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Cape Town – Deputy President David Mabuza managed to elude a prickly question on the governing party’s view of the South African Reserve Bank and its role in ensuring economic stability, which could have seen him put off either investors or the African National Congress.
During his appearance to reply to members’ questions in the National Assembly on Wednesday, Mabuza was replying to a question from ANC MP Mmathulare Coleman when a supplementary questions came from Democratic Alliance MP David Maynier on the Reserve Bank.
At its elective conference in December – where Mabuza became the governing party’s deputy president – the ANC resolved to look into the purchase of SA Reserve Bank shares with a view of adjusting its mandate to meet developmental and transformation objectives.
Such utterances have worried foreign investors and sovereign credit rating agencies, with Moody’s raising the concern that chapter nine institutions, National Treasury, the Reserve Bank and the judiciary were being targeted because of their role in pushing back against the erosion of governance at state entities.
However, the ANC is not just wary of irking investors. Changes in government’s approach to the Reserve Bank were close to being introduced in Parliament through a motion in March, which the ANC withdrew at the last minute. The party is still under pressure to produce something to show for its conference resolution.
Replying to Coleman’s original question on whether he believed investor sentiments improved since Moody’s gave the South African economy a reprieve, Mabuza said ratings agencies recognised that the country was hard at work to reverse damage done to its reputation in the international community.
“The international ratings agency Moody’s announced they would maintain SA’s investment grade rating and changed the outlook of debt from negative to stable. This is a shift in the current sentiments and a vote of investor confidence in the country,” said Mabuza.
Mabuza said Moody’s decided on SA’s credit rating after broad meetings with government and stakeholders in the economy. This positive investor sentiment reflects recognition of hard work which has begun to steer government and its entities in the right direction, he added.
“We have not just halted economic decline. We have also embarked on a path of economic recovery and restoring investor confidence. This change in outlook from negative to stable is important for investors who require that their investments go to investor grade economies. They can now rest easier following Moody’s decision,” Mabuza said.
When Coleman asked for an example of a meaningful impact of the credit rating, Mabuza said: “Highveld Steel was placed under business rescue. We have succeeded in bringing it back to operation. They have more downstream SMMEs housed in the company’s operations to beneficiate the steel. It’s not an easy task but we applaud the management of Highveld and we can say this confidence will allow them to attract more investment.”
Maynier said the independence and strength of the South African Reserve Bank was critical in maintaining Moody’s rating. He asked the deputy president whether he was in support of proposals to review the mandate even if such a review could shatter the investment grade of the country and bring it to junk status.
Mabuza evaded the question by saying that the supplementary question was not related to the founding, much to the frustration of MPs at the DA seats of the House.
“You are taking your luck on this question. It is a new question. In any event, we are looking at the comments made by these institutions. At no stage have the comments we have seen reflected on the Reserve Bank. The comments we saw pertained to entities that agencies believed were regressing,” he said.
Maynier countered Mabuza’s view, saying: “The deputy president is misleading the house. The Moody’s report mentioned the Reserve Bank’s role in maintaining the credit profile. The deputy president must answer the question”.
National Assembly Speaker Baleka Mbete agreed with Mabuza’s view, saying that she would like to avoid a situation wherein the session would be saddled with a fifth supplementary question. DA chief whip John Steenhuisen quickly protested, saying the ANC’s supplementary question was not any more relevant than what Maynier’s was.
Inkatha Freedom Party MP Mkhuleko Hlengwa challenged Mabuza to prove that the days when officials of the presidency would stand on the podium in the National Assembly and accuse ratings agencies of meddling in SA’s economic affairs – a veiled reference to former president Jacob Zuma’s typical response to agencies’ concerns – were over.
“As a country and as an economy, I think we have accepted that we cannot be a referee and a player. We must accept valid criticism and use it to understand where we are erring and how we can change. We are taking the comments seriously. They are concerned about political stability beyond the stability of our entities,” Mabuza conceded.
