4 April 2017
STATEMENT BY CAS COOVADIA, MD OF THE BANKING ASSOCIATION OF SOUTH AFRICA
Yesterday’s announcement by Standard & Poors of a sovereign downgrade to junk status is a direct consequence of poor leadership and self-serving political gain over the greater national interest.
The actions by the President in the early hours of last Friday were clearly not in the national interest. BASA and a number of other organisations warned that such reckless actions could lead to a ratings downgrade. This has, unfortunately, become reality to the detriment of the banking sector, small and medium businesses, corporates and everybody in SA. This downgrade means SA will pay higher interest on our debt, which we need to balance our budget. This will leave less funds for social development, with a direct negative impact on the most vulnerable in our society. The President must, sadly, take responsibility for this.
We must now recognize the crisis we are in. This crisis calls for all South Africans with national interest in mind to join forces to ensure good and accountable governance, with leadership that is informed by the interests of all South Africans, instead of a small group of greedy interests bent on self-enrichment at the expense of the most vulnerable.
This sovereign downgrade will lead to a steep erosion of already poor levels of investor confidence. Negative investor confidence will directly undermine an economy already struggling to achieve the levels of growth needed to meaningfully create jobs or lift our population out of poverty.