Land expropriation policy will not 'significantly hamper investment levels in SA' - S&P | Fin24
 
  • Still falling

    Annual consumer price inflation has dipped to its lowest level in 9 years.

  • Sabotage at Eskom

    President Cyril Ramaphosa says sabotage contributed to power cuts earlier in the week.

  • Digital Banking

    TymeBank says it will be switching gears in a bid to triple its size by the end of 2020.

Loading...

Land expropriation policy will not 'significantly hamper investment levels in SA' - S&P

Nov 25 2018 13:31
Fin24

Ratings agency S&P Global has said that the expropriation of land without compensation is not expected to significantly hamper levels of investment flowing into South Africa, as the rule of law and enforcement of contracts is expected to remain in place. 

But it warned that the move would likely "force some businesses to reconsider investing in the country". 

In its latest rating action on Friday it kept SA's sovereign credit ratings unchanged at non-investment grade, with a stable outlook.

S&P affirmed SA's long-term local currency debt at BB+, the first notch of sub-investment grade, and kept SA's the long-term foreign currency rating at BB, two notches below investment grade.

It first downgraded SA's sovereign credit rating to 'junk' in 2017. 

In a statement at midnight on Friday, S&P said the country was facing "significant challenges around high levels of poverty, unemployment, and economic inequality, which largely break along racial lines."

Land expropriation 

In mid-November, Parliament's Joint Constitutional Review Committee adopted a resolution that Section 25 of the Constitution be amended to specifically allow for the expropriation of land without compensation.

S&P said there were sufficient checks and balances in place to keep investors from fleeing. 

"While expropriation without compensation will force some businesses to reconsider investing in the country, we expect that the rule of law and enforcement of contracts will largely remain in place and will not significantly hamper investment levels in South Africa," it said in its latest rating action. 

"Our view reflects our consideration of the checks and balances embedded within South Africa's institutional framework, which includes a constitutionally independent judiciary."

It said it would consider lowering SA's credit rating if the rule of law, property rights, or enforcement of contracts were to "weaken significantly". 

Reaction by business bodies to the move by the review committee has been mixed. While federation of agricultural organisation Agri SA said it would cause "large scale damage to the South African economy", Business Unity South Africa President Sipho Pityana called for "cool heads and pragmatism"

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER

s&p global  |  s&p  |  credit rating  |  sa economy
NEXT ON FIN24X

 
 
 
 

Company Snapshot

Voting Booth

What do you think about private healthcare in SA?

Previous results · Suggest a vote

Loading...