Naturally, Moody’s flagged Eskom’s escalating debt and government bailouts to the embattled power utility as a contingent liability to the government as a likely trigger of the downgrade.
Now we can get into arguments about the need for countries to take ratings agencies seriously, particularly since some were fingered in the 2009 international financial crisis.
However, our differences on their merits would be as good as debating whether Public Protector Busi Mkhwebane is fit for office or outgoing Western Cape Premier Helen Zille requires some time in a mental institution to check if she is right in the head.
The reality is that investors take their cue from the ratings agencies’ assessment of the country’s attractiveness for investments.
No sane investor would splurge his or her dollars or euros in a venture that is not likely to yield any returns.
It would be like betting your last dime that the once mighty Glamour Boys would lift the African Champions League cup with Bobby Motaung still pulling the strings.
And therein lies our biggest problem.
Eskom has become more than just a national nuisance. It has eroded our worthiness as a nation to a point that the economy is fast slipping into irrelevance.
The Guptas also failed to help our cause, as they looted whatever remained of Eskom.
The current growth trajectory of under 1percent is not likely to change any time soon, unless fundamental structural changes are made to turn Eskom into a financially viable parastatal like Transnet.
At the moment, Eskom’s debt is estimated at around R500billion, including bonds and issued loans.
To get a clearer picture, Eskom’s current liability to the economy is more than a third of the country’s budget or more than 10percent of the gross domestic product (GDP).
The National Treasury’s own estimates says that the country’s debt, excluding Eskom, could deteriorate to 60.2percent of the GDP by 2024.
This is the real picture that faces President Cyril Ramaphosa as he ponders on his new Cabinet.
Just weeks before the elections, Eskom was given R5bn in emergency funds to enable it to meet obligations. This will not be sustainable in the long term.
And last week Ramaphosa told a Goldman Sachs investment meeting that Eskom was too big to fail.
That is not untrue.
Eskom plays a much more significant role in our economy.
Its total collapse would unleash damages yet unseen in the country.
It would see more foreigners abandoning the South African market on a much larger scale than they did when former president Jacob Zuma replaced Nhlanhla Nene with Des van Rooyen in 2016 and the rand would be as valuable as the Zimbabwean dollar.
South African assets are already showing anxieties on what Ramaphosa’s new administration would bring.
Ramaphosa needs to speed up the proposed breaking up of Eskom into three separate units that would be responsible for generation, transmission and distribution.
That would not create a clearer structure for Eskom, but it would raise the power utility to current international energy generation standards.
It would break Eskom’s monopoly on energy supply and create more competition in the energy sector.
It would also bring more clarity on its cost structures as well as better accountability and oversight on its functions.
But for all this plan to succeed, Ramaphosa will have to be prepared to tough it out with South Africa’s spoilt labour unions, and to make the best decisions in the interest of the country.
Already, the National Union of Mineworkers (NUM) and National Union of Metalworkers of South Africa (Numsa) have threatened fire and brimstone should Eskom be unbundled.
However, South Africa is way too big and matured as a democracy to be held to ransom by empty threats.
Ramaphosa will have to be brave enough to tell them Eskom’s bloated workforce is not compatible with its output. And that workers can be trained for more opportunities outside the outdated fossil energy model to much cleaner generation that the world is moving towards.
Given the country’s current debt-to-GDP ratio, the successful unbundling of Eskom would more likely be the biggest step in addressing key structural reforms in the economy. It would release more money to fund his stimulus packages. It would also go a long way in addressing the country’s ballooning unemployment.
The restructuring of Eskom and the overall economy would take some time to materialise.
But Ramaphosa would need courage and a solid team to see through the reforms. That team would need to have the arrogant pragmatism of the like of Finance Minister Tito Mboweni.
While sometimes combative, Mboweni has the uncanny ability of dissecting problems for what they are.
On Tuesday, he correctly assessed that Eskom’s problems were more operational than financial.
Mboweni said the power utility should develop a capacity to collect money that was owed to it by municipalities.
He said it was somewhat of a madness that the government gave municipalities money through grants, but has to assist Eskom with bailouts because the very municipalities do not pay for the electricity that they consume.
It’s a contradiction in principle.
Eskom needs a long-term view that would address its governance and management frailties.
Bringing in new players, even if they come from the private sector, would not be a bad thing at all, if it helped Eskom and the economy.
Mboweni might be brash and at times outlandish. But his clarity of thought is a breath of fresh air and the kind of brave courage that the country needs to move forward.