Today was another day in so many over the past weeks where the outside world tries to set clear signals that South Africa’s economy is deteriorating by the minute. While South Africa’s Top Honcho rests in Nkandla, untouched by any investigation, his cousin – new appointed Master of Finance – is rather attending expensive, government and ANC funded events on which he can pat himself and his comrades on their shoulders how nicely they have brainwashed their voters to spend the next five years in tax-payer-financed luxury while the economy is staring into an abyss.
h3. Standard & Poors
Standard & Poors lowered South Africa’s sovereign credit rating to “BBB-” today, just a notch from junk bond status, citing feeble growth and prolonged platinum strikes. The agency held its outlook stable, but noted “relatively high” current account deficits and the economy contracting in the first quarter this year partly because of the marathon stoppages as having influenced its decision. While Nene makes his name programme and denies that South Africa is headed for an recession.
Just a few miles down the road Fitch revised the outlook for the former powerhouse from “stable” to “negative”. The decision by the ratings agency to revise South Africa’s outlook should serve as a warning, scenario planner Frans Cronje said today. He told the Cape Town Press Club Fitch’s outlook was logical and not surprising. “The macro indicators are all pointing in this direction in any case – low growth, difficult investment environment, a volatile domestic economy and labour market,” said Cronje, CEO of the SA Institute of Race Relations. Fitch’s concerns about the deteriorating growth outlook stemmed partly from a marathon strike in the platinum mining sector. Cronje said this strike was the beginning of a larger problem. “I think if we settle at R12 500 in the platinum strike, that’s the start of the labour unrest because that’s going to spread to every industry in the country that relies on large numbers of relatively poorly skilled workers,” Cronje said. “There’s also the social problem that comes out of the settlement in the platinum strike. If they settle at R12 500 or near that it means that if you are a poorly skilled young South African, you are now a lot less likely to find a job in the South African formal sector.
The recently announced Cabinet pointed to a doom and gloom scenario where South Africa was beginning to slide with regard to attracting investment, he said further. “If you spoke to us a few weeks ago, we were very keen on the idea of reform because it seemed so logical that a government under great social and political pressure would lead an economic reform exercise,” Cronje said. “The more realistic assessment now is that if you look at the Cabinet selection… at the policy direction, this is not a government that believes reform should be high on its policy agenda.”
This would result in low levels of investment, which would drive down growth and create fewer jobs. “The realistic, baseline scenario now is lower levels of economic growth, sustained high levels of unemployment, and great pressure on the triple deficits – the current account deficit, the budget deficit and… the household deficit,” said Cronje. The lack of reform would be closely monitored by ratings agencies. “I get the sense the rating agencies were also watching whether there would be clear sounds of reforms coming through in the run-up to and after the South African elections,” said Cronje. “It has been clearly moving in the opposite direction and the rating agency’s decision is absolutely logical.”
It is only a matter of time, when Dr Zuma has replaced any capable politician and official by his family members, goons and cronies and it will be only a matter of time before he sacks Gill Marcus to be replaced by yet another cousin with his surname instead of brains. The impeachment procedures need to be ensured while begging the president and the cabinet to take the country’s future at heart, to step down and leave the reigns in more capable hands. How much champagne can one drink? How many cars can one drive? Enough is enough … go home, keep your security system, you know best why you will need is as bought friends are only temporary friends!