JOHANNESBURG - South African business leaders are preparing for more
credit-rating reductions as mismanagement hobbles state companies and after bad
decisions by President Jacob Zuma, according to the head of one of the
country’s biggest corporate lobby groups.
“We are expecting further ratings-agency downgrades because
all the things that they said we shouldn’t do, the president has gone on to
do,” Bonang Mohale, chief executive officer of Business Leadership South Africa
and a former chairman of Royal Dutch Shell’s South African unit, said in an
interview at Bloomberg’s office in Johannesburg.
Fitch Ratings and S&P Global Ratings cut South Africa’s
foreign-currency debt to junk in April citing concerns about policy
direction, political infighting and poor governance at state companies after
Zuma fired investor-favorite Pravin Gordhan as finance minister. Another
downgrade to non-investment grade in the assessments for local-currency debt
would exclude the nation from global indexes and lead to billions of dollars in
capital outflows.
Moody’s Investors Service is the only major company to
assess both South Africa’s
foreign-currency and rand-denominated debt at investment grade.
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BLSA, a group of about 80 of the country’s largest
companies, will be more vocal on social issues and in combating corruption, and
seeking ways to transform and grow the economy, particularly after the African
National Congress elects a new leader in December, Mohale said.
More Vocal
“We accept as business that we have been quieter,” Mohale
said. “We are going to talk to government, talk to the minister of finance and
talk to the president to his face and saying something publicly,” he said. “The
politeness has died.”
Zuma’s eight years as national president have been
characterized by scandals, policy missteps and controversial appointments that
have led to deep divisions within the ruling party.
He is due to step down as leader of the ANC in December,
with Deputy President Cyril Ramaphosa and Nkosazana Dlamini-Zuma, the former
head of the African Union Commission and Zuma’s ex-wife, the main contenders
for the party post. His term as president of the country ends in 2019.
His successor will inherit an economy that slid into
recession in the first quarter and a network of officials implicated in
allegedly looting taxpayer funds, while business confidence is close to the
lowest level in three decades.
The ANC has been bleeding support, raising the prospect it
won’t secure a majority in the next election. It lost control of South Africa’s economic hub, Johannesburg,
and the capital, Pretoria,
in a local government ballot last year, leading to opposition parties cooperating
to run four of the country’s six largest cities.
The ANC’s overall support slid to 54.5 percent in that poll
from 62 percent in a national vote two years earlier, the worst electoral
performance since it came to power to end apartheid in 1994.
“Any right-thinking South African knows beyond any shadow of
doubt that the actions of this ANC-led government” have lost the party the 2019
elections, Mohale said. “Coalition politics is a reality today, now it is going
to move to national.”