Hope Springs: Pravin meets business. National Crisis shouldn’t be wasted.

The below letter confirms that South Africa’s silver knight, Finance Minister Pravin Gordhan, met up with around 60 business CEOs last week, in an attempt to galvanise the crew and find solutions to the problems the country is faced with. The problems stem far and wide but most notable is the impending downgrade to ‘junk’ status. It’s been deemed inevitable but as noted earlier today in “Pravin’s Pledge: I’ll defend SA credit rating – we cannot afford to lost it” there are a few hurdles that can be jumped in order to avoid this fate. The meeting is just further proof that he’s looking to tap into every corner of South Africa in order to do this. One just hopes that those he shares parliament with are on the same page. The letter was written by the CEO of Old Mutual Emerging Markets Ralph Mupita. He shoots straight from the hip, and despite all the doom and gloom about, he’s put his faith into the Finance Minister to deliver a budget that’s appropriate for South Africa’s current situation. The letter also looks at the consequences should SA get downgraded and why it must be avoided at all costs. Hope springs. – Stuart Lowman

Gordhan Meets Business Chiefs as S. Africa Junk Rating Looms

By Rene Vollgraaff, Renee Bonorchis and Loni Prinsloo

(Bloomberg) — South African Finance Minister Pravin Gordhan met with top business leaders on Jan. 29 to discuss steps to boost investor sentiment and avert a credit-rating downgrade to junk.

About 60 chief executive officers representing industries ranging from banking to mining met with Gordhan for two-and-a- half hours at Nedbank Group Ltd.’s offices in Johannesburg, Jabu Mabuza, chairman of Telkom SA SOC Ltd. and coordinator of the meeting, said by phone on Monday from the Ethiopian capital, Addis Ababa.

“The point was to recognize that there is a sense of crisis,” said Mabuza, who also chairs the lobby group Business Unity South Africa. Executives “left that meeting feeling very positive and confident that as government and business, we are all looking at the same thing, we are all in agreement about the urgency and the crisis nature of the situation.”

Gordhan is seeking to restore confidence in an economy hit by sliding commodity prices, weak demand from China and policy mistakes by President Jacob Zuma toward the end of last year that pushed the rand to record lows. Standard & Poor’s in December put South Africa’s BBB- rating on a negative outlook, indicating it may downgrade the nation’s debt to below investment grade.

Eskom Investment

Executives discussed with Gordhan the steps needed to boost investment, including whether the government should allow private-sector involvement in projects like the Kusile and Medupi coal-fired power plants owned by Eskom Holdings SOC Ltd., Mabuza said.

“We have to do everything we can to avert the sovereign downgrade,” Thabo Dloti, CEO of insurer Liberty Holdings Ltd., who attended the meeting, said in an e-mailed response to questions. The talks “went a long way into developing and affirming the partnership required between business and government to find practical solutions to the current economic challenges.”

Vodacom Group Ltd. CEO Shameel Joosub, who attended the meeting, said collective action was needed under current circumstances.

“We were very encouraged by the minister and Treasury’s determination and commitment, as well as their plans to address the short-term fiscal challenges,” he said in an e-mailed response to questions.

Rand Plunge

Also attending the meeting were Lonmin Plc CEO Ben Magara, AngloGold Ashanti Ltd.’s Srinivasan Venkatakrishnan and Dan Matjila, head of the Public Investment Corp., according to a photograph posted on Twitter by Stephen van Coller, head of corporate and investment banking at Barclays Africa Group Ltd.

The rand has plunged 13 percent against the dollar in the past three months to trade at 15.9975 as of 6:13 a.m. in Johannesburg. Sentiment deteriorated after Zuma fired Finance Minister Nhlanhla Nene on Dec. 9 and replaced him with a little- known lawmaker. A market backlash that followed forced Zuma to reverse the decision four days later and re-appoint Gordhan to a post he had occupied from 2009 to 2014.

The government is committed to fiscal consolidation as it seeks to avert a credit-rating downgrade, Gordhan said in an interview with the Financial Times Monday.

Phumza Macanda, a spokeswoman for the Treasury, didn’t immediately respond to an e-mail seeking comment.

  • EnjoyTheDecline

    Oh dear, the delusions continue. I feel a joke coming on … “A communist and 60 capitalists walk into a bar to discuss economic policy …” Even if Pravin takes any of the CEOs said to heart, it will never pass muster with Cde Davies, the SACP and Cosatu.

  • Frik De Wet

    From your lips to Gods ears…

  • v_3

    Business leaders also met with the Apartheid bosses and attempted to moderate or reform it. Like Apartheid, Corruptheid is dragging our country down, is now endemic and pervasive and cannot be reformed or fixed – the only cure is to end it. Too many bosses are too comfortable or accommodate with Big Government (ask Cyril ConcomitantActionMan). Interestingly, four of the five top runners in the USA primaries are anti the same-old business-government nexus and this is also mirrored in the rise of other anti-status quo “resentment” leaders like Corbyn, le Pen, Tsipras, Maduro, Malema, etc and Vavi & Jim’s breaking away from SA’s Government-Union-Complex.

    Pravin Gordhan was SARS Commissioner or Finance Minister when the “rogue unit” began and has a hard-won reputation for enforcing ZANC-connected-so-protected avoidance of tax investigations into ZANC nomenklatura. The main qualification of this pharmacist is being one of the Zumafian “Vula boys”, hardly Mr Clean or Mr Cleanup.

    JZ783’s cynical offer, days ahead of SONA, to #PayBackSomeMoney, after three years of Stalingrad Stategy underscores the need to “kick the bums out”

  • Odilo von Steinitz

    It’s at least a start.

    1. What is needed is a total overhaul of the structural impediments in the SA economy. Starting with the overpopulated civil service in the areas where no value is added. I should think that this is at least 33% of total public employment.

    2. Next has to be a total overhaul of the current labour legislation. All impediments to the employment of people who would like to work needs to be removed. That would mean a much shorter leash for the trade unions.

    3. The education system needs a long overdue overhaul. Free education and a level playing field is a necessity here – right into the tertiary level.

    4. An anti- corruption structure needs to be established with overreaching powers to bring guilty parties to book, confiscate their ill gotten gains both locally and offshore and send the scoundrels to prison.

    5. Overhaul the tax system so that it is fair and reasonable, apart from simple and transparent. If there are corporate tax breaks they need to be available to all companies, large and small.

    6. Rigorously clamp down on anti competitive behaviour by the large oligopolies suffocating all our industries. Privatise the inefficiently managed state owned parastatals.

    7. Use the funds saved (freed) in 1-6 above to help the poor, level the playing field for all citizens, and improve the general quality of life in SA.

    Oops, I just woke up – but one can dream!

  • A major positive step in the right direction would be the privatization of ESKOM’s coal fired generation capacity and the establishment of a privately owned railway company, both of which will then pay rent for the use of the national rail and electricity infrastructure.

    In addition to adding billions to the Fiscus, the simple economic fact of the matter is that there is not a single product or service that any consumer purchases that does not have electricity and transportation as cost component. The high cost of electricity is well known, while a recent study by a Master’s Degree candidate at UJ suggests that the average transportation cost in the country is inflated by some 15% due to the lack of railway transport. Surely this is one way in which we can drive down the living costs for the majority of South Africans in addition to saving heavens know how much money on the maintenance of our road networks.

  • Macafrican

    there is no point to a talk shop with the overpaid underwhelming hired help

    Convince the owners by way of concrete steps and sane policies. That, or get 10m people to vote different

  • New SA is dysfunctional !

    Ahhhhhh so the business leaders aka CEO’s are finally pulling their fingers out of their collective arrogant shitscared asses and beginning to make an effort to engage with the ANC – likewise the arrogance of government now possibly realizes they need the assistance of business to get new SA through the next phase of business including a very real possibility of a recession !!!!