Cape Town - Former finance minister Pravin Gordhan's steady hand maintained South Africa's investment-grade credit rating amid a brittle financial and economic environment.
So says Professor Jannie Rossouw, who is the head of the School of Economic and Business Sciences at Wits University. He isn't alone in this view either.
Former finance minister Nhlanhla Nene said in an interview with CNBC he had no doubt that Gordhan would have staved off South Africa's first credit ratings downgrade in 17 years. The downgrade was anticipated since Nene was abruptly replaced in December 2015.
Fitch lowered both the foreign and local currency debt of SA to sub-investment grade. This followed a downgrade by Standard & Poor's of South Africa's foreign debt. Moody’s responded by announcing a review, pending downgrade of South Africa.
Analysts have warned that the downgrades will emasculate the economy in a far-reaching and long-lasting way, with the poor and millions of cash-strapped, highly indebted consumers bearing the brunt.
"If there was any doubt whether Gordhan stood between us and a downgrade, it is now out of the way. He clearly stood between us and a downgrade," Rossouw told Fin24.
'Zuma is to blame'
He laid the blame squarely on President Jacob Zuma, who prompted a swift response from rating agencies in the wake of his Cabinet shakeup.
"We must blame this fully on President Jacob Zuma for his irresponsible behaviour and unbecoming conduct. He is not suitable to be the president of a modern economy, he just doesn't understand how it works, he doesn't understand the risks and he doesn't care.”
Within hours of taking over at National Treasury, new Finance Minister Malusi Gigaba called for meetings with rating agencies Fitch and Moody's.
"We have to give the minister the benefit of the doubt, but whatever he discussed with them clearly did not work," said Rossouw.
He said Gigaba needs to inspire trust and confidence in foreign investors. "The minister has been sending conflicting messages. He said that one person cannot determine a downgrade and then suddenly a day later he changed his tune, so investors and the business community are not quite sure."
Gordhan has been credited with keeping the fiscal ship as steady as possible, striving to grow the economy and create conditions for the private sector and the state to become key players in the economy.
Together with Team SA, Gordhan worked hard over the last year to appease the concerns of nervous investors and keep a limping economy from heading into a recession.
He was kicked out of Zuma's Cabinet days after discussions with three rating agencies, as well as 50 investors in the UK. This post-budget investor roadshow was cut short when Zuma ordered him to abort further meetings and return to South Africa. At the same time, the then deputy finance minister Mcebisi Jonas was barred from joining a delegation in the US.
All eyes on Moody's
"At this stage we can say that our foreign issues debt is deemed junk as two of three agencies are rating it junk. However, our local rating is still investment grade as only one agency, Fitch, rated it junk," JB Smith, chief investment officer at Rebalance Fund Managers, told Fin24.
"We will have to wait for the Moody's review to be concluded."
He said the message from rating agencies is clear: our political situation is creating uncertainty in policy.
"Remember that we have been seeing a slight improvement in the economy. What has been supportive is the fact that emerging markets have been favoured the last six months." When there is positive sentiment towards risk and growth in global markets, it tends to support emerging market buying, he explained.
Smith noted that events since Gordhan's recall had a mixed effect on local markets.
"Our rand hedge stocks, resources, offshore and gold exposed investment did well, whereas financials, bonds, listed property and in some way retails were negatively affected."