Mohale: SA seems to give ratings agencies the opposite of what they want

Ratings agencies are looking for institutional, economic and financial stability as well as resilience, Bonang Mohale, CEO of Business Leadership SA, said on Friday.

"While they are looking for stability and continuity, SA seems to be giving it the opposite," he said as guest speaker at an event hosted by the Ubuntu Foundation and the Konrad Adenauer Foundation in Cape Town.

"When you are borrowed to the hilt, you do not call the shots. You have to play by the rules of ratings agencies. If I take out a bond on my home, the bank sets the interest rate," he said as comparison.

"For 20 years we loved it when ratings agencies said SA is Africa's springboard...and then, over the last few years when Fitch and Standard and Poor's downgraded us, we suddenly asked 'who are these ratings agencies'?"

He said it surely must give some South Africans "a bit of indigestion to wonder how the country of Madiba's dreams, the country we have been praying for, gets it so wrong".

He pointed out that, had Moody's downgraded SA beyond investment grade a few weeks ago, R100bn would have "walked off our shores" as investment outflows due to the prescriptions of the mandates of certain asset managers.

"This is almost the same amount as the target President Cyril Ramaphosa set for us as business to raise in investments in five years," said Mohale.

He pointed out that the 53 members of the BLSA together represent more than half of SA's gross domestic product (GDP).

"Had Moody's downgraded SA, it would have cost the SA government more to borrow and state-owned enterprises (SOEs) too. When it costs SA more to borrow, it would have been more than the R20bn we use today just to service our debt," he said.

"The SA Reserve Bank (SARB) would then have witnessed a run on the rand and it would have had no option but to increase interest rates to protect the currency and manage inflation. You would have paid more for your bond and cars, so ordinary South Africans' quality of life would have deteriorated."

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For only R75 per month, you have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today.
Subscribe to News24
USD/ZAR
14.05
0.0%
GBP/ZAR
19.67
0.0%
EUR/ZAR
17.10
0.0%
AUD/ZAR
11.03
0.0%
JPY/ZAR
0.13
0.0%
Gold
1,831.32
0.0%
Silver
27.45
0.0%
Palladium
2,929.64
0.0%
Platinum
1,256.50
0.0%
Brent Crude
68.28
+0.3%
Top 40
62,573
+1.4%
All Share
68,520
+1.4%
Resource 10
71,474
+2.1%
Industrial 25
86,856
+0.9%
Financial 15
12,711
+1.1%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Voting Booth
Please select an option Oops! Something went wrong, please try again later.
Results
Yes, and I've gotten it.
21% - 1387 votes
No, I did not.
52% - 3460 votes
My landlord refused
27% - 1836 votes
Vote