South African Finance Minister Pravin Gordhan met with top business leaders last Friday to discuss steps to boost investor support and avert a credit rating downgrade sparked by SA domestic challenges.
About 60 chief executive officers representing industries ranging from banking to mining met with Gordhan for two-and-a-half hours at Nedbank’s offices in Johannesburg, Jabu Mabuza, chairman of Telkom and co-ordinator of the meeting, said by phone on Monday from the Ethiopian capital, Addis Ababa.
“The point was to recognise that there is a sense of crisis,” said Mabuza, who also chairs the lobby group Business Unity South Africa. Executives “left that meeting feeling very positive and confident that as government and business, we are all looking at the same thing, we are all in agreement about the urgency and the crisis nature of the situation”.
Gordhan is seeking to restore confidence in an economy hit by sliding commodity prices, weak demand from China and policy mistakes by President Jacob Zuma toward the end of last year that pushed the rand to record lows. Standard & Poor’s in December put South Africa’s BBB- rating on a negative outlook, indicating it may downgrade the nation’s debt to below investment grade.
Executives discussed with Gordhan the steps needed to boost investment, including whether the government should allow private-sector involvement in projects like the Kusile and Medupi coal-fired power plants owned by Eskom, Mabuza said.
“We have to do everything we can to avert the sovereign downgrade,” Thabo Dloti, CEO of insurer Liberty, who attended the meeting, said in an emailed response to questions. The talks “went a long way into developing and affirming the partnership required between business and government to find practical solutions to the current economic challenges”.
Attendees of the meeting were Lonmin CEO Ben Magara, AngloGold Ashanti’s Srinivasan Venkatakrishnan and Dan Matjila, head of Public Investment Corporation, according to a photograph posted on Twitter by Stephen van Coller, head of corporate and investment banking at Barclays Africa.
The rand has plunged 14 percent against the dollar in the past three months to trade at 16.0512 as of 5.35pm in Johannesburg. Sentiment deteriorated after Zuma fired his finance minister, Nhlanhla Nene, on December 9 and replaced him with a little-known lawmaker. A market backlash that followed forced Zuma to reverse the decision four days later and re-appoint Gordhan to a post he had occupied from 2009 to 2014.
Phumza Macanda, a spokeswoman for the Treasury, didn’t immediately respond to an email seeking comment.
Main contributors to a downward spiral is drought, slow repayments to creditors including bond payments, maintenance in mining industry and a cut down on imports.
Earlier this year Zuma led an Inter-Minister Committee to gain and support foreign investment at The World Economic Forum in Davos, Switzerland.
After opposition parties blamed the Growth Employment and Redistribution (GEAR) on SA’s economic failure.
With the country heading into a recession consumers will be spending more on debt and having less buying power on other goods.BUSINESS REPORT