Statement By Cas Coovadia, MD of The Banking Association South Africa
The vacuum of leadership caused by the announcement of a cabinet reshuffle and appointment of a new Finance Minister, Deputy Finance Minister and the removal of additional cabinet ministers is of extreme concern for the whole of South Africa.
The actions of the President have put our country into turmoil, at a time the country is trying to come together to address the problems we face. We have no choice but to say this reshuffle is not in the best interests of the country. We are also left with little choice but to question the motives behind this action.
The specific change in both Finance Minister and Deputy Finance Minister creates a dire loss of institutional knowledge and raises legitimate and alarming concerns regarding issues of fiscal discipline, protection of institutions and indeed the scope state capture.
The Banking Association South Africa (BASA) has previously voiced its deep concerns regarding the actions of the President. These have unfortunately fallen on deaf ears.
BASA objects again – and in the strongest possible terms. The President’s actions directly undermine the significant progress made in the last 18 months towards building confidence in our country. These actions fly in the face of the imperative we all have to ensure political and policy certainty. The President’s actions go further to place all South Africans at significant risk as a result of the fall out of any potential ratings downgrade.
The position of Finance Minister is a critical one. An effective and credible National Treasury is also important. These institutions are pivotal to creation of certainty in markets and in management of potential risks introduced by numerous factors. The action of removing a Minister and a Deputy-Minister who have gained global and national credibility and were performing optimally under difficult circumstances raises questions about the rationale for their removal. This further makes it difficult for their successors to conduct their responsibilities as well. In short, the President’s actions have created increased uncertainty and risk. This is exacerbated by the fact that some Ministers who have performed very badly and publicity criticized have been retained.
It must be emphasised that any sovereign downgrade would have a serious impact on banks and the business sector in general. It will also undermine our collective ability to fund social programmes, which will severely and sustainably worsen the lives of the poorest of the poor in our country.