Acknowledging that the State President acted within the scope of his mandate in the recent
reshuffling of cabinet, the Grahamstown Business Forum would like to express the organisation’s
grave concern over the adverse effects of this action on the country in general, but specifically on
the business environment.
While the GBF fails to see the logic behind decisions that so clearly compromise the government’s ability to address the pressing challenges of poverty, unemployment and inequality, the organisation is troubled by the possibility that the poorest of the poor will most suffer the consequences of such seemingly thoughtless decisions.
The cause and effects are rather simple to follow: due of the risk involved, governments, pension funds, and banks will not invest in a country with a junk status credit rating. For such a country this simply means that money in the form of investments will not flow into the country. Since it also results in a higher interest rates being charged on overseas loans, Government will have less money available to fund commitments such as social grants, infrastructure, business development and so on.
As inflation increases and the value of the Rand depreciates, people have less food on their tables. And as import prices rise, business conditions becomes tougher and unemployment soars. A vicious cycle which has the potential to end up in a recession.
Not to dismiss the huge losses that people and institutions have already suffered or the potential for future disaster, South Africans might do well to remember that this is not the first time that our country’s credit rating was at junk status level.
In 1994 our young democracy inherited a BB credit rating: two points below junk status, a situation that took four to five years to remedy. But we have survived. Also, in the BRICS family, both Brazil and Russia currently have a junk status credit rating. And they are surviving.
So, this too shall pass. It might pass like a kidney stone, but it will pass.
While supporting the peaceful silent vigil on Church Square and the anti-corruption protest by former Black Sash Members, the GBF would like to point out that the responsibility to build our country lies with ordinary citizens: people who play their part at work and in the community; people who reach conclusions based on rational thought and evidence rather than blind emotion; people who look to the future and who realise that we are in this together. It might serve us well to heed Churchill’s advice: “You will never reach your destination if you stop and throw stones at every dog that barks.”