REACTION TO THE PRESIDENCY’S INSTRUCTION FOR MINISTER PRAVIN GORDHAN TO RETURN TO SOUTH AFRICA

Today’s shock announcement in an unexpected and unexplained statement by the Presidency this morning cancelling the roadshow and instructing Finance Minister Pravin Gordhan to return to South Africa is ill advised.

The Finance Ministry, alongside business and labour who are accompanying the National Treasury on this roadshow, have worked hard to maintain South Africa’s investment grade credit rating. The damage to investor sentiment to South Africa as a result of the President’s decision should not be underestimated.

Coming in the middle of meetings where business and the National Treasury have been making the case for South Africa, this action has pulled the rug from under our feet, as demonstrated by the rand sharply reversing its strongest growth trend in two years. At a time when investors need stability, certainty, and evidence of progress, this action sends exactly the opposite message.

Business calls for cool heads and sound leadership to prevail in the context of certain damage to the economy should decisions be made which cause institutional instability, and associated negative impact on asset prices as seen in the collapse of confidence, currency and equity prices following Nenegate in December 2015. The sovereign credit rating agencies have continuously communicated that institutional stability is one of the central pillars on which their investment grade rating for South Africa rests, and any undermining of such strength puts this rating and the cost of capital at risk.

The consequences of uncertainty and a downgrade include diminishing the ability of our country to remain economically stable, finance its debt, and support the government spending on which so many South Africans depend.

We therefore call on South Africa’s political leadership to exercise the greatest due diligence and put the economic welfare of the country first.

Statement issued by Business Leadership South Africa, 27 March 2017