Cape Town – The decision by rating agency S&P Global to downgrade South Africa's sovereign rating to junk status came as a result of "self-inflicted pain" and bad leadership from President Jacob Zuma, the Federation of Unions of South Africa (Fedusa) said on Monday night.
Fedusa general secretary Dennis George, who was with axed Finance Minister Pravin Gordhan and his deputy Mcebisi Jonas in London before the two were called back home, said he was extremely concerned.
"All these things are self-inflicted pain. We were going to London, New York and Boston to meet with ratings agencies and investors, then the president decided to cancel the trip, call back the minister of finance and announce in the night a cabinet reshuffle, and this is the consequences of bad leadership," said George.
"This is really not acceptable. You see what happened to Greece when they were downgraded to junk status. It makes economic policy management much more difficult."
George said Zuma had not learnt his lesson from 9/12 – the date in 2015 when he fired finance minister Nhlanhla Nene – before replacing him with little known (at the time) Des van Rooyen, then reappointed Gordhan to the position after billions were wiped from South Africa's stock and bond markets as a result of the reshuffle.
"It's like a person that doesn't learn the importance of managing an economy. We must come up with a strategy to manage these things. Investors are jittery," he said.
"The point is this downgrade affects the entire country's ability to raise capital. Certain institutions and investors are not allowed to buy bonds of countries which have been downgraded to junk status," said George.