Here’s Why South Africa Needs to Stop Politicising Ratings Agencies

Jacob Zuma

Jacob Zuma

The problem with South Africans is that they’re “politicising” the decision that rating agencies are about to make on the country’s sovereign credit rating, said President Jacob Zuma in Parliament on Wednesday.

Zuma was responding to a question from Steve Swart, ACDP MP, who asked the President what measures have been taken to ensure South Africa will not get a credit downgrade towards year-end.

“We tend to politicise the gradings,” the President said. “We pick and choose what we think rating agencies will talk about.”

Zuma listed a number of countries that had been downgraded earlier this year.

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“There was France in September, the UK in June, Turkey in September to junk status, Russia, Brazil and China,” Zuma said. “I’m sure some of you here have heard for the first time that all these countries – big and small – have been downgraded.

“But here we make a big issue of it even though the rating agencies haven’t even arrived yet.”

Zuma reassured MPs that government has been “hard at work” to stave off a rating downgrade.

He mentioned a number of initiatives government has been busy with over the past months:

– R1.4bn has been committed by the private sector to invest in small enterprises;

– companies have pledged to offer internships to 1m young work seekers;

– there has been considerable investment in the Independent Power Producers Programme in renewables that has led to 2 500MW of energy generation; and

– some state-owned enterprise has improved their governance.

In addition, the government has budgeted over R987bn for infrastructure development over the medium-term expenditure framework, Zuma said.

Asked by the DA’s David Maynier, what his views are that a credit rating agency is set up which would be more sympathetic to the needs of Brics nations, Zuma said: “there’s nothing wrong with that”.

“There are views and there are views on the economy,” Zuma said. “There’s not one view. Western countries or whatever part of the world – they all have assumptions. [The] Brics (countries) look at the world in a particular way and do their own approach to ratings.”

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