South Africa faces
an uphill battle back
to investment grade,
especially in light of the
low business confidence.
Speaking in Cape
Town at a seminar on the
Western Cape’s action plan
to counteract the credit
rating downgrades, Ryan
Ravens, CEO of Accelerate
Cape Town, said one had
to be realistic about the
state of the South African
economy at present.
“Throughout history
Standard & Poor's has
rated 132 countries of
which only 21 have ever
received a downgrade,”
he said. “Of those only
seven ever made it back
to investment grade.
No African country has
managed to do that. It’s
certainly not a simple
matter to get the country
back to investment grade.
We do however feel that
significant political change
can inspire confidence.”
He said business
continued to monitor
the strength of public
institutions and there were
some discouraging things
happening at the moment –
including the stance of the
public prosecutor.
“Should we, however,
withstand this onslaught
we will send a very strong
message to the world
economy and it will result
in a massive uptick in the
confidence
of the
country.”
Ravens
said at
present
the private
sector
remained
in a wait
and see
position
with
concerns
over the
declining
economy
very high.
Zakariya Hoosain, head
of the provincial treasury,
acknowledged the low
business confidence in the
country and said there was
no easy solution to the host
of challenges. “These are
not easy issues that we have
to navigate and the process
to do so is definitely not
going to be easy. We are
going to need a very clear
strategy to do this.”
He said in the Western
Cape the goal was to work
with business to improve
confidence and to create a
greater sense of security all
round.
“The good news
remains that despite these
downgrades
our currency
has held and
that allows us
the chance to
really drive
our exports
and identify
real trade
opportunities.
“The time
has come for
us to really
look at our
province and
to identify the
opportunities
that exist. We had a thriving
clothing and textile industry
yet the large retailers in the
country are only sourcing
about 30% locally. We
have to stimulate sectors
like this to ensure more
manufacturing that will see
us reduce imports.”
Hoosain said by growing
business confidence
and building trust
between government and
business much could be
accomplished.
Only 21 countries
have ever received
a downgrade — and
of those only seven
ever made it back to
investment grade.
– Ryan Ravens
