Johannesburg - South African Finance Minister Pravin Gordhan met with top business leaders on January 29 to discuss steps to boost investor sentiment and avert a credit rating downgrade to junk.
About 60 chief executive officers representing industries ranging from banking to mining met with Gordhan for two-and-a-half hours at Nedbank’s offices in Johannesburg, Jabu Mabuza, chairman of Telkom and co-ordinator of the meeting, said by phone on Monday from the Ethiopian capital, Addis Ababa.
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“The point was to recognise that there is a sense of crisis,” said Mabuza, who also chairs the lobby group Business Unity South Africa. Executives “left that meeting feeling very positive and confident that as government and business, we are all looking at the same thing, we are all in agreement about the urgency and the crisis nature of the situation”.
Gordhan is seeking to restore confidence in an economy hit by sliding commodity prices, weak demand from China and policy mistakes by President Jacob Zuma toward the end of last year that pushed the rand to record lows. Standard & Poor’s in December put South Africa’s BBB- rating on a negative outlook, indicating it may downgrade the nation’s debt to below investment grade.
Eskom investment
Executives discussed with Gordhan the steps needed to boost investment, including whether the government should allow private-sector involvement in projects like the Kusile and Medupi coal-fired power plants owned by Eskom, Mabuza said.
“We have to do everything we can to avert the sovereign downgrade,” Thabo Dloti, CEO of insurer Liberty, who attended the meeting, said in an emailed response to questions. The talks “went a long way into developing and affirming the partnership required between business and government to find practical solutions to the current economic challenges”.
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Vodacom CEO Shameel Joosub, who attended the meeting, said collective action was needed under current circumstances.
“We were very encouraged by the minister and Treasury’s determination and commitment, as well as their plans to address the short-term fiscal challenges,” he said in an emailed response to questions.
Rand plunge
Also attending the meeting were Lonmin CEO Ben Magara, AngloGold Ashanti’s Srinivasan Venkatakrishnan and Dan Matjila, head of Public Investment Corporation, according to a photograph posted on Twitter by Stephen van Coller, head of corporate and investment banking at Barclays Africa.
The rand has plunged 14 percent against the dollar in the past three months to trade at 16.0512 as of 5.35pm in Johannesburg. Sentiment deteriorated after Zuma fired his finance minister, Nhlanhla Nene, on December 9 and replaced him with a little-known lawmaker. A market backlash that followed forced Zuma to reverse the decision four days later and re-appoint Gordhan to a post he had occupied from 2009 to 2014.
Phumza Macanda, a spokeswoman for the Treasury, didn’t immediately respond to an email seeking comment.
* With assistance from Andre Janse van Vuuren
BLOOMBERG