Listed South African companies are having a torrid time explaining to their foreign investors the implications of South Africa’s rapidly slumping political landscape.
The CEOs of JSE-listed companies with significant foreign investors have had to spend an inordinate amount of time outlining the impact of the downgrades of South Africa’s sovereign credit rating and its likely impact on the companies they run.
But, thank goodness, South African business remains strong and needs to hold steady, despite all the political noise.
The Chamber of Mines is correct to have taken a strong lead and was right to apportion all the blame at the feet of President Jacob Zuma. The chamber was also correct in condemning the President’s reshuffle as “illogical”.
The craziest step any head of State could possibly take is to subject a fragile economy to needless body blows.
Which head of State in his right mind would want to raise the cost of capital, increase government borrowing costs, increase the portion of government revenue that must be allocated to debt service costs, crowd out other key government programmes by doing so, weaken the currency, raise inflation and hit investment, economic growth and employment creation for a six?
Which head of State in his right mind would want to hurt the poor through higher inflation? The country has just had such a scare – when it was uncertain whether social grants would not be paid in time by an incompetent Minister who survived President Zuma’s cut, while the competent were axed.
Which head of State in his right mind would, after such a scare, make fewer resources available for social grants, when there was absolutely no need to do so?
Which head of State in his right mind would want to frighten investment away and smash opportunities for citizens?
For years now, Minerals Minister after Minerals Minister has urged the mining industry to help eradicate South Africa’s triple evils of poverty, inequality and unemployment.
Then along comes a head of State who takes steps that will add to poverty, aggravate inequality and increase unemployment.
President Zuma has deliberately caused the crisis, despite business and organised labour working with the Treasury over the past 18 months to ensure that South Africa retains its investment-grade rating.
The chamber is correct to emphasise President Zuma must be held to account and to remind all that the Constitution compels him to put the national interest first.
Business, in the meantime, must accele- rate corporate action to alleviate South Africa’s nasty political downturn and strongly support all actions that put the national interest ahead of all else.