South Africans have been dealt a debilitating blow with the recent downgrades of the country’s long-term foreign currency sovereign credit ratings to sub-investment grade.

This is a blow that was ill-affordable in a country that is struggling to find momentum towards the inclusive growth necessary to tackle our significant socio-economic challenges in a sustainable manner. It is also an entirely preventable blow and, frustratingly, came when we were starting to see increased collaboration between government, business and labour – and faint signs of the necessary economic turnaround.

Ratings decisions affect everyone in a country. As government has to borrow at higher rates in order to provide the services its citizens expect, there is of course less for government to spend on those services. As trust and confidence in the direction of an economy wanes, so investment in that economy declines and with it growth, employment, wages and tax collection. The poor and vulnerable will suffer the most.

While no economic good comes from a downgrade, we should celebrate the rising of voices across the political, business and civil society spectrum reflecting the democracy we cherish so strongly in this country.

It is no easy matter for a country to regain investment grade status. We will need unwavering commitment to fiscal discipline from government; to show the independence of Chapter 9 institutions (such as the Public Protector, Independent Electoral Commission and the Auditor-General) and that other important institutions to our democracy (such as the judiciary, SARB, SARS and PIC) are strong, functioning, independent and accountable; clear direction on crucial policies in energy, financial services and mining particularly – and clarity on terms such as radical economic transformation and what they mean in relation to existing national policies; real progress on initiatives that will lead to inclusive growth; and a restart of collaborative leadership between government, business and labour that builds confidence in the economy and leads to increased investment, growth and jobs.

All this is possible but only with strong, constructive and courageous national leadership from government, business and labour. Populist policies that focus on short-term solutions with no regard for the liabilities that we bestow on future generations will only result in the economy slipping further away from providing opportunities that benefit all that live in the country.

This is a tipping point for our country. What we do now will lay the foundation and shape the narrative of our country and the sustainability thereof.

Let us be counted. 

Nicky Newton-King
Chief Executive Officer, JSE

April 2017
Image: Wilnicque Rall