Zuma’s impact on economy, disturbing

OWN CORRESPONDENT

Koseff is a member of the CEO Initiative, a grouping of 81 top South African companies – a number of which are Jewish-owned – which in October last year came out in support of Gordhan and his initiative to prevent the country from being downgraded.

Koseff said in a radio interview this week that the work of 14 months has now been wiped out because of the reshuffle. 

The CEO Initiative was formed after former Finance Minister Nhlanhla Nene was fired in December 2015 and has worked with labour and government to find unity with business going forward.

Following South Africa’s downgrade on Monday, the CEO Initiative issued a statement expressing their disappointment, especially given that a number of “green shoots” had been appearing in the economy. This is due to the work done to restore confidence among investors and ratings agencies, through the collaboration between business, government and labour.

“This downgrade could and should have been avoided had the structural reforms necessary to underpin sustained and inclusive economic growth been implemented in the interests of all South Africans,” said the CEO Initiative.

Standard and Poor’s admitted that the political turmoil surrounding the reshuffle, helped them make a decision on a downgrade to junk.

Koseff said: “We were on a good path starting to come right and gain momentum, a positive mood starting… The ANC needs to take corrective action. They can’t just forget about fiscal conditions.

“It is a difficult time for a society. We’ve just missed a recession, now we go back to square one.”

Political analyst Daniel Silke says the downgrading was “regrettable, but entirely predictable, South Africa has walked right into the S&P’s ratings downgrade”.

He said “in a swift and stark reaction to Jacob Zuma’s Cabinet reshuffle and its underlying motivation, the ratings agency decision now compounds the problems of an already stagnant economy so dependent on both domestic and foreign capital investment.  

“While the economic effects will ripple across all sectors in the coming months, there is a more dramatic short-term political effect. The downgrade further damages President Zuma at a time when he faces unprecedented internal pressure from his own party and broader society.

“It will be used by his increasingly vocal detractors to hammer home their message for a change of leadership and direction. The downgrade undermines the political spin from the President around ‘radical economic transformation’ and also undermines his own leadership abilities already much maligned.”