Standard & Poor's Southern African MD Konrad Reuss. Picture: MARTIN RHODES
Standard & Poor's Southern African MD Konrad Reuss. Picture: MARTIN RHODES

GLOBAL rating agencies are likely to continue sitting on the fence in terms of their assessment of South Africa after policy pronouncements at the elective conference of the African National Congress (ANC) in Mangaung.

ANC officials said the controversial issue of nationalisation had been scrapped in favour of "strategic state ownership", while more taxes would be imposed on the mining sector to ensure the government's developmental aims would be met.

Jury is out

Standard & Poor's (S&P) would wait to see what follow-through action the government takes before revisiting the October downgrade of the country’s sovereign rating, said Southern Africa MD Konrad Reuss on Thursday.

"From our perspective, the jury is out — we have to see what it is that is going to be implemented as far as policy action is concerned," he told Business Day in an interview on Thursday.

"Anything that would support growth in the economy, deal with social and labour market issues, and support fiscal consolidation would be constructive for SA's rating," said Mr Reuss.

He welcomed the election of business tycoon Cyril Ramaphosa as deputy president, saying his support for the National Development Plan and his track record as a skilled negotiator would make him an "important person" to have in the cabinet.

His comments were significant, as S&P has put a negative outlook on its BBB credit rating for South Africa, citing the recent wave of social unrest, which the ratings agency said may increase "uncertainties" related to the country's economic policy framework.

The Black Business Council (BBC) said in a statement it was "relieved" the ANC has, once and for all, buried the threat of the wholesale nationalisation of mines and banks.

"The BBC believes the ANC should better manage the perceptions around its economic policy choices and reaffirm the private sector as the appropriate agent for accelerated economic growth and employment creation, with the state playing the role of creating the right conditions for good and socially responsible business," the council said.

Meanwhile, the South African Reserve Bank’s deputy governor, Daniel Mminele, said in Tokyo the government had to take steps to address the problems highlighted by S&P.

The problems included a spate of often violent strikes that swept through the mining sector between August and October, curbing the economy’s pace of growth during the third quarter of this year.

Outlook still negative

Moody's Investors Service downgraded South Africa in September, warning of a decline in the government's institutional strength amidst "increased socio-economic stresses." Like S&P, they kept a negative outlook on the rating, which means there is a risk of another downgrade.

The third major global rating agency, Fitch Ratings, is likely to downgrade the country when its annual assessment of the country is completed in January.

"Overall it’s more of the same," said Pan African Investment and Research MD Iraj Abedian.

"The ANC has always engaged in rigorous left-sounding debate, or more recently populist-oriented, but when all is said and done, there are fairly pragmatic and realistic policy choices," said Mr Abedian.

On the positive side, ANC officials said there would be no ban on labour brokers — a step which the Congress of South African Trade Unions has campaigned vigorously for in the past months.

"This is very welcome — one must take it as an appreciation by the ANC that labour broking has a role to play in job creation," said Neren Rau, chief executive of the South African Chamber of Commerce and Industry.

"On the issue of nationalisation, it's good that this has been clarified — it will be positively received by the international community," said Mr Rau.