Youth must stop the downgrade memes

Jun 18 2017 14:22
Kgotso Kobo

INTERNATIONAL ratings agencies S&P, Fitch, and most recently Moody’s, have downgraded various aspects of South Africa’s credit rating to junk status.

These downgrades are in part contributed to the country’s political landscape, especially the instability and lack of leadership in government. And as our supposed leaders – both in the ruling ANC and in opposition parties – continue with their political battles, infighting, and power struggles, this situation is likely to continue for the foreseeable future.

With this in mind, one of the most pertinent issues is what these credit rating downgrades mean for ordinary South Africans. While this broad topic has been addressed to a certain extent, the focus must also extend to specifically what the downgrades mean for our youth.

Stubborn unemployment

South Africa has one of the highest unemployed rates in the world. The graduates of the class if 2017 intending to enter the adult world, and young professionals, will be severely impacted by the downgrades. And those that already don’t have employment might see their efforts being derailed by the current technical recession as well.

The downgrades will also result in higher living costs. If you had your first car in mind, or a first small place to buy, some furniture or even just a television set – the fallout of the down grade is higher installment costs. Even if you are using taxis as transport, the cost is sure to rise due to the increase in the price of fuel. All these increases transfer to the end consumer and that includes the youth.

The majority of SA youth spend an average of 800 to 1 200 minutes a month looking for a job. This time increases at graduate or job-seeker level, as higher remuneration is expected, which is proving hard to come by at the current economic climate.

Bearing the brunt

In the immediate future, we as the youth might not feel the impact of the credit downgrades, but in the mid- to long-term period we shall definitely feel it, especially in our pockets. And since many youth still rely on their parents to “carry-them”, it means even harder times for families.

Even aspiring entrepreneurs and young people running their own business are at risk of getting credit at a higher interest. Most SMME owners take out personal loans to start or expand a business, and the downgrade could lead to more borrowing costs for them. Access to credit will be difficult for young entrepreneurs, and if you’re lucky to secure it, it will come at a higher rate, which will negatively impact your business.

The leadership crisis has eroded investor sentiment, and with that reduced the money available to grow the economy and in turn create employment and alleviate poverty.

Meanwhile, one highly-placed minister has assured the South African people that “it is not all doom and gloom for young people”, that they will pick up the rand, and that we must not worry.

Elders misleading young people

Statements such as these are clearly misleading young people, and can only be described as reckless. Our so-called leaders don’t seem to understand how the political crisis affects us, the youth.

It’s time for us to galvanise ourselves, be more positive and stop the downgrade memes. We must become more assertive, look for opportunities in and outside our communities, go study abroad, and acquire new skills that will grow this country.

As things stand, it does not seem as if help will come from our leaders. They do not understand our everyday struggles. They do not appear to share our need to grow the economy, to make it an enabling environment to prosper. It’s our time, and it’s up to us, the youth, to get ourselves out of this misery.
*Kgotso Kobo, a former investment banker, is the co-fouder of SkillsRus, which is a graduate recruitment portal and an online skills platform. Views expressed are his own.

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sa economy  |  recession



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