to day operations.''

The coffers were so empty, and the debt was so high, that the ANC was close to approaching the World Bank for a loan, but decided it would rather go it alone.

It also had to deal with over 10 ''states'' - each with its own sets of directors general and high ranking staff.

The president did not even pay tax in those days, he added, which has since changed.

Simple solutions

The first item on the new government's budget was to repay debt and a single currency was created. Policies led to the country eventually gaining an A rating with credit agencies by 2008.

''It took 27 years,'' said Mboweni. ''But now we are back to junk status," he said.

''Me, I wash my hands off now. I don't have another 27 years...'' said Mboweni, who was introduced as also having been the labour minister who brought about ''breath taking changes'' in that department.

''You plough on a rock and people make reckless political decisions which have implications,'' said Mboweni without specifically mentioning President Jacob Zuma's Cabinet reshuffle of March 30 and fears over the rand's performance.

In his day, he continued, only three people were allowed to speak about the currency, and there was no ''minister of water affairs'' talking about currency issues.

''The world owes us nothing,'' said Mboweni, telling students that no matter how the economy changed, they would still have to trade with the rest of the world.

The problem, he explained, is that people look for simple solutions to complex problems.

He urged students to go and look at the share register of the Johannesburg Stock Exchange to see who really owns big business in SA when they raise white monopoly capital concerns.

Black ownership

He conceded that company management was mostly white, but found that some of the biggest investment companies, such as the Public Investment Corporation or Coronation, were institutional.

''In these companies there is no white family that owns them. It is not there. So the ownership structure of companies has changed from the days when the Oppenheimers owned Anglo American."

To move toward more black ownership, people must mobilise union-invested funds, and other funds to ''get hold of the company''.

He said the ANC is currently in discussion about a State Bank, with a meeting being held on Wednesday.

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