Johannesburg/Cape Town - Sipho Pityana, the chairman of gold producer AngloGold Ashanti, called on South African business leaders to boycott international tours with government officials to promote investment in the country and to demand President Jacob Zuma’s resignation.
“I don’t believe it makes sense for business to continue to be part of government international investor roadshows, assuring investors that we’ve got these challenges and that we are dealing with them and assuring them that they will be sorted,” Pityana, 57, said in an interview in Johannesburg on Thursday. “That would be putting our own credibility on the line because now we have a government that is led by a leader who has no integrity.”
Zuma is putting South Africa at risk of having its credit rating downgraded to junk, Pityana said in a separate emailed statement on Thursday. Its state companies are in worse shape than at the beginning of the year when Zuma first promised to improve their management and oversight, said Pityana, a respected member of the ruling African National Congress and a former head of the nation’s international relations department.
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Zuma, 74, has faced calls to quit since the nation’s top court ruled in March that he violated the constitution by refusing to repay taxpayer money spent on upgrading his private home. He’s spooked investors by sparring with his Finance Minister Pravin Gordhan for control of the Treasury, tax collection agency and state companies. He’s also fighting a lawsuit filed by opposition parties aimed at forcing prosecutors to reinstate 783 graft charges against him that were dropped just weeks before he became president in 2009.
“Business needs to stand together with other sectors of society to demand a leadership that is transparent, accountable and free from corruption,” Pityana said in the statement. “The first step in that process is to demand that Zuma step down as president, before it’s too late. Because of Zuma, South Africa is now one step closer to a sovereign downgrade, which will have disastrous implications.”
Addressing lawmakers in Cape Town on Tuesday, Zuma denied a rift with Gordhan and said his administration was taking steps to revive the stagnating economy and improve the governance and performance of state companies. He’s previously denied that he intentionally broke any laws.
“There is an effort to destabilise Treasury,” Pityana said. “Gordhan happens to be there standing in the way. So it leaves us very worried about the motives behind all of that.”
Officials from the Treasury, the Johannesburg Stock Exchange, Old Mutual and Standard Bank will meet with investors in the US on October 4 and 5 in a bid to shore up investor confidence in the economy, the stock exchange’s Director of Marketing and Corporate Affairs Zeona Jacobs said in an emailed response to questions on Wednesday. The trip comes ahead of a scheduled credit review by S&P Global Ratings in December.
“Business should suspend these conversations and engagement with government until government fulfills its side of the bargain,” Pityana said. “They made an undertaking that they will ensure policy certainty in their communications and sort out the state-owned entities. They must do those things. We’ve played our side of the bargain.”
While South Africa was spared credit-rating downgrades by Moody’s Investors Service, S&P and Fitch Ratings earlier this year, all three companies have voiced concern about the way the country is run. S&P rates South Africa’s debt at BBB-, the lowest investment-grade level, and is due to release its next review on December 2. Fitch, which has a similar assessment to S&P, and Moody’s, whose rating is one notch higher, haven’t set dates for their reviews.
Moody’s placed five South African state-owned companies on review for a downgrade due to concerns about governance and the political environment, the ratings company said on Wednesday.
The foreign-currency long-term issuer ratings of Eskom, the Development Bank of Southern Africa, Industrial Development Corporation, the South African National Roads Agency Limited and the Land and Agricultural Development Bank were all placed on review for downgrade, it said.
Pityana said that Zuma is tarnishing the image of the country, and since the ANC hasn’t asked him to step down, South Africans have a civic duty to convince him to quit.
“We can’t have a president like this,” he said. “It’s not in the interests of the country. It’s about that, calling on ordinary citizens of the country to take a stand and reflect and think of what it is that can be done within the framework of the law and the constitution to get the president to step down.”