SA under close watch for commitment to reforms – top business group

S&P Global’s decision to retain South Africa’s sovereign rating at sub-investment grade and to maintain a stable outlook indicates that the country is under close watch for its commitment to undertakings made by the president earlier this year to revive the economy, a leading business group said on Monday.

In its ratings review last Friday, S&P noted that after the recent political transition that saw former president Jacob Zuma step down in favour of his deputy, Cyril Ramaphosa, South African authorities were pursuing key economic and social reforms, but said the country faced “considerable” economic and social challenges.

On Monday, top business group Business Unity South Africa (Busa) said a sound policy framework, implemented in a coherent manner by the state, was now required to reinforce commitments made by Ramaphosa in his inaugural state of the nation address.

It said despite the damage to the economy and South Africa’s profile from reports of corruption and mismanagement at many state-owned enterprises (SOEs), the signal from S&P as well as peers Fitch and Moody’s was that “the country is restoring competence and integrity”.

“Concrete steps are now required by these SOEs to turnaround their fortunes,” Busa said.

It said the appointment of new boards at entities such as logistics firm Transnet, arms company Denel and power utility Eskom “are a continuation of a series of steps taken in recent months to restore sound governance, ethical leadership and address the mismanagement that has plagued many of South Africa’s SOEs”.

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