Implications of S.A's credit downgrade

South Africa's credit rating was downgraded to BB+ by S&P on Monday, citing political and institutional uncertainty as the primary drivers behind the decision. The news sent shockwaves through the financial markets and raised concerns about the country's economic stability. Professor Jannie Rossouw, Head of the School of Economic and Business Sciences at WITS, shared his insights on the implications of the downgrade and the challenges facing South Africa in the aftermath. Rossouw expressed disappointment in the downgrade, attributing it to poor decision-making and irresponsible conduct by President Zuma. He highlighted the role of former Finance Minister Pravin Gordhan in staving off the downgrade and emphasized the long-term impact of higher taxes and increased borrowing costs on South Africans. Rossouw also commented on the appointment of Malusi Gigaba as the new Finance Minister, expressing skepticism about his ability to navigate the complex economic challenges facing the country. The departure of key officials from the National Treasury was also a point of concern, as it raised questions about the institutional memory and continuity within the department. Rossouw underscored the importance of maintaining a professional and experienced team at the Treasury to mitigate the fallout from the downgrade. The interview delved into the political dynamics within the ANC and the lack of decisive leadership in addressing the economic crisis. Rossouw criticized the lack of action from Deputy President Cyril Ramaphosa and called for a new leader to step up and provide direction to the country. The discussion also touched on the Reserve Bank and the significance of maintaining stability within the institution amidst the ongoing turmoil. Rossouw emphasized the critical role of credit rating agencies in shaping investor perceptions and urged South Africa to rebuild confidence with international stakeholders. Looking ahead, Rossouw highlighted the need for decisive action to address corruption and unsustainable expenditure to restore the country's economic health. The interview concluded with a reflection on the upcoming ratings from Moody's and Fitch, underscoring the need to take the assessments seriously and prepare for potential challenges ahead.