Cape Town – The Association for Savings and Investment South Africa (Asisa) added its voice to the discontent over the dismissal of Finance Minister Pravin Gordhan and his deputy Mcebisi Jonas.
In a statement, Asisa CEO Leon Campher said although the late-night reshuffle didn’t come as a complete surprise, it presents a “huge setback” to the good work done by government, labour and the CEO Initiative to avoid a downgrade and fast track initiatives to grow our economy, create jobs and fund education.
Campher said although it would not be fair to be critical of the new Finance Minister, Malusi Gigaba, and his deputy, Sfiso Buthelezi, before they have even started, the reality is that the sacking of a highly experienced and respected team at this critical juncture in the country’s fragile economy is likely to come at a high price for ordinary South Africans from all walks of life.
“The President has not offered any justifiable reasons for yet again interfering with the Finance Ministry. The reality is that significant and inexplicable political pressure on the leadership of the National Treasury as custodian of the country’s finances causes a loss of investor confidence in the Government.”
Reiterating a warning made last year following consistent attempts to undermine Gordhan and the National Treasury, Campher said if South Africa loses its investment grade rating, foreign investors, many of whom are pension funds, would be forced to withdraw their money from South Africa.
Since foreigners own almost 40% of the value of JSE listed shares, the impact of foreigners selling shares would negatively impact on equity investors, including South African pension and provident funds, which hold the retirement savings of our nation.
Campher adds that a loss in investor confidence leads to sell-offs in bonds and a much weaker rand.
“This will have a massive impact on our country’s ability to borrow money. The additional interest we will have to pay to attract new flows would mean less money for social welfare, education and health care. Consumer interest rates may go up, hitting the poor the hardest.”
“A strong and functional National Treasury is therefore vital to South Africa’s future. Without this, there is virtually no chance of an economic revival and reversal of the current job losses. As custodians of close to R9 trillion in savings and investments belonging to South African citizens, our industry therefore hopes that the new Finance Minister and his deputy pick up where Pravin Gordhan and Mcebisi Jonas left off.”
Asisa will be requesting an urgent meeting with the new leadership of the Finance Ministry and pledges its support to ensuring that the momentum achieved over the past year by the CEO initiative is maintained.
Campher concludes that the integrity of the National Treasury must be protected at all costs to enable it to maintain fiscal prudence and governance, which are key to protecting the country’s economy and therefore the wellbeing of all South Africans.