International ratings agency Moody’s has issued its first real sign that South Africa could avoid a downgrade this year.
The agency, which is expected to make its decision public in November, said yesterday that the probability of a credit rating downgrade for the country had lessened to below 50 percent.
It said only the mooted arrest of Finance Minister Pravin Gordhan would threaten the country’s economic policy.
Moody’s is by far the most dovish of the rating agencies that continue to circle our lives like vultures.
Its rating system is more measured, rational and takes into cognisance all fiscal realities and developments on the domestic growth front before pronouncing on its assessment.
With the recently rampant rand and buoyant stocks in the market, this should indeed be good news for all of us who call this part of Africa home.
It should also be a welcome distraction to the millions of the black and gold fans, who continue to fill Soccer City in a twisted belief that the wordy Steve Komphela could one day decorate their jersey with the coveted continental star while cursing him afterwards.
But Gordhan is not out of the woods yet. The elite police crime busting unit, the Hawks, is said to be doing everything it can to ensure that Gordhan does not escape its claws.
State-owned enterprises (SOEs) - particularly Denel and Eskom - and the SA Revenue Service, continue to undermine his authority with abandon.
And most importantly, Mineral Resources Minister Mosebenzi Zwane and his local government and traditional affairs counterpart Des van Rooyen continue to look at him with a malicious glint in their eyes. And therein lies the problem, the continuing fracas around Gordhan has unsettled the market.
And should it happen, the arrest would not only send us into a tailspin far larger than the hilarious but costly soap-opera that ushered in Van Rooyen as the shortest serving finance minister in December - an event worthy of history books.
It would send the rand into a free fall that our foreign currency-denominated debt would become even more expensive to service.
Higher inflation
It would mean paying more for importing maize, given the current drought in the country and, with the produce being such an important commodity in the agricultural value chain, lead to higher inflation. This would send food prices through the roof and be an invitation for the SA Reserve Bank to review its rates regime.
The people who will suffer most in this equation are the middle- to lower-income earners. It will also be a bad omen for the entire continent as Nigeria has already hit recession levels.
And with two of the continent’s most powerful economies on a downturn, no one will take Africa seriously.
But we have only ourselves to blame for the mess we are in. We have made it our habit to lie to the world about our intention to be taken seriously.
When Gordhan went on his international charm offensive early in the year, he promised investors that South Africa would do everything in its power to rein in the parastatals.
He went as far as saying that the state was even prepared to tap into the wisdom of the private sector to ensure that SOEs are governed in accordance with the world’s best governance principles.
He said the government was not averse to selling some of the SOEs’ non-core businesses to solicit more cash.
Gordhan had particularly strong words for SAA, an entity that has become the epitome of everything that is wrong with our parastatals.
He told SAA in no uncertain terms that the government would only give it guarantees under the strictest of all conditions.
He accepted the enforcement of SAA strongwoman Dudu Myeni as the chairwoman of the board, but made sure that she was surrounded with people who would keep her under control.
But as Gordhan was reading the riot act to the SOEs, President Jacob Zuma was doing everything to protect some of them from the Treasury.
He took over the co-ordination of the committee that is meant to oversee the governance of all parastatals. SOEs came under siege as it happened last week when Moody’s placed at least five of them on review, warning that they could face a possible downgrade in the future.
Zuma also contradicted his deputy Cyril Ramaphosa in public, telling Parliament that perceptions that the state was at war with itself was the figment of Ramaphosa’s imagination.
And, as if to stamp his approval on the embattled airline, Zuma flew SAA to attend the UN General Assembly on Saturday. On his arrival in New York, Zuma urged South Africans to fly on SAA.
While we celebrate our downgrade could only just be averted, so our celebrations should be guarded and not Âoverzealous.
As the government continues to speak with forked tongues, parastatals have used this apparent disconnect to ensure that they get themselves as far away from the realms of accountability as possible.
They have made it their mission to undermine every aspect that normal people call good governance, reducing South Africa into nothing more than a disjointed administration where one side does not care about what the other side is doing.
They have condemned the lofty goals of the National Development Plan into another piece of legislation that will never see the light of day.
This was why it was a little discomforting to hear the Black Business Council offering its unqualified support for Zuma and, by implication, the chaos that characterised the current administration last week.
Granted, the council is within its right to demand that it be included in Gordhan’s road shows next time he goes to woo international investors.
Pronouncements
It is also entitled to have a say on the recapitalisation of the National Empowerment Fund; the need for black asset managers to manage the new R1 billion fund for small and medium enterprises and the revision of the terms of the Treasury’s jobs fund.
But the timing of its pronouncements and their concerns over the signing of the Financial Intelligence Centre Amendment Act into law presupposes that they are more interested in their overall well-being at the expense of the rest.
Like its counterparts in parastatals, it wants the government to look at its needs, while ignoring laws that govern the good republic.
But that has always been the case with organised black business - putting personal interests above the whole.
You only have to look at the caricature that now parades as the National African Federated Chamber of Commerce and Industry to see how successful this art called self-destruction can be.
Fortunately, there are still some in the council who see beyond such shenanigans. The Black Management Forum and the Black Business Council in the Built Environment last week came close to distancing themselves from the council’s stance.
They wrote to the council demanding clarity on the decision to support Zuma publicly without first canvassing the views of its 41 affiliates.
With that, the only thing that South Africa can still reasonably celebrate without limits is that there are still sensible voices among us.
* Sechaba ka’Nkosi’s column - The Shake-Up - is published in Business Report.
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