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South Africa’s recovery can begin immediately, but it won’t happen with current economic policies nor with current political leadership, explains political analyst Daniel Silke.
Regrettably, but entirely predictably, South Africa has walked right into a rating downgrade by Standard & Poor's. In a swift and stark reaction to President Jacob Zuma’s Cabinet reshuffle and its underlying motivation, the rating agency decision now compounds the problems of an already stagnant economy so dependent on both domestic and foreign capital investment.
Whilst the economic effects will ripple across all sectors in the coming months, there is a more dramatic short-term political effect.
The downgrade further damages Zuma at a time when he faces unprecedented internal pressure from his own party and broader society. It will be used by his increasingly vocal detractors to hammer home their message for a change of leadership and direction.
The downgrade undermines the political spin from the President around ‘radical economic transformation’ and also undermines his own leadership abilities already much maligned.
There is simply something unpleasant about the term ‘junk’ and whatever the practical consequences, the negative sentiment of the term at a time of great political firmament is likely to have a dramatic and lasting effect.
South Africa therefore now faces a tough choice – it’s recovery can begin immediately – but it won’t happen with current economic policies nor with current political leadership.
Now read: Gigaba’s first 24 hours: Insights into the future
Newly-appointed Finance Mininster Malusi Gigaba’s statement points to a disregard for what a downgrade will do to the cost of capital and ability to spend on crucial infrastructure and social services, and highlights the spurning of the global financial system prevalent in some ANC quarters, writes Daniel Silke.
* Daniel Silke is director of the Political Futures Consultancy and is a noted keynote speaker and commentator. Views expressed are his own. Follow him on Twitter at @DanielSilke or visit his website.
