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Cape Town – Government must ditch its nuclear programme and the implementation of the latest Mining Charter and ensure an independent justice system can tackle state capture to regain its lost trust, said Business Leadership SA (BLSA) CEO Bonang Mohale.
He was responding to the announcement on Friday that S&P Global Ratings had cut South Africa’s local-currency debt score to junk, while Moody’s Investors Services threatened to slash its ranking to the same level, raising the risk of a selloff from global indexes.
“Until there is an unambiguous declaration of abandoning the nuclear programme and setting aside of Mining Charter 3, the trust deficit will persist,” Mohale said in a statement on Saturday.
“This administration seems to derive joy at scoring own goals. BLSA has long stated that many economic and political problems South Africans experience are rooted in corruption, state capture and political patronage resulting in trust deficit.
“Unfortunately, it's the ordinary man and woman who continue to feel the impact the most with the lack of jobs, ever-increasing prices of goods and denial of basic services.
“Corruption and state capture continue to deny ordinary South Africans basic human rights; basic quality education, health care, housing and job opportunities.
“Until our state institutions are truly independent, especially the police services and NPA to bring to book those who are implicated in state capture, confidence will remain low.
“BLSA calls upon the government to engage organised business, organised labour and civil society to urgently work on an emergency economic recovery plan to rescue our economy from the fiscal cliff. Business Believes in South Africa.
“We did not inherit this country from our ancestors but borrowed it from our grandchildren,” he said.
Investor confidence at a 30-year low
BLSA said in the statement that the ratings downgrade will deliver another blow to an already weakened economy and negatively impact the everyday lives of millions of South Africans.
“Business and investor confidence in South Africa is already at a 30-year low and this will only deepen it,” it said.
“Events such as the two cabinet reshuffles, mixed messages around nuclear capability, poor numbers and a lack of direction in the Medium-Term Budget Policy Statement and most recently the resignation of Michael Sachs at National Treasury, have all sent a message of instability and lack of clarity to the ratings agencies.
“The situation we are in was avoidable. Instead of pursuing stability and certainty in fiscal policy and regulatory reform, the government has become riddled with the twin cancers of corruption and state capture and put the economy of South Africa in jeopardy.”
How to save SA
BLSA said its contract with South Africa sets out how business will encourage and promote inclusive economic growth and transformation.
“We have also set out the conditions and roadmap by which the government can reverse the fortunes of millions of South Africans.”
This should include but is not limited to:
• "The eradication of state capture. BLSA repeats its call for an independent judicial enquiry to be established as recommended in the public protector report “A State of Capture”.
• "Addressing the broader economic crisis by enforcing strict fiscal discipline. This means that government must commit to not adding big new spending programmes to existing budget plans. For example, there should be no nuclear build.
• "Addressing the leadership, governance and balance sheets of critical state-owned enterprises. This is particularly important to speed up the release of government from SOE guarantees, and therefore creating the much-needed fiscal space for spending on more pressing needs in society.
• "Reviewing the national budget and making the necessary adjustments. But it is vital that cuts are not imposed on key national institutions and social support systems such as grants, housing and the Expanded Public Works Programme.
• "Prioritising inclusive economic growth and job creation above all else for the sake of all South Africans. Government must commit to working with business and other sectors of society to develop an urgent economic recovery plan."
FULL COVERAGE OF RATINGS ACTIONS:- Moody's keeps SA at investment grade - for now
- S&P Global downgrades SA to junk
- Full statement by S&P
- Full statement by Moody's
- Downgrade a 'significant blow' - CEO Initiative
- S&P Global downgrades SA to junk, Moody's places SA on downgrade review
- SA to mull tax hikes and spending cuts to avoid full junk - Treasury
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