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On Monday, Moody’s announced the downgrade of South Africa’s major banks. This development was expected, following the country’s recent sovereign rating downgrade.

The downgrades will lower South Africa’s creditworthiness and make financing harder and more expensive to source, with knock-on effects for all South Africans, especially the poor.

Moody’s reasons for the downgrade were “pronounced economic slowdown and weakening institutional strength”, which confirms that policy uncertainty, cabinet upheavals and ongoing lack of strong and ethical leadership from government have undermined the ability to get the economy back onto an inclusive and sustained growth path.

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Despite this, South Africa’s banking system remains fundamentally solid and respected in the world. According to the World Economic Forum Global Competitiveness Index the South African banking system is the second most sound in the world.

South African banking remains committed to getting South Africa onto a sustained path of inclusive growth that will help reduce poverty, create jobs and reduce inequality.

According to a statement released by the Banking Association of South Africa the banking industry believes that a clearly articulated, unambiguous government growth strategy will have the wholehearted support of the banking sector.