SA faces big challenge to reassure investors: Busa


SA faces big challenge to reassure investors: Busa

Jan Bornman | 2017-04-04 17:29:33.0

Busa’s Vice President and Chair of the Economic and Trade Committee Martin Kingston. File photo

Image by: Arnold Pronto © Business Day.

South Africa was facing a “very significant challenge” to reassure investors and to alleviate the drop in confidence‚ said Business Unity South Africa (Busa) which took part in the investor’s roadshow from which former minister of finance Pravin Gordhan had been recalled last week.

Busa’s Vice President and Chair of the Economic and Trade Committee Martin Kingston said it was going to take some time to recover from the latest downgrade by ratings agency Standard and Poor’s.

“We all acknowledge that we now face a very significant challenge in reassuring investors and alleviating a fairly major drop in their confidence levels over the cancellation of the roadshow and the subsequent downgrade of our foreign debt on Monday by Standard and Poor’s‚” he said.

“We are not going to be able to turn back the clock in terms of the downgrade in any short time frame‚” he said.

“I think we are all hopeful that Fitch and Moody’s will not follow suit‚ but the market I believe is already of the view there will be further downgrade of foreign debt and there is the risk that local debt might also be downgraded with even more catastrophic consequences‚” Kingston said.

“We will only be able to remedy the situation by putting in place prudent‚ responsible and consistent policies‚” he said.

“What business can do in the medium term is ensure and communicate to government alongside our local partners‚ that we want the policies that have been advocated up until now by former minister of finance Pravin Gordhan‚ to be consistently applied for the longer term‚” Kingston said.

He said investors would be very reluctant to invest in the long term if there was a deviation from these policies or any signs of inconsistency or lack of transparency.

“We have made it very clear that we need to ensure that the ruling party acts in the best interest of the country‚ we’re seeking to engage with them and their alliance partners‚” he said.

Kingston said the country was at “a pretty critical stage” in terms of the political dynamics and the macro economic dynamic which had been “exacerbated” by recent events.

The Johannesburg Chamber of Commerce and Industry (JCCI) said on Tuesday in a statement that it had been left shocked by the recent developments that led to Standard and Poor’s announcement to downgrade South Africa to junk status.

“The country can ill afford the ripple effects given the current pedestrian economic growth cycle‚” the JCCI said.

“These include redirecting tax revenues from service delivery-related activities to servicing potentially higher interest rates – compounded by the costs associated with a higher currency exchange rate‚ affecting local and international business confidence in taking long-term investment decisions‚ resulting in job losses and the inability of ordinary citizens to service their normal household debts‚” it said.

The JCCI said it planned to work with all stakeholders‚ including government‚ business‚ organised labour and civil society to eliminate the threats of downgrades‚ eliminate the trust deficit between stakeholders and to enhance policy stability.

– TMG Digital/The Times

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