Stable investment rating a chance to enact key reforms

THE CEO Initiative welcomes the decision by Moody’s to retain the investment grade rating of South Africa’s government debt denominated in local currency, as well as the change in the outlook to stable.

This has offered the country a window to demonstrate its ability to implement the key structural reforms necessary for improving its credit rating.

Jabu Mabuza, co-convenor of the CEO Initiative, commented: “The decision is largely attributed to the confidence-enhancing measures taken in key areas over the past three months, including a smooth presidential transition, the appointment of a new board for Eskom, the presentation of a fiscally responsible budget and changes to the national executive aimed at restoring stability to key portfolios.”

While the economy is still far from operating optimally, the measures announced in the Budget speech, along with the undertakings by the president in the State of the Nation address, are clear indications of the will to achieve necessary reforms required for inclusive, sustainable growth.

We are particularly encouraged by the decisive action on elements that are crucial for building institutional strength and investor confidence as foundations for enabling higher levels of inclusive economic growth, including:

Confronting state capture and corruption through the immediate prioritising of the Zondo Commission – this is imperative in the battle against maladministration, which undermines the government’s objectives.

Restoring the credibility of public institutions, including dealing with leadership challenges in key organisations such as the National Prosecuting Authority and the SA Revenue Service (Sars), as well as the commitment to establish a commission of inquiry into tax administration and governance at Sars – addressing the credibility of the revenue-collection capacity can produce much-needed resources to enhance growth.

Restoring our state-owned enterprises, with particular attention to the respective funding models which – if efficiency is achieved – will significantly improve our fiscal position.

The CEO Initiative remains firmly committed to the task of improving South Africa’s credit rating. This is not an end in itself, but an outcome of structural reforms that will restore our country to faster, more sustainable and more inclusive economic growth for the benefit of all South Africans.

Over the past two years, government, labour and business have made progress on various initiatives to support growth in the economy. This includes the establishment of a R1.4 billion SME Fund to invest in the smalland medium-sized enterprise sector; a Youth Employment Service aimed at providing employment opportunities to one million young people, as well as various investment initiatives under way in sectors such as agriculture, tourism, manufacturing and healthcare.

“South Africa should use this window of opportunity by responding appropriately to the significant challenges we face, in order to improve the lives of our citizens and inspire confidence in the future of our country.

“As business, we remain committed to continue working with the government and labour in creating an environment that is conducive to achieving sustainable and inclusive economic growth that benefits all South Africans,” concludes Mabuza. Roz Thomas and Lauren Thys CEO Initiative