Black Business Council calls for support for middle class and SMMEs

On 01 June 2017, Fitch Ratings (Fitch) downgraded South Africa’s long-term foreign and local currency debt to ‘BB+’ from ‘BBB-‘ with a stable outlook, a non-investment grade rating.

Sello Rasethaba, Chairman of the Black Business Council (BBC) notes that the announcement by Fitch “is a setback, we must remain committed to making sure that our work with government, labour and civil society continues in order to improve business confidence both at home and abroad.  The BBC will continue to participate in NEDLAC, the Presidents CEO Initiative and the more inclusive Presidential Working Group on Business.”

President Jacob Zuma first convened the meeting between Government and Business in February 2013 to promote collaboration towards implementing an inclusive growth strategy to support the National Development Plan.  In subsequent meetings assessments on progress and implementation action plans were made.   Five task teams co-chaired by Ministers and Business Leaders updated the Presidential Working Group on plans developed and action initiated since February 2013 in focus areas of education and skills development, infrastructure, labour regulatory environment, regulatory impact on investment and inclusive growth.  Mr Rasethaba further stated that “The BBC encourages government to revive the Presidential Working Group on Business because this is the best platform that will ensure that government and business remain committed to:

• the fiscal policy trajectory outlined in Budget 2017,
• implementing radical reforms to improve governance and commitment to Black Economic Empowerment in state-owned companies,
• maintaining the expenditure ceiling and ensuring the stabilisation of government debt,
• ensuring that Nuclear procurement will be transparent, promote the transfer of skills to the previously disadvantaged, improve the social integration of the South African society and is implemented at a scale and pace that the country can afford,
• fast-tracking the implementation of structural reforms aimed at boosting economic growth as contained in the 9-point plan,
• constituting the anti-money laundering council to ensure that there is transparency and inclusive implementation of the FICA Act by including law enforcement agencies and relevant departments in the Council.  The structure of the Council and the allocation of roles and responsibilities to ensure that the implementation of FICA is transparent, enforceable and constitutional, and
• implementing Radical Economic Transformation by promoting SME development through programs of the B20 and the BRICS Business Council.

Fitch also stated that South Africa’s ratings are weighed down by low trend GDP growth, sizeable contingent liabilities and deteriorating governance.  On the positive side, they are supported by deep local capital markets, a favourable government debt structure and a track record of a fairly prudent fiscal and monetary policy.

The Fitch rating could have been worse and the BBC believe that it is a show of confidence that Fitch and others are starting to have in our new Minister of Finance, Malusi Gigaba. It is particularly encouraging on improving South Africa’s track record of prudent fiscal and monetary policy,” says Dr Danisa Baloyi, President of BBC.

Dr Baloyi also calls on patriotic social partners “to talk and think South Africa in their interaction with rating agencies and international investors.  The current discourse and comments by certain individuals and organisations of talking down the country and government leads to the conclusion by ratings agencies and other investors that South Africa is a failed state, we call upon them to think about the poor and down-throdden masses who are extremely affected by the downgrades.”

“The BBC will continue its mission for Radical Economic Transformation and while supporting government to continue with social grants for those in the population that need them, the government must not neglect the middle-class and SMEs but ensure that they benefit from their hard-earned cash through savings and investment incentives,” concludes Danisa Baloyi.