BLSA releases position paper on South Africa’s Sovereign Credit Rating
Business Leadership South Africa (BLSA) has commissioned an empirically grounded research paper on South Africa’s sovereign credit rating. The commissioning of the research paper was inspired by BLSA’s belief that South Africa offers investors, lenders, and businesses enormous potential. While conceding that South Africa faces challenges ranging from structural inefficiencies and a narrow tax base to high unemployment and inequality, the paper outlines the key initiatives and mitigants underway to provide cause for optimism. Ultimately, the more informed ratings agencies and stakeholders at large are about South Africa’s social and economic trajectory, the greater efficiencies in the deployment of capital will be possible, to the benefit of all.
The document is intended to be used by business leaders and relevant stakeholders to advance understanding of what is being done by government and business to position South Africa for growth, and to promote a balanced narrative of country-specific risks and opportunities. The attached “hymn sheet” summarises the key messages of the position paper to guide executives and business leaders in their engagements on this and related topics.
“To enable South Africa’s return to investment grade status, it is essential for the local and international investor community, credit rating agencies (CRAs), and other stakeholders to understand the progress being made across all elements that define the country’s creditworthiness,” notes Busi Mavuso, CEO of BLSA.
The report notes:
“Since 2012, South Africa has suffered successive sovereign rating downgrades by all major CRAs – S&P Global, Fitch, and Moody’s – culminating in sub-investment grade status across all three by 2020 (S&P and Fitch in 2017, Moody’s in 2020), which raised borrowing costs, eroded investor confidence, and redirected capital away from the country. South Africa has now moved from a period of institutional erosion, rising fiscal risk and weakening confidence into one of rebuilding credibility, policy traction and stabilisation.”
Factors critical to any upgrades are outlined in the below extract from the report:
You can read the full report here.
Give us your feedback:
As the SA Trade Desk, we are always looking to engage with our community around South Africa’s economic future. Give us your feedback in the comments below whether you think South Africa will trigger further ratings upgrades this year.
